European nations secured the top three retirement system rankings in the Mercer and the CFA Institute annual Global Pension Index, with Netherlands winning first, Iceland ranking second and Denmark placing third.
The MCGPI benchmarks retirement income systems around the world, highlighting some shortcomings in each system, and suggests possible areas of reform that would provide more adequate and sustainable retirement benefits. This year, the index compared 47 global retirement income systems that cover 64% of the world’s population.
Israel ranked fourth with a total index value of 80.8 and an overall A grade, followed by Australia with a B+ and 77.3 index, Finland (B+ and 76.6), Singapore (B+ and 76.3), and Norway (B+ and 74.4).
The U.S. finished in 22nd place, with an overall grade of C+ and a 68.9 index, trailing behind countries and regions including Switzerland (B and 72.0), Uruguay (B and 68.9), and Hong Kong (C+ and 64.0).
The United States, whose retirement system largely places responsibility on participants for contributing to their long-term savings, could increase its ranking by raising the minimum pension for low-income pensioners, improving retirement plan vesting, limiting access to funds before retirement, and requiring that portions of retirement benefits be taken as income streams, say Mercer and the CFA Institute.
Among those in last place included Thailand (D and 46.4), Turkey (D and 46.3), India (D and 45.9), and the Philippines (D and 45.2), with Argentina (D and 42.3) bottoming the list due to its restricted public pension system and voluntary retirement plans.
Other countries in the index were ranked for the first time, including Botswana (C and 54.5), Croatia (C+ and 60.3), and Kazakhstan (C+ and 64.9).
The Global Pension Index uses the weighted average of the sub-indices of adequacy, sustainability, and integrity to measure retirement systems around the world.
For each sub-index, the systems with the highest values were Portugal for adequacy (86.7), Iceland for sustainability (83.8), and Finland for integrity (90.9). The systems with the lowest values across the sub-indices were South Korea for adequacy (39.0), Austria for sustainability (22.6), and the Philippines for integrity (25.7).
The full ranking of the Mercer and CFA Institute Global Pension Index can be found here.
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Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.