The Dutch pension system is one of the best in the world but is performing less well in terms of future sustainability, according to the latest research by consultancy Mercer.

The Danish system tops the Mercer list of 25 pension systems, with the Netherlands in second place, just head of Australia, Sweden and Switzerland. Mercer produces its annual ranking based on 50 different criteria.

The Netherlands derives its high ranking from the way the pension system guarantees a liveable minimum income, news agency ANP says.

However, the Dutch score for future sustainability has gone down this year, Mercer said. In addition, the Netherlands can do more to make it attractive to save for a private pension and improve the protection for corporate pensions in case of bankruptcy.

The Netherlands has the toughest residency requirements for a state pension in Europe. To qualify, a person must have lived in the country for 50 years. A person who has worked in the Netherlands for 40 years is only entitled to 80% of the state pension.