Israel's pension system has been ranked fifth in the world in the 2026 Marsh CFA Institute Global Pension Index, earning an A grade and placing it among just six countries to receive the highest rating. The Netherlands topped the rankings for the fourth consecutive year, scoring 85.8 out of 100, as the latest report warned that aging populations are putting growing pressure on retirement systems worldwide.
Israel received an overall score of 81.9, up from 80.3 last year, placing it just behind Singapore, which scored 82.0, and ahead of Australia, which received 80.6. The annual index evaluates 55 pension systems covering approximately 66% of the world's population, examining the adequacy of retirement benefits, long-term financial sustainability and the integrity of pension management.
Israel's retirement system outperforms much of Europe in global ranking
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The Netherlands led the rankings, followed by Denmark with 84.1 points, Iceland with 84.0, Singapore with 82.0, Israel with 81.9 and Australia with 80.6. All six countries received an A grade, awarded to systems scoring above 80 points.
Five countries retained their top rating from last year: the Netherlands, Denmark, Iceland, Singapore and Israel. Australia joined the group for the first time in 2026.
According to the index, these systems provide relatively strong retirement benefits, demonstrate long-term financial resilience and maintain high standards of governance and protection for pension savers.
Notably, half of the six highest-rated pension systems are located outside Europe, reflecting a trend that has continued for several years.
Israel's performance improved in two of the index's three categories. Its adequacy score, which measures the retirement income people can expect to receive, rose from 75.6 to 79.4. Its integrity score, assessing regulation, governance and protections for savers, increased from 83.6 to 85.1.
However, Israel's sustainability score, measuring the system's capacity to continue meeting its obligations in the future, declined slightly from 83.2 to 82.4.
How are the world's pension systems ranked?
The Marsh CFA Institute Global Pension Index assesses retirement systems using three weighted categories.
Adequacy accounts for 40% of the overall score. It examines the basic retirement income provided by the system and the net replacement rate, meaning the proportion of a person's earnings before retirement that is replaced by pension income.
The calculations consider individuals earning between 50% and 150% of the average wage, alongside factors such as personal savings, government support, homeownership and the proportion of pension assets invested in growth-oriented holdings, including stocks and real estate.
Sustainability accounts for 35% of the overall score and measures whether a pension system is financially equipped to continue making payments over the long term. Factors include pension coverage, accumulated assets, contribution rates, demographics, public pension spending, government debt and economic growth.
Integrity makes up the remaining 25%. It evaluates regulatory standards, pension fund governance, protections for savers, communication with members and operating costs. This category focuses primarily on funded pension arrangements, particularly those in the private sector, rather than public retirement benefits.
Why does the Netherlands lead the world?
According to Euronews, the Dutch pension system stands out because it combines a reliable basic state pension with extensive workplace pension coverage and substantial investment assets intended to support future payments.
The system has maintained its leading position even as the Netherlands undertakes a major pension reform. The country is transitioning from arrangements promising predetermined retirement benefits toward more individualized pension accounts, where future payments depend on contributions and investment returns.
The transition is expected to be completed by 2028.
While the Netherlands continues to set the benchmark, the report highlights significant long-term weaknesses in several other European pension systems, including those of Austria, Spain and Italy.
Spain, for example, received a strong adequacy score of 83, indicating relatively generous retirement benefits, but scored just 33 for sustainability. The gap illustrates a central challenge facing pension policymakers: A system may provide substantial benefits to today's retirees without being equally well positioned to finance those benefits in the future.
Aging populations put retirement systems under pressure
Behind the rankings lies a demographic challenge shared by many developed economies. As life expectancy increases and birth rates decline, the number of retirees relative to working-age adults is expected to rise significantly over the coming decades.
In Canada, people aged 65 and older account for approximately 20% of the population, according to the country's national statistics agency.
Japan faces an even more pronounced challenge. Its working-age population declined by approximately 16%, from 87.3 million in 1995 to 73.7 million in 2024. Its old-age dependency ratio, which measures the number of older people relative to the working-age population, has more than doubled to 49%.
"Pension systems are under real strain," said Christine Mahoney, global head of the people and investments division at Marsh, which conducted the survey.
Governments are responding with a range of pension reforms aimed at maintaining financial stability as their populations age.
In Germany, Bundesbank President Joachim Nagel proposed in May linking the retirement age to life expectancy beginning in 2031, an approach intended to adjust the length of working lives as people live longer.
Britain slips to 14th place
The United Kingdom is among the countries facing challenges in the rankings. Its score of 71.6 places it 14th globally, down from 10th place in 2022.
Recommendations for strengthening Britain's pension system include reducing household debt, requiring retirees to convert retirement savings into regular pension income and expanding pension coverage, particularly among self-employed workers.
The findings highlight the increasingly difficult balance facing pension systems around the world: providing sufficient income for people already retired while ensuring that future generations can count on comparable financial security.
For Israel, the improved overall score and continued A rating represent a strong international assessment. But the slight decline in sustainability serves as a reminder that even highly rated pension systems must adapt to demographic and economic pressures if they are to maintain their performance over time.