Europe's retirement systems continue to dominate international comparisons, but a new global ranking exposes a widening gap between the generosity of benefits and the ability to pay for them in the decades ahead. The Marsh CFA Institute Global Pension Index, which assessed 55 retirement income systems covering roughly two-thirds of the world's population, placed the Netherlands at the top for the fourth year running with a score of 85.8 out of 100.
Denmark followed at 84.1 and Iceland at 84.0, making the three the only European systems in the index's highest grade. Singapore, Israel and Australia complete that top category. The ranking evaluates each system against three sub-indices: adequacy of retirement income, sustainability, and integrity of governance and safeguards.
A Dutch model built on funded pillars
The report describes the Dutch system as robust, combining a state pension that provides a reliable income floor with workplace schemes covering most employees. A large pool of invested assets underpins future payments, and strong regulation and member protections reinforce confidence. The Netherlands is nonetheless midway through a significant overhaul, shifting from defined-benefit promises tied to salary and years of service towards individual pension pots based on contributions and investment returns. Low interest rates made the old promises harder to fund, and funding rules sometimes delayed indexation. The transition is due to be completed by 2028.
Behind the leaders, Sweden, Finland and Norway occupy the next tier, followed by Switzerland, the UK, France, Ireland, Belgium, Germany, Portugal and Croatia. All received B+ or B grades, signalling sound structures with room for improvement. Spain, Poland, Italy and Austria fall into the C+ and C categories, alongside the United States and mainland China.
Generous benefits, fragile finances
The contrast is starkest in Spain, the EU's fourth-largest economy, which scored 83 for adequacy but only 33 for sustainability. France, the bloc's second-largest economy, recorded 85 for adequacy and just 49.3 for sustainability. Austria and Italy also rank among the European systems with the greatest long-term vulnerabilities. Turkey sits at the bottom of the overall European table, with the weakest scores for resources and funding.
The pressure stems from demographics. People are living longer while fertility rates decline, meaning fewer workers contribute to systems that pay today's retirees directly rather than investing for their own futures. Graham Pearce, global defined benefit segment leader at Marsh, told Euronews Business that "one of the key challenges for unfunded pension systems is that the number of retirees relative to workers is expected to increase significantly over the coming decades".
Central bankers have echoed the warning. Bundesbank president Joachim Nagel told Handelsblatt in May 2026 that linking Germany's retirement age to life expectancy after 2031 could help, calling the country's new private pension scheme due in early 2027 "an important step towards a stronger funded pension pillar" while cautioning it would not solve long-term sustainability alone. François Villeroy de Galhau, then governor of the Banque de France, told Le Figaro that financing public spending through deficits shifts costs to younger generations: "We are transferring the burden of debt and pensions to our children."
In September 2026, the European Commission urged supplementary saving alongside public pensions, warning of mounting pressure on public budgets and the risk that "too many people will face a sharp drop in income when they retire".
Adapting to longer working lives
Pearce suggested governments could raise additional revenue through higher taxes or social security contributions, or by enabling and incentivising those willing and able to work longer. The report argues that systems which clarify their objectives, strengthen funding and build in flexibility today can become the best performers of tomorrow. Expanding private pension coverage for employees and the self-employed, and improving governance, feature among its recommendations.
For European policymakers, the index offers both reassurance and a warning. The continent still sets the global benchmark for retirement income, but the fiscal arithmetic behind some of its largest economies is becoming harder to ignore. As the EU's own executive arm has noted, the choice is between adapting now or passing a heavier bill to the next generation.
