Looks like our country an average student when it comes to retirement planning.

The U.S. pension system earned a “C” grade on the Melbourne Mercer Global Pension Index. It joins Mexico, Brazil, France Germany and Poland in the “average” category. Denmark was the only country on the list that received an “A” grade for having a first class and robust retirement income system that delivers good benefits, is sustainable and has a high level of integrity.

It’s hard to compare pension systems in different countries since all are organized differently and every country has to contend with its own economic, social, cultural, political and historical circumstances, but the Melbourne Mercer Global Pension Index measures each country’s system against more than 50 questions it believes should apply to retirement systems everywhere.

“Many of the challenges relating to aging populations are similar, irrespective of each country’s social, political, historical or economic influences,” the study found. “Many of the desirable policy reforms to alleviate these challenges are also similar and relate to pension ages, the level of funding for retirement, encouraging people to work longer and some benefit design issues that can reduce leakage of benefits before retirement.”

The study’s authors point out early that there’s “no perfect system that can be applied universally around the world. However, there are certain features and characteristics of retirement income systems that are likely to lead to improved benefits for individuals and households, an increased likelihood of future sustainability of the system, and a greater level of confidence and trust within the community.”

The research focused on adequacy, sustainability and integrity to measure each country’s retirement income system against each other.

Since 2009, the first year of the study, there have been several improvements. Some governments have increased pension ages over the longer term and the labor force participation rate of 55- to 64-year-olds in most countries has steadily increased.

Australia and Netherlands earned a “B+” while Canada, Chile, United Kingdom, Sweden, Switzerland and Singapore earned “B” grades.

None of the countries in this study earned an “E” grade, which is the lowest possible score and reflects a poor retirement system that could be in the early stages of development or the country doesn’t have a retirement system. China, Japan, South Korea, India and Indonesia all earned a “D” which meant their systems have some desirable features but have major weaknesses or omissions that need to be addressed.

The study said each country’s system could be improved by increasing the retirement age to reflect a longer life expectancy to reduce the costs of publicly financed pension benefits; by promoting higher labor force participation at older ages, which increases available savings; by encouraging or requiring higher levels of private saving; by increasing the coverage of employees or self-employed in the private pension system; and by reducing leakage from the retirement savings system before retirement.

Instant Insights /

U.S. retirement system is just average

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