Global retirement systems compared for long-term security

Pension financing looks very different depending on where you live.

While the United States focuses greatly on voluntary 401 (K) -style saving plans, other countries rely on compulsory contributions or more traditional pensions to provide extensive scope and stable income.

Mercer CFA Institute Global Pension Index It takes into account these structural differences when sorting some of the world’s largest pension systems.

“We are doing this because we want to give a picture of the retirement view,” he said. He continued: “We are trying to look at what public systems are, what special systems are, and we look at how people will work in retirement among all of these.”

In 2024, the US Pension System received C+ from the Global Pension Index of the Mercer CFA Institute. 29 of the 48 global pension systems were ranked.

“This means that the system is designed, but it is a significant risk,” Mahoney said. “And if we do not clarify this risk, the system may be a bit dangerous.”

Countries around the world Raising Pension AgeIn addition to what you need Mandatory Contributions According to research conducted by the Organization for Economic Cooperation and Development, personal retirement savings. Experts argue that this can help to address modern problems like people living longer, and less workers pay the system.

“For the US system, what can change this note significantly, most importantly the scope.” He said. “401 (K) Our plans are volunteer.”

The Netherlands is often given the best score in the index. Mahoney says that one of the main features that emphasize the Dutch system is compulsory.

There are two wide models for their pension plans and they function very differently:

• A Defined Contribution Plan401 (K) or a bucket such as an individual pension account. Workers are adding how much to put, how to deposit, and in some cases employers add them to the bucket. The retirement balance depends on contributions and investment returns and leaves the ultimate consequence uncertain. In the United States, participation in these plans is volunteer and workers should typically choose to choose.

• A Defined Benefit Plan It looks like a faucet. Programs such as social security or employer -backed pensions in the United States promise a stable flow of revenue in retirement based on salaries and years of services. It is often necessary for the worker to finance the program through taxes or for employment. While employers or governments manage the risk of financing and investment, retirees typically receive predictable monthly payments for life.

Countries such as the Netherlands and Australia are different from The United States wants workers to pay for defined contribution plans.

In the Netherlands … There is a compulsory contribution, Mah Mahoney said. “You can’t give up as an employer or an employee. So making money [into defined contribution accounts] It is a real challenge in the United States because it is a volunteer system. If we are going to voluntarily, it is critical to facilitate starting a plan and participating in a plan. [the U.S.] To focus. “

Watch video To learn more about how the US pension system accumulates against countries such as the Netherlands and Australia.