The U.S. pension system ranked ninth among 18 nations, up from the 10th spot a year ago, according to an annual Mercer report that ranks countries with major retirement systems.
“The U.S. has held its own in the past year,” said Charles Salmans, a spokesman for Mercer, in an interview. “While the U.S. pension system continues to be challenged, private pension plan coverage has improved” according to the Organization for Economic Co-operation and Development.
The U.S. scored 59 out of 100 in the Melbourne Mercer Global Pension Index, which rates nations on about 40 indicators that measure adequacy, sustainability and integrity. The report identifies countries that received an overall index of 50 to 60 as “a system that has some good features, but also has major risks and/or shortcomings that should be addressed.”
Denmark had the world’s best pension system with a score of 82.9, and was considered “a first-class and robust retirement system.” Netherlands had the second-best retirement system with 78.9, followed by Australia with 75.7.
While the U.S. moved up in the rankings from last year, the Mercer report warns that the sustainability of the pension system is at risk because of rising government debt and falling household savings.
“Many of the world’s retirement systems are under significant stress and even the world’s most advanced retirement income systems require reform,” according to an analysis of the ranking by Mercer.
The U.S. score could be improved by raising the minimum pension for low-income retirees, increasing the level of mandatory contributions and limiting the access to DC funds before retirement, according to the report.
The Melbourne Mercer Global Pension Index is produced by Mercer for the Australian Centre for Financial Studies, a non-profit research consortium of several academic institutions.