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We shouldn't settle for a 'C' in retirement

For the second consecutive year, the Australian Centre for Financial Studies and human resources consulting firm Mercer have issued the Melbourne Mercer Global Pension Index, which compares retirement income systems of several different nations and rates them based on their "adequacy, sustainability, and integrity."  This year's index ranked the Netherlands #1 out of 14 countries surveyed, the second year that the nation has gotten the top ranking.  The United States ranked 10th, ahead of France, Germany, Japan, and China.

The index scored each nation on a scale of 1 to 100 and also assigned letter grades to ranges within that scale:

>80 = A = "A first-class and robust retirement income system that delivers good benefits, is sustainable and has a high level of integrity."

65-80 = B = "A system that has a sound structure, with many good features, but has some areas for improvement that differentiates it from an A-grade system."

50-65 = C = "A system that has some good features, but also has major risks and/or shortcomings that should be addressed. Without these improvements, its efficacy and/or long-term sustainability can be questioned."

35-50 = D = "A system that has some desirable features, but also has major weaknesses and/or omissions that need to be addressed. Without these improvements, its efficacy and sustainability are in doubt."

<35 = E = "A poor system that may be in the early stages of development or a non-existent system."

None of the 14 countries studied received an A or an E.  With its high-score of 78, the Netherlands was one of five nations to earn a B.  The United States, with a score of 57.3, was one of seven nations to receive a C.  Japan and China received Ds.  Mercer's press release provides a nice summary of the index.

It just so happens that, earlier this year, PRC co-hosted a conference on "The U.S. and the Netherlands: Converging Paths to Retirement Security."  The purpose of the conference was to highlight trends in retirement plan design and prospects for the future in both countries.  Panelists included PRC Executive Vice President Karen Friedman, Columbus School of Law Professor and PRC Board Member Regina Jefferson, Deputy Assistant Secretary of the Treasury J. Mark Iwry, Heritage Foundation Senior Fellow David John, and Dutch government officials, pension fund administrators and academics.  You can watch video of the conference on the Heritage Foundation website, while the government of the Netherlands offers this summary of the proceedings. You can also read a blog written by a conference attendee.

Check out the International section of our website for a summary of the Netherlands' innovative Collective Defined Contribution plans. Award-winning pension consultant, Keith Ambachtsheer, told Time magazine that this plan "is just what the U.S. needs." It is one of the plans that the conveners of Retirement USA reviewed to develop our 12 "Principles for a New Retirement System."

Imagine how much better our international ranking will be once Retirement USA principles are incorporated into a new private retirement income system!  

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