US Social Security System Being Benchmarked

Pension coverThe US Social Security System may be getting just what it needs…to be compared! Just because the United States has the largest number of self-funded retirement plans, the largest amount of aggregated assets within a social pension system, and the largest number of plan participants does not automatically mean that we are the best at ‘Doing the Right Things’. The number of participants is only one measure – but against what?

Our social security system is known around the world for being successful – to some extent. However, there are areas where other countries actually measure and even exceed what we deliver within the US social security system.

For example, other countries deliver a much greater income replacement rate to their retirees than the US Social Security system. And the differences outlined by the Organization for Economic Co-operation and Development (OECD) don’t just stop there:

  • Future net replacement rates of compulsory pension schemes for medium-wage workers with full careers are equal to 90% or more, in Hungary, Portugal and Turkey for those retiring at normal retirement age;
  • Denmark, Ireland, Italy and Lithuania have expanded early retirement options;
  • Men who retired in Turkey in 2020 had the lowest normal retirement age at 52;
  • Brazil has introduced minimum retirement ages and adjusted premiums.

Another way to compare plans is to determine how lower-paid citizens benefit from the social system compared to higher-paid citizens.

Australia is known for giving its citizens incentives to supplement their social pension system.

The question boils down to, “Is the country using the social system wisely?” Is the country really trying to help and assist the citizens, or are they just ‘cutting a check’? There is a big difference in intention and results!

This week in 401k Real Talk – at about 4 minutes and 30 seconds in – Josh Cohen of PIGM’s DC Solutions article is discussed by Fred Barstein. For those interested in what makes a great social pension system – visit 401k Real talk. For those interested in a comparison of the various pension systems from around the world – visit: The Organization for Economic Co-operation and Development (OECD) (Pensions).

Article contributed by Steff Chalk – Mr. Chalk has previously worked as an investment fiduciary for the Chilean pension system, as an advisor to the Turkish self-funded pension system, and as a USAID advisor to the Ministry of Finance of Kuwait and the Arab African International Bank.

Steff Chalk

Steff Chalk

Steff C. Chalk is Executive Director of The Retirement Advisor University, a partnership with UCLA Anderson School of Management Executive Education. Steff is also Executive Director of The Plan Sponsor University and is the current faculty of The Retirement Adviser University.

Steff Chalk

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