A man walks in front of a branch of the Pension Fund administrator in Santiago, Chile, in January. Parliament approved pension reform promoted by Gabriel Boric’s government. File Photo by Elvis Gonzalez
Chile ranked eighth in the Global Pension Index 2025, moving up one spot and standing out among the 10 countries with the world’s most robust retirement income systems.
The study, conducted by Mercer and the CFA Institute, evaluated pension systems in 52 countries based on three factors: adequacy, sustainability and integrity. The Netherlands ranked first with an A grade, followed by Iceland, Denmark, Singapore and Israel.
Chile was the only Latin American country to make the Top 10. It moved from a B to a B+ rating after raising its overall score from 74.9 in 2024 to 76.6 in this year’s assessment.
In the ranking, Uruguay ranked 14th, Canada 16th, Mexico 19th and Colombia 29th, while the United States ranked 30th.
“Chile has stood out for the financial strength of its pension model, which is based on a defined-contribution system with individual capitalization accounts. This differentiates it from many traditional pay-as-you-go or defined-benefit systems,” Joaquín Ramírez, the head of Wealth at Mercer Chile, told UPI.
He added that the system has a robust regulatory framework, clear governance and a high level of transparency that protects members’ savings and builds trust.
“The system clearly defines the roles and responsibilities of regulators, fund managers and members, which helps build trust and protect the rights of contributors,” Ramírez said.
He noted that strong investment transparency and regular reporting explain the high integrity score, “which is the best among the three pillars. However, it remains essential to keep working on education and communication to rebuild members’ confidence in the system as a whole.”
Capital markets specialist José Luis Ruiz, a professor in the business administration department at the University of Chile, told UPI that Chile has steadily improved its ranking over the past four years, after dropping to 16th place in 2022 due to the negative impact of the mass pension withdrawals authorized by Congress during the COVID-19 pandemic.
“The improvement now is undoubtedly due to better pension quality following the introduction of the Universal Guaranteed Pension, funded with public resources,” he said. The PGU was created in 2022 to provide monthly financial support to people over 65 who face economic vulnerability or lack sufficient retirement savings.
“The combination of financial strength and high integrity has allowed Chile to maintain a strong position in the global ranking, remaining the only Latin American country in the Top 10,” Ramírez said.
He said Chile rose one position due to an improvement in the sustainability pillar, “driven by the [International Monetary Fund’s] updated economic indicators as of April 2025, which reflect stronger expected growth. The other pillars, adequacy and integrity, remained largely unchanged.”
The ranking did not take into account the pension reform Chile enacted earlier this year for its system, in place since 1981, which required workers to contribute 10% of their monthly salary. Among the changes introduced were a 1.5% increase in employer contributions and a rise in the Universal Guaranteed Pension to $262 a month.
“It wasn’t reflected in the 2025 index because the main changes — such as higher contributions and benefits — began taking effect in September and will have a greater impact starting in 2026. The reform is expected to have a positive effect in future editions,” he said.
For that reason, “it’s likely that Chile will climb higher in the ranking as the effects of the reform take hold. We must not lose sight of the fact that, despite improvements in several areas, the increase in the Universal Guaranteed Pension will have a negative effect on the index because of its higher fiscal cost, which will affect sustainability, although to a lesser extent than the positive impact.”
However, he noted that over the system’s more than 40 years, individual capitalization has remained dominant and, although the reform brings greater state involvement in benefits and employer contributions, “the system continues to be funded largely by workers’ own savings.”
Despite its strengths, areas for improvement remain, the analyst warned. “Chile faces demographic challenges such as low birth rates and high life expectancy, which put pressure on the system’s sustainability.”
There is also a call to increase workforce participation among older adults and to raise the minimum retirement age as key measures to balance finances and ensure sufficient contributions during longer retirement periods.
