U.S. retirement programs fall far short of the top in global rankings

When it comes to retirement systems, the U.S. gets a passing grade, but it’s hardly one to be proud of.

A new ranking of global retirement systems by human resources consulting firm Mercer gives the U.S. a C+, saying the system here “has some good features but also has major risks and/or shortcomings that should be addressed; without these improvements, its efficacy and/or long-term sustainability can be questioned.”

Other countries earning a C+ rating in the 2023 Mercer CFA Institute Global Pension Index included Kazakhstan, Croatia, Colombia, France and Spain.

“Retirement income systems around the world are under pressure like never before,” said Dr. David Knox, lead author of the report and an actuary and senior partner at Mercer.

Only four countries earned an “A” ranking—Iceland, Denmark, Israel and the Netherlands, which claimed the top spot. Those countries’ systems were described as “first-class and robust” with “good benefits … and a high level of integrity”. Argentina was cited as the worst of the 47 systems examined.

The U.S. scored 63 out of 100 possible points, coming in 22nd out of the 47 countries examined. The 2023 score was slightly lower than last year.

The study said the U.S. could increase its overall index score by raising the minimum pension for people with low incomes, improving vesting benefits for plan members, and introducing a requirement that part of the retirement benefit be taken as an income stream. It also advised reducing “pre-retirement leakage,” which can be achieved by making it more difficult for people to access retirement funds prematurely.

The report comes amid growing fear about Social Security, which trustees say could see its trust fund completely drained by 2033, resulting in a sudden 23% cut in monthly check premiums in 2034.

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