The world's best and worst places to retire

This year's Mercer's Global Pension Index is a 'warning for all countries to prepare, prepare, prepare'

Denmark topped the Mercer's Global Pension Index for the fourth year in a row (AFP/Getty Images)

Denmark has been crowned the best country in the world in which to retire for the fourth year running – eight places ahead of the UK.

The Scandinavian kingdom was given the top spot in this year’s Mercer’s Global Pension Index, which measures 25 retirement systems against 40 indicators, covering close to 60 per cent of the world’s population.

While Denmark was rated the best retirement retreat overall, as well as best for the sustainability of its retirement system, Australia's system came top for adequacy, and Finland's for integrity.

India was rated as the worst country in the world to retire in (India was rated as the worst country in the world to retire in)

“Denmark’s well-funded pension system with its good coverage, high level of assets and contributions, the provision of adequate benefits and a private pension system with developed regulations are the primary reasons for its stop spot,” said a report into the index, now in its seventh year.

“Implementing the right reform to improve pension systems and provide financial security in retirement has never been more critical for both individuals and societies,” Dr David Knox, author of the report, said.

“Our seven-year snapshot highlights the importance of measures such as adjusting the state pension age, increasing workforce participation amongst our ageing population, or funding additional contributions for future retirement income.”

He said raising the retirement age could be one way for countries to make their pension systems more sustainable with an ageing population.

Dr Knox said: “Extending the years that individuals spend in the workforce is one of the most positive ways of developing sustainable retirement systems when life expectancies are increasing.

“While there is a natural limit to the participation rate at older ages, with most countries still below 70 per cent, the scope for significant increases across the world remains, which would improve the sustainability of many pension systems.”

Germany's retirement system came 12th out of 25 countries

The index found there was huge variety in how much money countries set aside, as a proportion of their gross domestic product, to pay for its citizens' future retirement.

While Indonesia earmarked 1.8 per cent of its GDP in this way, Denmark put aside a significant 168.9 per cent of its GDP.

“Some countries have very limited private pension arrangements whereas others have well-developed and mature pension systems. However, it is an important warning for all countries to prepare, prepare, prepare,” Dr Knox added.

The best and worst places to retire:

1. Denmark (81.7)
2. Netherlands (80.5)
3. Australia (79.6)
4. Sweden (74.2)
5. Switzerland (74.2)
6. Finland (73)
7. Canada (70)
8. Chile (69.1)
9. UK (65)
10. Singapore (64.7)
11. Ireland (63.1)
12. Germany (62)
13. France (57.4)
14. US (56.3)
15. Poland (56.2)
16. South Africa (53.4)
17. Brazil (53.2)
18. Austria (52.2)
19. Mexico (52.1)
20. Italy (50.9)
21. Indonesia (48.2)
22. China (48)
23. Japan (44.1)
24. South Korea (43.8)
25. India (40.3)