The United States ranks 22nd out of 47 countries in the latest Mercer CFA Institute Global Pension Index.
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.
Mercer assigned a C+ grade to the United States, with an overall index value of 63 out of 100, which is only slightly higher than the 62.9 global average. Other C+ countries are Columbia, Croatia, France, Hong Kong SAR, Kazakhstan and the United Arab Emirates.
The Netherlands had the highest overall index value, 85, closely followed by Iceland, 83.5, and Denmark, 81.3.
Mercer’s C+ grade indicates that the United States’ system “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,” according to the report.
Broken down by subcategories, the US retirement system earned a B for adequacy, a C+ for sustainability and a C for integrity.
The responsibility for retirement savings in the United States rests mainly on the shoulders of individuals. Main sources of retirement income include Social Security and individual savings plans. Not every American has access to a 401(k) plan through an employer.
“Automatic enrollment in 401(k) plans has helped improve participation and boosted total retirement savings. But many Americans don’t have access to a 401(k) or choose not to put money into individual retirement accounts on their own,” the Wall Street Journal noted in commentary on the report.
Sixty-one percent of Americans recently surveyed by Allianz Life Insurance Co. of North America said they are afraid they might outlive their savings, as the McKnight’s Business Daily previously reported.
“Retirement savings coverage and institutional quality retirement vehicles remain out of reach for many Americans, creating a significant adequacy gap that needs to be addressed,” Katie Hockenmaier, partner and US defined contribution research director at Mercer, said in a statement, as reported by Yahoo Finance and other media outlets.
