Canada’s retirement income system has ranked fourth in a world first global pension index that compares private and public pension systems from around the world.

The inaugural Melbourne Mercer Global Pension Index, released Thursday, compares the retirement income systems of 11 countries, and ranks them based on adequacy, sustainability, and integrity.

The index, produced by global consulting Mercer, and funded by the Victorian State Government in Australia of which Melbourne is the capital city, is the first time that the world’s retirement income systems have been compared and ranked on a basis that considers a retirement income system in its entirety.

The Netherlands obtained top ranking with a score of 76.1 out of a maximum of 100, followed by Australia (74.0), Sweden (73.5) and Canada (73.2).

Scott Clausen, professional leader for Mercer’s Canadian retirement, risk and finance consulting business, said that while the public and private sector pillars of the Canadian system appear strong compared to many other countries in the world, there are areas that can be improved.

The report recommended Canada’s system could be improved by:

• increasing the level of coverage of employees in occupational pension plans, possibly through a more efficient system;
• introducing a mechanism for ensuring that voluntary retirement savings are preserved for retirement purposes;
• introducing a mechanism to increase the pension age as life expectancy continues to increase; and
• increasing the level of household savings.

“The prevalence of private pension plans in Canada continues to decrease for employees working in the private sector. Simplifying pension regulations to provide uniform pension rules across the Country has been proposed by the pension industry for years and would greatly increase the efficiency of the pension system.” Clausen said.

No country in the index was classed as having an A-grade system (obtaining a score greater than 80), proving even the world’s most advanced pension models still need refinement to ensure they are robust enough to support the world’s rapidly aging population, Mercer said.

The countries with the lowest ranking retirement income systems were Japan with a score of 41.5, China (48.0) and Germany (48.2).

IE