Canada's retirement system has been ranked fourth in the world in a new study that compares public and private pension systems in 11 countries.
The study by pension consulting firm Mercer concluded the Netherlands, Australia and Sweden had the world's best pension systems, while Canada ranked a close fourth, followed by Britain and the United States. Germany, China and Japan were at the bottom of the list.
The review looked at 40 factors relating to the countries' pension systems, including the adequacy of private and public pension payments for retirees, and the level of pension incomes compared to preretirement incomes. It also looked at the rate of participation in private sector pension plans, the level of pension assets in plans, and factors affecting the “integrity” of private sector pension plans, such as regulation and risk-protection.
Scott Clausen, professional leader for Mercer's Canadian retirement consulting business, said that while Canada's public and private pension pillars appear strong compared to many other countries, they could still be improved.
Mercer, for example, says Canada needs to increase the percentage of its work force covered by company pension plans. According to Statistics Canada, about 38 per cent of Canadian workers had a company pension plan in 2007. Excluding public sector employees, about 25 per cent of workers in the private sector had a company pension plan.
“The prevalence of private pension plans in Canada continues to decrease for employees working in the private sector,” Mr. Clausen said in a statement.
“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.”
Mercer also recommends introducing controls to ensure Canadians' personal retirement savings are not withdrawn early and are preserved for retirement years, and recommends increasing the age of eligibility for pensions as life expectancy increases.
No country received an “A” in the study, Mercer said, with top-ranked Netherlands earning a score of 76.1 out of 100. Canada received a mark of 73.2, while Japan ranked worst with a score of 41.5.
