German pension system ranked 25th best in the world

The latest Global Pension Index ranks Germany's pension system 25th globally. Pension systems in the Netherlands, Denmark and Iceland took the top spots.

Dutch have the best pension system worldwide

The Dutch pension system has been named the best in the world in 2026, with a score of 85,8 out of 100 in the 2026 Marsh CFA Institute Global Pension Index.

The annual study evaluates pension systems in three areas: adequacy (how well pensions support people in retirement); sustainability (their ability to keep paying benefits); and integrity (including governance and protections for members).

The ranking assessed 55 retirement income systems covering around 66 percent of the world's population. Denmark came second with 84,1 points, followed by Iceland with 84,0.

Singapore (82,0), Israel (81,9) and Australia (80,6) completed the six countries awarded an A grade, the highest classification. Australia entered the top category this year.

German pension system awarded grade B

The German pension system, meanwhile, scored 67,9 points overall and was awarded a grade B. This assessment considers all three pillars of the German pension system: statutory pensions, company pensions and private pensions.

“The German system provides a good minimum level of support for the poorest older individuals and a good net replacement rate across a range of income earners,” Marsh CFA concluded. “Further, the system has good regulation and governance along with good protection of and communication to members.”

While the German pension system performed relatively well by worldwide comparison, its statutory pension pillar, which is based on working-age people funding the pension payments of those currently in retirement, is in turmoil.

A declining birth rate and longer life expectancy are throwing the system out of balance. In 1992, 2,7 working-age people funded the pension payments of one retiree; in 2022, this burden fell on 2,0 working-age people; and by 2030, just 1,5 people will be responsible for paying one retiree's pension, according to figures from the Demografieportal.

Now, the CDU/CSU-SPD government is planning a 33-point pension reform. The plan includes tying retirement age to life expectancy; scrapping early retirement; investing pensions in capital markets; and obliging freelancers to pay into the statutory pension, among other things.

The government aims to pass the reform in the Bundestag in the coming weeks, so it can take effect on January 1, 2027.

Parts of this article originally featured on IamExpat the Netherlands.