Canada’s retirement income system scored ninth place for the second year in a row, securing a “B” rating in spite of uncertainty in the markets as a result of the coronavirus pandemic.
The annual global pension index by Mercer and the CFA Institute noted the pandemic’s effects on the global pension fund markets aren’t only widespread but long term, impacting industries, interest rates, investment returns and community confidence.
“In the wake of the financial pressures brought on by the pandemic, supporting financial security in retirement and providing guidance to modernize the pension landscape becomes an even greater challenge,” said Michael Thom, managing director of CFA Societies Canada, in a press release.
Read: Canada’s retirement system ranked 9th in the world
Indeed, the long-term ramifications of the pandemic will result in changes to the ways in which governments provide adequate and sustainable retirement systems. As the level of government debt increases in many countries, it will restrict their ability to support older populations, including in the provision of pensions, said the report.
“Given the widespread effects of COVID-19, retirement planning is more important now than ever before,” said Teresa Palandra, partner and wealth business leader at Mercer Canada, in the release. “Our workforce is changing and dealing with unexpected challenges and retirement planning must continue to evolve to help Canadians manage their future finances in the face of significant disruption.”
The pandemic has also increased gender inequality in pension provision. As the amount of government debt as a percentage of gross domestic product increased significantly, savings gaps had a disproportionate impact on certain groups, such as women, she noted.
Read: Gender inequality in the workplace, retirement addressed in budget
Although decreased economic growth (negative 1.2) resulted in a lower average sustainability score for world nations in 2020, the good news is that Canada actually saw its index value increase slightly, from 69.2 in 2019 to 69.3 this year.
“Although Canada’s retirement system continues to have a sound structure, as reflected in its 2020 ranking, there are both near-term and long-term risks that need to be considered and addressed,” said Palandra.