Despite market uncertainty, Canada maintains No. 9 position in global retirement rankings
BY Staff | October 21, 2020
Canada’s retirement income system scored ninth place for the second year in a row, securing a “B” rating despite uncertainty in the markets, according to a global pension index by Mercer and the CFA Institute.
The annual index, formerly known as the Melbourne Mercer global pension index, noted the pandemic’s effects aren’t only widespread, but also long term, impacting industries, interest rates, investment returns and community confidence.
“In the wake of the financial pressures brought on by the pandemic, supporting financial security in retirement and providing guidance to modernize the pension landscape becomes an even greater challenge,” said Michael Thom, managing director of CFA Societies Canada, in a press release.
Indeed, the long-term ramifications of the pandemic will result in changes to the ways in which governments provide adequate and sustainable retirement systems. As the level of government debt increases in many countries, it will restrict their ability to support older populations, including in the provision of pensions, said the report.
“Although Canada’s retirement system continues to have a sound structure, as reflected in its 2020 ranking, there are both near-term and long-term risks that need to be considered and addressed,” said Teresa Palandra, partner and wealth business leader, at Mercer Canada, in the release. “In particular, the COVID-19 pandemic has significantly increased the amount of government debt as a percentage of [gross domestic product]. In addition, there are savings gaps that have a disproportionate impact on certain groups, such as women. This will be particularly important in a COVID-19 context where women are often over-represented in the industries most impacted by the pandemic.”
“Given the widespread effects of COVID-19, retirement planning is more important now than ever before,” she added. “Our workforce is changing and dealing with unexpected challenges, and retirement planning must continue to evolve to help Canadians manage their future finances in the face of significant disruption.”
Despite a tough year, Canada actually saw its index value increase slightly, to 69.3 this year from 69.2 in 2019.
Of note, the global pension index compares 39 countries and this year’s index also includes two new retirement systems: Belgium and Israel.