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

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.

Recommendations

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.