Canada is facing a $13.4-trillion retirement savings deficit by 2050, up from a $2.7-trillion shortfall in 2015, according to a new report by Mercer.

Among all eight countries included in the report — Australia, Britain, Canada, China, India, Japan, the Netherlands and the United States — the current gap between aggregate savings and expected annual retirement income needs stands at US$70 trillion. By 2050, the report projects the combined shortfall will rise to US$400 trillion.

Read: Canada slides down a spot in global retirement security ranking

The report notes there are several factors contributing to the deficit in Canada, including a trend towards self-employment, which reduces access to employer-sponsored savings plans, and fewer private sector employees covered by defined benefit pensions.

Louis Gagnon, senior partner and chief executive officer of Mercer Canada, believes the issue of financial security isn’t just about retirement but is instead about broader financial issues people encounter at various life stages that ultimately undermine productivity.

“We do not believe this is merely a retirement savings matter. The retirement savings gap is part of the significant financial security issue that is chipping away at productivity and putting individuals into periods of financial instability,” said Gagnon.

The main challenges facing all eight countries include: longer lives, combined with lower birth rates; lack of easy access to pensions and savings products; people not being ready for greater financial responsibility in retirement; lack of trust in financial markets and products; an environment of low growth; and gender imbalances in long-term savings.

Read: Bridging the pension gender gap

“Success will require bold and immediate action. Given the current size of the retirement gap, all relevant stakeholders need to act now,” said Jean-Philippe Provost, senior partner and leader of Mercer’s wealth business in Canada.

“Public and private sector individuals need to work together to create a cultural revolution that engages individuals in saving for the long term, shifting the concept of saving from a financial services experience into a consumer one. People need to understand what good looks like when it comes to savings products, advice and decisions. But they also need to have the confidence to act on their knowledge to achieve the best outcomes.”

Read: 2016 CAP Member Survey: Deconstructing how different employees view their retirement

Copyright © 2018 Transcontinental Media G.P. Originally published on benefitscanada.com

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