The Netherlands has once again claimed the top spot on the Mercer CFA Institute Global Pension Index 2025, marking its third consecutive year at number one.

Its score rose to 85.4, up from 84.8, ahead of Iceland (84.0) and Denmark (82.3), which also maintained their positions from last year.

The index cited the inclusion of a new question in the sustainability sub-index and updated economic growth data published by the International Monetary Fund (IMF) as the reason for a slight increase in the Dutch index value.

The Netherlands’ retirement income system, which is currently undergoing a transition from a defined benefit-type system to a defined contribution-style system, comprises a flat-rate public pension and quasi-mandatory earnings-related occupational pension schemes linked to industrial agreements.

“Although the Netherlands is currently undertaking significant pension reform, moving from a mostly collective benefit structure to a more individual DC approach, its system continues to receive the highest index score. The reason for this rating is that, notwithstanding these changes, the system may continue to provide very good benefits, supported by a strong asset base and very sound regulation,” the report stated.

Despite its high score, the Mercer CFA Institute report offered three areas of improvement for the county: reducing the level of household debt, introducing a carer’s pension credit for those caring for young children, and providing greater protection of members’ accrued benefits.

Overall, the Netherlands, Iceland and Denmark were the only European countries to be awarded an A grade in the index, where they were joined by Singapore and Israel.

In terms of other countries' placement in Europe, Sweden, Finland and Norway were awarded a B+, while Switzerland, the UK, France, Belgium, Croatia, Germany, Ireland and Portugal were given a B grade.

Lower down the index was Spain with a C+, and Poland, Italy, and Austria with a C grade. All C-grade systems are defined as having some good features but major risks and/or shortcomings that should be addressed.

The 2025 index examined 52 retirement income systems, covering 65 per cent of the global population. Three areas are analysed and have a unique weighting in determining the score: adequacy (40 per cent), sustainability (35 per cent) and integrity (25 per cent).

This year’s report also included a chapter on the role of private pension fund investments, which was described by Mercer partner, Tim Jenkins, as a “hot topic” impacting retirement income systems, in his foreword.

“Several governments have been openly discussing the ongoing role of private pension fund investments in the broader economy for the longer-term benefit of society,” he said.

Therefore, the report set out eight principles to help balance between pension fund participants’ interests and the national interest. The first is that the duty of any pension fund is to provide retirement income for members and their dependents.

Strong fiduciary standards and robust governance frameworks are also seen as essential to maintaining trust and accountability in how retirement assets are managed.

In addition, pension funds, the report argued, should consider the full range of investment opportunities that reflect their size and complexity, without undue government direction.

It stressed that while policymakers can encourage certain types of investment through incentives, they should avoid compelling pension funds to allocate a minimum share to specific asset classes, leaving the ultimate investment decision to the fund.

The guidance also called for greater collaboration between pension funds and governments to unlock large-scale investment, particularly in areas such as infrastructure, where scale and partnership can help manage risk.

Transparency was another theme: Funds should disclose their investment activities and performance openly, though without restrictive fee caps or performance tests that could hinder long-term strategies.

Finally, the principles highlighted the importance of macro-level awareness. As private pension assets grow to represent a significant share of GDP in many countries, governments must recognise the broader fiscal and social policy implications of their decisions.

This article originally appeared on our sister title, European Pensions.

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