United States of America | Melbourne Mercer Global Pension Index : Melbourne Mercer Global Pension Index


United States of America


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The United States’ retirement income system comprises a social security system with a progressive benefit formula based on lifetime earnings, adjusted to a current dollar basis, together with a means-tested top-up benefit; and voluntary private pensions, which may be occupational or personal.

The overall index value for the American system could be increased by:

  • 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
  • increasing the funding level of the social security program
  • raising the state pension age and the minimum access age to receive benefits from private pension plans
  • providing incentives to delay retirement and increase labour force participation at older ages
  • providing access to retirement plans on an institutional group basis for workers who don’t have access to an employer sponsored plan.

RRF19921_MMGPI Report_0616_Chart_WEB_1000x950_27_USA

Progressive Results:

Year

Overall

Adequacy

Sustainability

Integrity

2016 56.4 53.5  57.1  59.9
The American index value increased slightly from 56.3 in 2015 to 56.4 in 2016.
2015 56.3 55.1 54.4 61.1
The American index value fell from 57.9 in 2014 to 56.3 in 2015 primarily caused by increasing life expectancy and a reduced estimate of funding available from social security contributions.
2014  57.9  55.2  58.5  61.2
  The American index value fell slightly from 58.2 in 2013 to 57.9 in 2014 due to a number of small changes.
2013

58.2

56.6

57.8

61.2

The American index value fell from 59.0 in 2012 to 58.2 in 2013 primarily due to a reduction in the net replacement rate
2012

59.0

58.3

58.4

61.1

The American index value increased from 58.1 in 2011 to 59.0 in 2012 primarily due to an increase in pension coverage as the OECD information is now using survey data and an increased level of fund assets. This improvement was partly offset by a fall in the household saving rate and increased government debt.
2011

58.1

58.7

54.4

62.5

The American index value increased slightly from 57.3 in 2010 to 58.1 in 2011 due to an increase in the adequacy sub-index which was partly offset by a decline in the sustainability sub-index due to a fall in asset values and a rise in government debt.
2010

57.3

54.3

59.0

60.0

The American index value fell from 59.8 in 2009 to 57.3 in 2010 due to the effects of the global financial crisis; namely a decline in asset values in 2008 and a rise in government debt.
2009

59.8

49.2

69.4

63.4

Media 2015:
US Continues Decline in Ranking of Global Pension Index
Increase in life expectancy and reduced estimate in funding available for social security cited as primary reasons for drop
 US Continues Decline in Ranking of Global Pension Index

Media 2014:
Improving how the U.S. retires
Finnish pension system ranks among world’s best

 


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Link to Victorian Government (Victoria Online) the Mercer Australian website Australian Centre for Financial Studies