The U.S. ranked ninth out of 18 countries for global pensionsystems this year, compared to its tenth place ranking the yearprior.

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According to the 1012 Melbourne Mercer Global Pension Index, theU.S. system requires further reform to withstand the pressures ofits aging population and help Americans secure sufficientretirement savings. The report has compared national private andpublic pension systems of major world economies since 2009.

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According to the index, many of the world’s retirement systemsare under significant stress and even the world’s most advancedretirement income systems require reform. The rankings are based onthe adequacy of the retirement income system to replacepre-retirement income, the sustainability of that system and theintegrity of that system.

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The U.S. could improve its ranking by raising the minimumpension for low-income retirees; adjusting the level of mandatorycontributions to defined contribution plans or social security toincrease the value of pension payments and bring them closer toreplacing pre-retirement income; improving the vesting of benefitsfor all members and maintaining the real value of benefits throughto retirement; reducing pre-retirement leakage by limiting theaccess to DC funds before retirement; and introducing a requirementthat part of the retirement benefit must be taken as an incomestream rather than a lump sum payment, according to the index.

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“Too few Americans are accumulating sufficient assets in theirdefined contribution 401(k) plans,” said Arthur Noonan, seniorconsultant in Mercer’s Retirement, Risk and Finance Group. “Notonly are the savings levels inadequate to provide for a sustainableretirement income, but regulations allow participants to borrowagainst their 401(k) assets, make withdrawals albeit withpenalties, or take a lump sum upon retirement which can easily bespent leaving them nothing for their later years.”

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Denmark received the top rating in this year’s evaluation andbecomes the first system to be classified as “A” grade. The othercountries among the top five are The Netherlands, Australia, Swedenand Switzerland. Canada was ranked sixth.

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Mercer is a global consulting leader in talent, health,retirement and investments.

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