Ireland's pension system ranking has dropped one place to 14th in the 2022 Mercer CFA Institute Global Pension Index.
However, its overall index value has increased from 68.3 to 70, accounted for mainly by the comparative contribution from the state pension.
That helped the pension system to achieve an overall B ranking.
The MCGPI is a comprehensive study of 44 global pension systems, accounting for around two thirds of the world's population.
It benchmarks retirement income systems around the world, highlighting some shortcomings in each system, and suggests possible areas of reform.
Ireland’s overall ranking is primarily affected by its low sustainability rating, where it ranks 21st, compared to 14th for adequacy and 8th for integrity.
The impending introduction of a system of automatic pension enrolment is regarded as a positive on this front.
Yesterday, it was confirmed that the Government had approved plans for the introduction of an auto enrolment scheme which is on course to commence in early 2024.
"Removing this uncertainty and delivering the proposed system will improve both Ireland’s sustainability and adequacy ratings," the report states.
It noted that all other countries that received either an A or B+ ranking in the index have some form of mandatory pension system in place.
The report suggested that a factor affecting Ireland's sustainability rating was the government’s approach to the State Pension age.
This time last year, the Pensions Commission recommended a phased increase in the State Pension age to 68 years by 2039, to help address the cost impacts of an ageing population.
The Government recently announced that the State Pension age would remain at 66, but it announced some additional reforms to the State Pension system.
These included the introduction of rights for employees to remain in employment until their State Pension age, and a new system of flexible retirement, whereby employees can opt to defer payment of the State Pension up to age 70 in return for a higher pension.
"The Government also intends to address the long-term sustainability of the State Pension system through incremental increases in social insurance rates over time. The potential impact of this policy approach on the long-term sustainability of the system is not yet known," the report concluded.
Ireland's retirement income system comprises a flat-rate basic social security pension and a means-tested benefit for those without sufficient social insurance contributions.
Voluntary occupational pension schemes and personal pension schemes provide supplementary income in retirement and cover about two thirds of the working population.
Most occupational schemes in Ireland are now Defined Contribution, or DC, with the rate of transfer from more attractive Defined Benefit, or DB, schemes gathering pace in recent years.
In a DB pension, an individual receives a regular retirement income for their lifetime based on a salary and service-related formula determined in advance.
In a DC plan, the amount of any fixed income option available at retirement is more uncertain and will depend on the size of the fund at retirement.
Just over 500 DB plans remain in operation, of which around two thirds remain open to accrual of benefits.
"Ireland’s retirement income system continues to compare relatively well with our peers in a global context," John Mercer, CEO of Mercer Ireland said of this year's rankings
"While Ireland’s ratings for adequacy and integrity remain strong and improving, once again there are questions to be addressed in relation to the overall cost and sustainability of the Irish retirement savings system," he added.
Iceland topped the rankings of retirement income systems with the Netherlands and Denmark coming second and third.
Ireland remains ahead of some of the larger European countries such as Germany - at 17th place -, France - in 22nd position -, and Spain at 26.
