Canada’s retirement income system is strong enough to maintain its seventh-place position in the Melbourne Mercer Global Pension Index thanks to its ability to ability to provide adequate retirement income to a median-income earner. However, the system’s sustainability prevented the country from improving its ranking in the seventh annual research report, published by Mercer LLC and the Australian Centre for Financial Studies.

“While Canada’s retirement [income] system continues to be one of the stronger retirement systems in the world, there’s room for improvement,” says Scott Clausen, a partner in Mercer’s retirement business in Toronto. “A large percentage of workers in the private sector do not have access to a workplace pension plan and rising levels of government debt has the potential to put pressure on the future sustainability of the Canadian retirement system.”

Suggestions to improve the system include the development of alternate pension plans for Canadians without an employer-sponsored plan; increasing the level of household savings for middle-income earners; and increasing the labour force participation rate for older individuals to acknowledge longer life expectances.

In addition, the financial services sector also has a part to play in possible improvement of the system, Clausen says: “The retirement income of Canadians could also be improved by further reductions in the level of investment management fees charged under capital accumulation plans.”

Mercer’s research notes that the Liberal Party of Canada’s victory in Monday’s federal election may improve the level and efficiency of retirement savings in the country as the Liberals’ platform included a promise to enhance Canada Pension Plan benefits in consultation with provincial and territorial governments.

However, the platform also stated it would maintain Canadians’ eligibility for the old-age security (OAS) program at 65 years of age. The Conservative government had announced in the 2013 federal budget that the age of eligibility for OAS would increase gradually to 67 over the span of six years, beginning in 2023.

“Changing OAS eligibility back to age 65 from age 67 goes in the opposite direction that other countries are adopting to recognize the fact that individuals are living longer,” Mercer’s research states.

Denmark held onto the top spot in the index for the fourth consecutive year, while the Netherlands and Australia took second and third place, respectively.