Data and Research

Actuaries Grade Retirement Systems and Reform Proposals

The American Academy of Actuaries evaluated how well public and private retirement systems—and proposals to reform them—meet the needs of participants, sponsors and other stakeholders.

By PLANADVISER staff editors@strategic-i.com | January 08, 2015

The American Academy of Actuaries, assisting public policymakers by providing actuarial advice on risk and financial security issues, has released grades for major retirement systems and public policy proposals. The association evaluated how well public and private retirement systems--and proposals to reform them--meet the needs of participants, sponsors and other stakeholders. Of the five systems and proposals that were graded, the academy bestowed its highest marks on retirement legislation proposed last year by then-U.S. Senator Tom Harkin and a Canadian government pension system.

The grades are part of an Academyinitiative, Retirement for the AGES, which sets a basis for evaluating retirement systems and reform proposals using four principles: alignment, governance, efficiency and sustainability (AGES). These principles determined the grades for each of the five systems.

"The overall grades provide a general assessment of whether a system is well designed to achieve its retirement income purpose," says Donald Fuerst, a senior pension fellow at the American Academy of Actuaries. "This assessment is based on factors such as whether the system is sustainable, supports good governance and decision-making, and avoids imposing undue burdens on stakeholders."

The grades were calculated by the Forward Thinking Task Force of the Academy’s Pension Practice Council:

  • USA Retirement Funds Act (S.1979, 113th Congress): A-
  • New Brunswick Shared Risk Model: A-
  • South Dakota Retirement System: B+
  • Current-system traditional defined benefit plan: C+
  • Current-system safe harbor defined contribution plan: C

A video highlighting the grades is available here. Assessments and analysis of the systems and proposals are available on the AGES website.