The Melbourne Mercer Global Pension Index has given Canada’s retirement savings and income system another B rating this year. The positive impact of increasing the Old Age Security (OAS) retirement age was offset by the continued reduction in pension plan coverage for employees in the private sector. Canada’s overall index value was 69.2.
Top marks for Denmark
Denmark received an overall index value of 82.9 and received an A classification, the first pension system to receive this grade. This moves the Netherlands from the top position of the rankings. Denmark’s unique A-grade ranking has been awarded in recognition of the country’s well-funded pension system, its high level of assets and contributions, the provision of adequate benefits and a private pension system with well-developed regulations.
Mercer senior partner and author of the report, Dr. David Knox, said, “Many of the world’s retirement systems are under increasing stress with an aging population, low investment returns and, in some cases, significant government debt. Reform is needed to ensure that adequate benefits are provided over the long term in a sustainable manner.
“This report highlights several reforms relevant to each country that will provide improved results for individuals, households and the community.”
Scott Clausen, a partner in Mercer’s retirement risk and finance business in Toronto, says, “Canada’s retirement system continues to be one of the strongest systems in the world with its multi-pillar approach of providing a combination of universal pensions, income-tested pensions, employer pensions and individual RRSPs.” But he says there is room for improvements and suggests the following:
- increase the level of retirement savings for middle-income households;
- improve access for smaller employers to provide efficient retirement products for their employees—the proposed pooled registered pension plan may be such a product if investment fees can be kept low; and
- encourage older workers to retire later as life expectancies continue to increase—the recent changes to OAS and the Canada/Quebec Pension Plan may be a first step.