US Retirement Systems Rank Low Globally

An annual ranking of global retirement systems, carried out by Mercer and the CFA Institute, has revealed a concerning status for the United States. The US placed 29th out of 48 countries, receiving a C+ for adequacy and Cs for sustainability and integrity. This ranking reflects the ongoing challenges of an aging population and the financial viability of pension plans amid rising life expectancies and declining birth rates. Notably, the US retirement system has not achieved a grade higher than C+ since rankings began in 2009. In contrast, the Netherlands, Denmark, Iceland, and Israel earned A ratings, attributed to their superior pension funding mechanisms and higher retirement plan participation rates. The research outlined key issues for the US, such as the reliance on 401(k) plans, which have left many Americans unprepared for retirement, with expectations to outlive their savings by a decade. However, recent legislative efforts, like the Secure Act 2.0, are anticipated to enhance enrollment in retirement plans, hinting at potential improvements in future rankings. The lessons learned from countries like the Netherlands highlight the importance of mandatory retirement plans and union involvement, offering a pathway for reform within the US system.