How does Canada’s retirement system rank worldwide? A report says it’s not bad, but it could be better.
An annual report by Mercer and CFA Institute examined retirement systems in 48 countries based on three categories: adequacy (current benefits), sustainability (future viability), and integrity (regulation). Each country was ranked and graded based on these factors.
So, how did Canada fare?
The country’s retirement system dropped from the 12th spot in 2023 to number 17 this year.
Canada’s retirement system has seen a slight decline over the years. In 2009, it had an index value of 73.2, but now it’s at 70, earning a solid B grade. It has the same grade as Chile, Sweden, the UK, Switzerland, Uruguay, New Zealand, Belgium, Mexico, Ireland, France, Germany, Croatia, and Portugal.
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According to the report, countries with a B grade all have “a sound structure, with many good features but has some areas for improvement that differentiate it from an A-grade system.”
Retirees in the Netherlands, Iceland, Denmark, and Israel have it made. All four got an outstanding A due to their “first-class and robust retirement income system that delivers good benefits, is sustainable and has a high level of integrity.”
Canada’s retirement system is slightly better than the US, which got a C+, but there’s still room for improvement.
The study suggests increasing coverage in occupational pension schemes for employees without employer-sponsored pension plans. Another is introducing a minimum age at which Canadians can access pension products. Canadians would also have to increase household savings and reduce household debt.
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That won’t be easy — according to another study, Canada is currently the sixth most expensive country for retirement.
Margaret Franklin, president and CEO of CFA Institute, said that pension systems are changing to keep up with the increasing number of people living longer and the continuing drop in fertility rates.
“Traditional defined benefit plans, once a mainstay of retirement security, continue to be replaced by defined contribution plans, shifting the burden of risk from employers to individuals,” she stated.