US retirement system down two places 08 October 2013Melbourne Reporter: Mark Dugdale
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The US has slipped to 11th in the Melbourne Mercer Global Pension Index.
The index, which evaluates retirement systems around the world, revealed that the US slipped from 9th in 2012 to 11th in 2013.
Its overall score fell slightly from 59 in 2012 to 58.2 in 2013, resulting in the American pension system being overtaken by Singapore and Germany.
“America’s score fell primarily due to a reduction in the net replacement rate, which is a measure of the percentage of an individual’s pre-retirement income paid in retirement. This represents an important measure of pension adequacy,” according to a statement.
To improve the US retirement system’s ranking, the minimum pension for low-income retirees must be raised, the level of mandatory contributions for median income earners should be adjusted, and the vesting benefits for all plan members needs to be improved.
The Melbourne Mercer Global Pension Index report added that pre-retirement leakage must be reduced by further limiting access to funds prior to retirement, and part of the retirement benefit should be taken as an income stream, not as a lump sum.
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