Mercer and the CFA Institute presented the 17th edition of the Global Index of Pensions 2025. The study evaluated 52 pension systems worldwide, based on three areas with their respective weights: adequacy (which evaluates the benefits offered and the design structure), sustainability (which measures the probability that the system will continue to deliver benefits in the future) and integrity (which considers governance, regulation and trust in the system).
In this edition, Peru ranked 41st, with a C grade and a score of 55.3, on a scale from 0 to 100. By subindexes, it obtained 55.4 in adequacy, 48.5 in sustainability and 64.8 in integrity.
What do these results mean? That, although the country shows a slight recovery after having fallen from its historical maximum of 62.4 points in 2018 to 54.7 in 2024, it still faces great challenges to build a sustainable system that guarantees a dignified retirement.
Sustainability deficiencies
Of the three subindices, Peru obtained the lowest score in sustainability (48.5 points), reflecting its greatest weakness. Such a scale suggests a high probability that the system will not be able to provide adequate benefits to future generations or will require a substantial increase in contributions, a reduction in benefits, or both.
This situation would be associated, in part, with the persistence of extraordinary withdrawals from pension funds. David Cuervo, general director of Mercer Peru, said that the Peruvian pension system is becoming increasingly unsustainable with early withdrawals of funds, while other countries focus on optimizing their investments and strengthening benefits for members.
“In Peru we continue to allow early access to funds through extraordinary withdrawals. This may represent temporary economic relief, but it also implies a significant risk in the future, which translates into more Peruvians without protection for their retirement,” Cuervo said.
Adaptation in the middle of the table
Regarding the adequacy subindex, this presented an average score (55.4 points), which would imply that the system meets some basic criteria for the provision of retirement income, but would have deficiencies in the design or the level of benefits. Hence, the country “still faces great challenges to build a sustainable system that guarantees a dignified retirement.”
High integrity
In the area of integrity, the evaluation rates the Peruvian system with a relatively high score (64.8), which suggests that governance and regulation standards exist in the system, but they are not sufficiently robust or cost-efficient.
According to the Mercer executive, systems with fewer restrictions tend to perform better in the index. Which in his opinion demonstrates that governments should focus on creating attractive and transparent investment options, promoting strong governance and promoting collaboration with the private sector to strengthen pensions and economic growth.
The combination of the three subindices gives Peru a C rating, which corresponds to systems with average adequacy, questionable integrity and deficiencies that may compromise their long-term sustainability, which requires significant improvements.
Five principles
In that sense, to move towards a more solid scheme, Mercer and the CFA Institute propose five key principles for governments to balance the interests of members with long-term national objectives:
- A pillar structure with long-term sustainable limits.
- Parameters adjusted to the reality of the country, including retirement age and contribution percentages, which in turn increase the pension assets of the system.
- Cost-efficient structures in both the accumulation and decumulation stages, which protect the interests of members and their beneficiaries in the long term.
- A flexible investment regime that prioritizes the benefit of members over the national interest of promoting the local capital market, ensuring diversification and avoiding excessive dependence on a specific asset class, issuer or region.
- Labor reforms aimed at increasing the participation rate in the labor force, especially at older ages, in line with the increase in life expectancy.
The study indicated that these actions are essential to strengthen the Peruvian pension system, improve its position in international indices and, above all, ensure a dignified and sustainable retirement for future generations.
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