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How Does Social Security Rank Against Other Countries' Retirement Programs?

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What You Need to Know

  • Mercer and the CFA Institute released their latest grades on global pension systems.
  • The United States' Social Security system got a C+.
  • Almost universally, women received less in pensions than men; Japan had the largest gender gap.

In their paper, Pension Reform in Challenging Times, Mercer and the CFA Institute compared 43 government retirement systems (often call pensions outside the U.S.) and graded each country.

This year is especially important as the effects from the pandemic, the paper notes, “with reduced wage growth, historically low interest rates and reduced investment returns in many asset classes, are placing additional financial pressures on existing retirement income systems.”

Using its Mercer CFA Institute Global Pension Index, each country’s system is graded using three sub-indexes, measuring adequacy, sustainability and integrity. Mercer/CFA Institute acknowledges the various systems can be expansive and different.

David Knox, senior partner of Mercer, notes in the paper that the grade indicates:

  • What benefits are future retirees likely to receive?
  • Can the existing systems continue to deliver, notwithstanding the demographic and economic pressures?
  • Are the systems well-governed to encourage long-term community confidence?

This year’s report also takes into consideration for the first time gender differences in pension outcomes, and found that “the average female pension is lower, and in some situations, much lower than the average male pension.”

The report states that this gap can be due to three broad areas: employment, pension design and socio-cultural issues. Of 34 selected Organization for Economic Cooperation and Development countries, the most extreme gap was in Japan, followed by Mexico, Austria, the United Kingdom and Luxembourg. The United States had the seventh-largest gender gap.

The smallest gender gaps were in Estonia, Denmark, Slovak Republic, Iceland and the Czech Republic.

Grading Scale

The three sub-indexes that make up the overall index cover certain areas that have different weights:

Adequacy (40%): benefits, system design, savings, government support, homeownership, growth assets

Sustainability (35%): pension coverage, total assets, demography, public expenditure, government debt, economic growth

Integrity (25%): regulation, governance, protection, communication, operating costs

Here are the grades, index level and countries:

Grade A

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

Index Value >80

Countries: Iceland, Netherlands, Denmark

Grade B+

Index value: 75-80

Countries: Israel, Norway, Australia

Grade B

A system that has a sound structure, with many good features but some areas for improvement.

Index Value: 65-75

Countries: Finland, Sweden, UK, Singapore, Switzerland, Canada, Ireland, Germany, New Zealand, Chile

Grade C+

Index Value: 60-65

Countries: Belgium, Hong Kong SAR, United States, Uruguay, France

Grade 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.

Index Value: 50-60

Countries: UAE, Malaysia, Spain, Colombia, Saudi Arabia, Poland, China, Peru, Brazil, South Africa, Italy, Austria, Taiwan, Indonesia

Grade 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.

Index Value: 35-50

Countries: Japan, Mexico, South Korea, Turkey, India, Philippines, Argentina, Thailand

Breaking It Down

Averages across the index and sub-indexes were key. For example, the average of all countries in the general index was 61.0, whereas the United States received a 61.4 ranking.

However, an inside look at adequacy, where the average was 62.2, the United States scored 60.9; the sustainability average overall was 51.7, whereas the United States was 63.6; and for integrity, the average was 72.1, whereas the United States was 59.2.

Uruguay, which received the same grade as the United States, had a much higher Integrity ranking, 74.4, whereas its sustainability was much lower, 49.2.

Overall, it appears most countries did better in 2021 than in 2020. The United States’ score climbed to 61.4 in 2021 from 60.3 in 2020. Peru, New Zealand, South Korea, Indonesia, India and Argentina all dropped almost a point or more in total index ranking.


The study examines each country’s pension/Social Security issues, but overall it provides some recommendations, including:

  • Increase the coverage of employees (including non-standard workers) and self-employed in the private pension system, recognizing that many individuals will not save for the future without an element of compulsion or automatic enrollment.
  • Increase the state pension age and/or retirement age to reflect life expectancy.
  • Promote higher labor force participation at older ages, especially to increase savings and reduce length of retirement.
  • Encourage higher levels of private savings to reduce future dependence on public pensions, while also adjusting the expectations of many workers.
  • Introduce measures to reduce the gender pension gap.
  • Reduce leakage of retirement savings prior to retirement, especially through taxation.
  • Review indexation of these pensions to ensure the real value is maintained.


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