Econintersect: Last week results a survey were released by Mercer, the global Human Resources and related financial advisory subsidiary of Marsh & McLennan Companies, and the Australian Centre for Financial studies. The survey ranked the retirement systems of 16 countries that include 50% of the world’s population. The top ranked pension indexes belong to Netherlands and Australia. The lowest rankings go the India, Japan and China. The U.S. is ranked tenth.The ranking system considers private group pensions, private individual retirement savings and public pension funds, such as Social Security in the U.S. From Advisor One:
Each country was given a score between zero and 100. The overall index value represents the weighted average of the three sub-indices–adequacy, sustainability and integrity.
As for the dismal appearance of the Unites States in the ranking’s bottom half, the authors suggest methods for improving the system, which include:
- Raising the minimum pension for low-income pensioners;
- Adjusting the level of mandatory contributions to increase the net replacement for median income earners;
- Improving the vesting of benefits for all plan members and maintaining the real value of retained benefits through to retirement;
- Reducing pre-retirement leakage by further limiting the access to funds before retirement;
- Introducing a requirement that part of the retirement benefit must be taken as an income stream.
Click through to Advisor One to read detailed summaries for the top ten countries.
Sources: Melbourne Mercer Global Pension Index Report 2011 and Advisor One
