Luxembourg saw a marginal decline in its standing in the 2024 Global Retirement Index, dropping one position to sixth place with an overall score of 78%, according to the Natixis Investment Managers’ latest report. This slight decrease, on Monday 9 September, followed a year of mixed performance for the country, with significant disparities between sub-indices. While Luxembourg demonstrated remarkable progress in healthcare, rising to first place in the health sub-index, it struggled in the material wellbeing category, where its ranking dropped to 17th due to a notable rise in the unemployment rate since 2023.

Health sub-index

The grand duchy’s health sector achieved its strongest performance yet, as Luxembourg climbed four percentage points to secure the top position in the health sub-index. This improvement was primarily driven by a rise in life expectancy and consistent performance across other health indicators, overtaking Norway, which had previously led in this area.

Global rankings

Switzerland topped the 2024 index with an overall score of 82%, overtaking Norway, which slipped to second place with 81%. The remainder of the top 10 remained largely unchanged, with Iceland (3rd), Ireland (4th) and Australia (7th) maintaining their positions from the previous year. Germany and Denmark both rose by one position, to 8th and 9th respectively. The Netherlands overtook Luxembourg, moving into 5th place, while New Zealand experienced the largest drop, falling two spots to 10th place.

Commenting on the results, Sebastien Sallée, head of Belux at Natixis Investment Managers, noted in a press statement that while the index showed steady overall performance, significant room for improvement remained. He highlighted Switzerland’s consistent presence in the top ten across all four sub-indices, marking the second consecutive year that the country had achieved this distinction. Sallée pointed out that although inflation appeared to be falling globally, high levels of public debt, elevated interest rates and tax pressures continued to weigh on financial stability for retirees.

Retirement planning

Sallée further remarked that the changes in the financial landscape had led to a shift in retirement planning, with more individuals taking control of their retirement security. He emphasised the importance of financial services providers adapting to these shifts by offering solutions tailored to the evolving retirement needs of individuals, including increased access to both public and private markets.

Investor concerns

Natixis’ global survey of individual investors found that the percentage of people who believed they must fund their retirement independently, rather than relying on public or private pensions, increased from 67% in 2015 to 81% in 2023. Additionally, 45% of respondents in 2023 felt that achieving retirement security would require a “miracle,” up from 40% in 2021. Among those surveyed, 19% said that even with $1m in savings, they would not be able to afford retirement, including 18% of those who had already accumulated this amount.

The report highlighted four key risks facing retirees today. First, interest rates, which had risen significantly since the global financial crisis, posed new challenges. Over $6trn was currently invested in money market funds and similar instruments and retirees may face difficulties in securing sustainable long-term income in this environment. Inflation also remained a critical concern, with 83% of investors stating that recent events had reminded them of the serious threat inflation posed to retirement security. The report also noted that public debt in OECD countries had more than doubled since the early 2000s, with growing concerns that individuals may be asked to shoulder the burden of repaying this debt through cuts to government retirement benefits. Finally, the report warned that a secure retirement required realistic expectations and consistent planning, areas where many investors still fell short.

Retirement security

Sallée concluded by reflecting on the broad financial challenges retirees now face. He cited the transition from defined benefit to defined contribution pensions, rising public debt and the long-term economic impact of shocks such as the covid-19 pandemic and geopolitical tensions, which had all contributed to heightened uncertainty. He reiterated the need for financial services providers to be more proactive in helping individuals prepare for retirement by offering tailored support and solutions designed to meet the challenges of the current economic climate.