Canada’s retirement savings and income system has held onto its B rating, with the Melbourne Mercer Global Pension Index value increasing slightly from 69.1 in 2011 to 69.2 in 2012.

Mercer said Monday that the positive impact of increasing the Old Age Security retirement age was offset by the continued reduction in pension plan coverage for employees in the private sector.

The introduction of Denmark, which received an ‘A’ rating and an overall index value of 82.9, moved the Netherlands from the top position of the rankings.

The index is now in its fourth year and has grown from 11 to 18 countries, covering over 50% of the world population. It looks objectively at both the publicly funded and private components of a system as well as personal assets and savings outside the pension system. It is produced by Mercer and the Australian Centre for Financial Studies and funded by the Victorian State Government. It is based on more than 40 indicators grouped into three sub-indices: adequacy, sustainability and integrity.

“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,” says Scott Clausen, a partner in Mercer’s retirement risk and finance business in Toronto.

Clausen also says that there are measures that could further improve Canada’s retirement system, including:

  • increasing the level of retirement savings for middle income households;
  • improving access for smaller employers to provide efficient retirement products for their employees – the proposed PRPPs may be such a product if investment fees can be kept low; and
  • encouraging older workers to retire later as life expectancies continue to increase – the recent changes to OAS and C/QPP may be a first step.