<!-- Swiftype Variables -->

Defined Contribution

Happiness not rooted in retirement system strength, survey finds

The strength of retirement systems is not a reflection of plan participants' happiness, according to research by State Street Global Advisors published Wednesday.

Comparative rankings of retirement systems in the "Global Retirement Reality Report: The Happiness Formula" surveyed 9,500 respondents in U.S., Netherlands, Italy, Australia, Ireland, Sweden, Germany and the U.K. from Feb. 8 through April 3.

The research showed the Netherlands had one of the strongest retirement systems in the world with 180% retirement savings adequacy, followed by the U.S. and Australia, with 150% and 131% respectively.

But the Netherlands scored the second lowest in terms of the level of satisfaction by plan participants in retirement, according to the survey. That came despite the highest Melbourne Mercer Global Pension Index ranking at B-plus and the high level of coverage, participation and savings rates in the country.

Retirement access, participant coverage and opportunity was the lowest in U.S. at 41% and U.K. at 43%; it was highest in Australia at 76% and Germany at 70%.

However, DC participants based in the U.S. were confident and optimistic about their prospects in retirement, despite comparatively low levels of saving and a low index ranking, State Street said.

Twenty-seven percent of survey participants from U.S. said they were optimistic about their financial situation in retirement compared to 5% in Italy and 8% in the Netherlands, which scored the lowest. In addition, 53% of U.S. participants were happy in their retirement, even though U.S. scored weakest in the Melbourne Index at C, behind Germany, which scored C-plus.

State Street looked at the degree of recent changes and the expected magnitude of future changes in efforts to evaluate the level of trust in the system, taking into account the expected change in public spending on pensions as a percentage of gross domestic product by 2050, it said. Sweden topped the list of the eight countries with a score of 5. The U.S. and Australia followed with 3.3 and 3.2, respectively. The Netherlands, the U.K. and Germany had the lowest scores at 2.2.

"From these findings, we hope to have arrived at a blueprint for a successful retirement structure that combines effective practices with rewarding retirement experiences, gathered from around the world," Alistair Byrne, head of pensions and retirement strategy at SSGA, said in a news release.

"With this study, we are looking to identify the factors across a number of retirement systems that drive retirement happiness, which can become best practices that are applied as retirement systems shift to have an increased reliance on the defined contribution model," Mr. Byrne added.