Adequacy of U.S. retirement system drops in rankingReprints
The United States continued to slip in this year's Melbourne Mercer Global Pension Index, falling to 14th place among 25 retirement income systems ranked annually by Mercer L.L.C.
The U.S. retirement income system drew an overall index value of 56.3, placing it behind in descending order the retirement systems of Denmark, the Netherlands, Australia, Sweden, Switzerland, Finland, Canada, Chile, the United Kingdom, Singapore, Ireland, Germany and France, according to Mercer's report on the 2015 index results, released on Monday.
The overall index values in Mercer's rankings are a composite score based onthe company's evaluation of the adequacy, sustainability and integrity of each nation's retirement system.
“Concerns over the adequacy of the typical level of benefits provided under the U.S. system contribute to our lackluster score.” Emily Eaton, a senior consultant in Mercer's International Consulting Group, said in a statement accompanying the report. “The lack of employer-provided supplemental retirement benefits for many Americans, and the relatively low labor force participation rates of our older workers are also contributing factors to the U.S. ranking. There have been a series of regulatory changes to address these issues, but additional action could improve the adequacy and sustainability of the U.S. system.”
The U.S. retirement income system previously ranked 13th in 2014 and 11th in 2013.
Mercer's report offered several suggestions for improving the U.S. retirement system, including raising the minimum pension for low-income beneficiaries, adjusting the level of mandatory contributions to increase the net replacement for middle-income earners, reducing plan leakage by further limiting pre-retirement access to savings and introducing requirements that benefits must be collected at least in part as annuities.
“The recent efforts, at both the state and national level, to introduce auto-enrollment and/or state-run Individual Retirement Accounts, is an encouraging step in the right direction,” Ms. Eaton said in Mercer's statement. “However, these are the first, small steps in improving retirement adequacy for the majority of Americans.”