Judged on its demographics, adequacy of state provision, affordability and sustainability and private pension provision, the Nordic state was praised both in terms of adequacy and sustainability. Sweden finished joint second, up seven places on last year, and Finland dropped two places to finish 15th.

“With [Denmark’s] pension system reportedly being one of the very few systems worldwide in surplus, there is flexibility to contribute to future schemes and undertake reforms,” says Aon in its 18-page report. “The key characteristic is that the majority of the pension structure is fully funded and based on employer or employee contributions. Coverage of first and second pillar pensions is almost universal and the demographics are also strong.”

Importantly, it adds: “With the expansion of occupational schemes and compulsory contributions into the pension system, this should ensure net replacement rates rise in the future.”

The gross replacement rate for the average earner in Denmark is approximately 75 per cent – significantly above the EU average of 58.7 per cent. According to OECD statistics, Denmark boasts a replacement rate of 120 per cent for lower earners, meaning they can expect a higher income in retirement than in work. Average retirement age, meanwhile, is a respectable 61 years with a projected life expectancy of 81 years in 2040, although this is below the EU average. “While lower life expectancy is not good news generally, it is helpful for the pensions system,” says the consultancy.

Along with Italy, Portugal also slipped seven places in the table. Surprisingly it topped Aon’s table in 2005. “The latest statistics suggest that Portugal’s expenditure on state pensions will be over 20 per cent by 2050 – the second highest in Europe,” says Donald Duval, chief actuary at Aon. “Almost single-handedly, this change has caused Portugal’s fall in the rankings. On the positive side, retirement age is impressive at 63.1, and the proportion of older workers employed (55-64) stands at just over 50 per cent. However, a concern for Portugal is the old-age dependency ratio, which is projected to be just over 58 per cent by 2050 – ie there are expected to be 58 pensioners for every 100 workers – this is the fourth highest ratio in Europe.”

While many countries are expanding the penetration and size of their private sector pension savings, the firm adds: “Portugal’s position remains fairly stable, which means other countries have overtaken them. Since 2005 the total pension funds in the private sector have increased by less than 1 per cent of GDP, while certain countries’ savings are increasing rapidly and starting to overtake them.” CN

People on the move

• SEB has appointed Mats Galvenius as client executive for global institutional investors. He will work within the financial institutions group of the client relationship management unit and is responsible for current and new clients in the Nordic and North European markets. Mr Galvenius was previously an advisor to the Central Bank of Bahrain. Prior to that, he was advisor to the executive board of the European Central Bank and head of the general secretariat of Sveriges Riksbank (Central Bank of Sweden).

• Intervalor Finland has hired Jani Verho as key account manager for institutional clients. The firm represents international asset managers in the Nordic region, for example BankInvest, Scottish Widows and Lee Overlay. Mr Verho founded Kaarti Group in 2003, where he has worked as a partner and management director and offered asset management and tax planning solutions for institutional, corporate and private clients. Prior to that, he worked with foreign exchange trading in the US and with insurance brokerage and private wealth management in Finland.
  
• Northern Trust has made three appointments to its Nordic asset servicing and asset management business. Neill McVity and Jane Porter have been appointed senior relationship managers. Mr McVity joins from JPMorgan Worldwide Securities Services, where he was responsible for client management and new business development. Ms Porter has spent 13 years at Northern Trust, most recently as relationship manager at the firm’s Dublin office. Joanie Stringer has been appointed as Nordic sales manager and will be responsible for Nordic business development. Ms Stringer has been at the firm since 1998.
  
• PPM, the Swedish premium pension authority, is on the hunt for a new director general. Since the departure of Christina Lindenius, who left this spring to become managing director of Försäkringsförbundet, the Swedish Insurance Federation, PPM has been run by acting director general Johan Hellman. The government is, however, planning to change the structure of the authority and is looking into a merger of PPM and parts of the Social Insurance Agency.