By Emile Hallez
Source: Investment News
The United States ranks 29th out of 48 countries Mercer and the CFA Institute evaluated for their global pension index published this week.
That equates to a C-plus letter grade, with a peer group of the United Arab Emirates, Kazakhstan, Hong Kong, Spain, Colombia, and Saudi Arabia. All of those countries have systems with “some good features but also ha[ving] major risks and/or shortcomings that should be addressed,” the report stated. “Without these improvements, its efficacy and/or long-term sustainability can be questioned.”
In the case of the US, the system could be improved by raising minimum retirement benefits for low-income retirees as well as by “improving the vesting of benefits for all plan members and maintaining the real value of retained benefits through to retirement,” the report stated.
But there are other steps that would likely be less politically popular, such as reducing access to plan assets before retirement and requiring that some benefits be taken as “an income stream,” such as an annuity.