A new survey by Mercer gives the US retirement system a C+, putting it in the same grade tier as the United Arab Emirates, Kazakhstan, Hong Kong, Spain...
The US earned just a C+ for its retirement system in the 16th annual Mercer CFA Institute Global Pension Index, coming in 29th out of 48 countries. Since the index's inception in 2009, the US retirement system has never surpassed a C+.
This year, the index score for the US decreased to 60.4 from 63.0, putting it in the same grade tier as the United Arab Emirates, Kazakhstan, Hong Kong, Spain, Colombia, and Saudi Arabia, though each of those countries had a higher overall score. The United States earned a C+ for adequacy and a C each for the sustainability and integrity of its retirement system.
So, people need to either save more or work longer, or both, she said. And they are working longer, on average, by two years. But they are also projected to live 4.4 years longer too. The Mercer report offers some straightforward ways to buttress the US retirement system. Americans could also take some best practices from the No. 1 retirement system in the world — the Netherlands.
Only four countries — the Netherlands, Iceland, Denmark, and Israel — earned an A ranking for their retirement systems. , aims to boost participation in the US by requiring employers with new 401 and 403 plans to automatically enroll their workers, starting in 2025. The legislation also includes auto-escalation of contributions.
"The defined contribution system has really only focused on getting workers through to their point of retirement," Verdeyen said. "But it has fallen short in helping workers get all the way through retirement."
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