Much has been made about the decline of the Great American Pension, yet all is not lost on the retirement front.

For example, America’s pension system is better than Bulgaria’s. And while that might sound snarky, Bulgaria’s pension system ranks ninth in the world, according to the "Allianz Pension Report 2020" that was released today. The U.S., meanwhile, ranked fifth out of 70 countries.

The report from Allianz Group, a global insurer and asset manager, posits the notion that the demographic divide between old and young makes pension policy a political minefield. In the report’s forward, Allianz chief economist Ludovic Subran said his company hopes its analyses and rankings of pension systems around the world will help spur public debate about the right policy mix and the roles of public and private pension providers.

“If the looming pension crisis cannot be defused, the social fabric might become even more frayed and a further rise in populism, with all its negative consequences for economic and individual freedom, seems inevitable,” he wrote.

The report utilized the Allianz Pension Index, a proprietary methodology that parses pension systems for their sustainability and adequacy based on three sub-indices and a total of 30 parameters. Each parameter is rated on a scale of one (best) to seven (worst). The report incorporates data as of March 2020, and entails both public and private pensions.

The first sub-index looks at demographic change and public finances. For example, Portugal and Italy do poorly here due to their older populations and high debt levels, while some African and Asian nations scored well thanks to their young populations and low public deficits and debts.

The second sub-index delves into sustainability in terms of how pensions react to demographic change. Indonesia and Bulgaria earn high marks because they’ve boosted their retirement ages and have disincentivized early retirement. But Saudi Arabia, Sri Lanka and Malaysia fare poorly in large part because their respective retirement ages are 60.

Within the third sub-index, which rates pension systems on their ability to provide an adequate living standard in old age, highly ranked countries either have generous state pensions—such as Austria and Italy—or the opportunity for its older citizens to tap into other pension pillars such as occupational and/or personal pensions. New Zealand and the Netherlands rank high in the latter category. Nigeria and Laos rank at the bottom of this sub-index because, Allianz said, they don’t have a reliable public pension system at all.

Allianz crunched the numbers and put Sweden atop the leaderboard with an aggregate score of 2.91. The rest of the top five are Belgium (2.92), Denmark (2.96), New Zealand (3.00) and the U.S. (3.04).

The sub-index breakdown shows the U.S. ranks 11th in demographic change and public finances, 14th in sustainability and 16th in adequacy.

But as noted in a press release announcing the study, Allianz said a big challenge for the U.S. retirement system isn’t the pension system itself but that too many people are behind the eight ball before they reach retirement, and that’s a condition that can’t be fixed by the pension system.

In ascending order, the bottom five nations—with scores ranging from 5.45 to 4.78—are Lebanon, United Arab Emirates, Sri Lanka, Saudi Arabia and Qatar.

In its report, Allianz asked the million-dollar question: What would a perfect pension system look like?

It concludes there’s no one-size-fits-all solution, but some components could make a pension system more “demography proof.” Among them:

• All people in retirement age, and at least 75% of the working-age population, would be covered by the pension system.

• The retirement age would be adjusted to changes in life expectancy to ensure the ratio of working life to time spent in retirement remains at least stable in the long-run.

• The benefit level provided by public pensions (e.g., Social Security in the U.S.) would range between at least 40% and 60% of the average gross wage. Benefit levels would take into account further developments in life expectancy.

• Make available the necessary preconditions—such as access to financial services—to establish and grow financial assets. In all top ten countries in its ranking, Allianz said, 99% of the population ages 15 and older had an account at a financial institution.