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Canada's pension system holds steady in global ranking as retirement risks rise

Financial Post logo Financial Post 2022-10-11 Barbara Shecter
Canada maintained its B-level rating in the 2022 Mercer CFA Institute Global Pension Index. © Provided by Financial Post Canada maintained its B-level rating in the 2022 Mercer CFA Institute Global Pension Index.

Canada’s pension system received an improved score in a global annual ranking by Mercer and the CFA Institute, but slipped a notch to 13th spot.

The list, released Tuesday, was topped by Iceland, which had an overall index value 84.7, closely followed by the Netherlands at 84.6 and Denmark at 82.

Canada maintained its B-level rating in the 2022 Mercer CFA Institute Global Pension Index with an overall score of 70.6, up from 69.8 in 2021.

Thailand had the lowest index value in the 2022 ranking, at 41.7.

The latest report warned that inflation and rising interest rates are challenging retirees, particularly as employers continue to shift from offering defined-benefit (DB) pension plans to defined-contribution (DC) pension plans. DB plans come with guaranteed payouts, sometimes indexed to keep up with inflation, while payouts on DC plans are based on market performance.

“As DC pension plans continue to make up a greater part of Canadians’ retirement, turbulent markets, soaring inflation and a higher cost of living are all impacting older workers that are transitioning to full or part-time retirement,” said F. Hubert Tremblay, principal and senior wealth adviser with Mercer Canada.  

“While Canada’s retirement system continues to rank well globally, there are risks that employers and employees need to manage in the current environment.”

The Mercer-CFA index is derived from a comprehensive study of 44 global pension systems and covers 65 per cent of the world’s population.  

It benchmarks retirement income systems around the world, highlighting some shortcomings in each system, and suggests possible areas of reform that would help provide more adequate and sustainable retirement benefits.

• Email: bshecter@nationalpost.com | Twitter:

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