Despite coming improvements to public pension plans, Canada will still be about 10 percentage points behind the  average net replacement rate for the typical worker across Organisation for Economic Co-operation and Development countries.

Future OECD average replacement rates for the full-career, average-wage worker will reach 63 per cent, according to the organization’s annual report on pension systems around the world. Canada, the report noted, will reach 53 per cent as a result of the various pension reforms the country is undertaking, 

Read: A look at how different countries deal with discount rates in pension plans

The report placed Canada among the most active member countries in terms of pension reforms over the last two years, alongside the Czech Republic, Finland, Greece and Poland. Canada’s policy changes, it noted, include a plan to boost the CPP starting in 2019, maintaining the age of eligibility for old-age security at 65 and increasing the guaranteed income supplement for the lowest-income single seniors.

The decision to keep the retirement age at 65 will place Canada about one year behind the OECD average by 2065, the report noted.

The findings indicate Canada is one of eight OECD countries in which more than 40 per cent of working-age people have a voluntary pension plan. Contributing to such a plan could significantly raise replacement rates, it suggests.

Read: Canada not preparing for ‘greying of society’ given retirement age reversal: study

More broadly, the report calls for more reforms among OECD countries to help mitigate the impact of aging populations, increasing inequality among the elderly and the changing nature of work.

“The challenges of financial sustainability and pension adequacy mean that bold action from governments is still needed,” OECD secretary-general Angel Gurría said in a statement. “The world of work is changing fast and policy-makers must ensure that decisions made today take this into account and our pension and social protection systems do not leave anyone behind in retirement.”

The report suggested that with more people having to work longer, policy-makers will need to make postponing retirement rewarding enough while not overly punishing those who retire a few years early.

Read: More Canadians working past age 65: Statistics Canada

Copyright © 2017 Transcontinental Media G.P. Originally published on benefitscanada.com

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