Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

Many people – especially women – will have to work longer and live on less in retirement as a lasting legacy of the global pandemic, according to an annual survey of pension plans around the world.

The 2020 Mercer CFA Institute Global Pension Index says the recession created by the novel coronavirus delivered a stinging blow to many retirement systems, including Canada’s, as falling interest rates and surging levels of government debt added to the challenges ahead for policy makers, money managers and households.

“Inevitably, this will impact future pensions, meaning some people will have to work longer while others will have to settle for a lower standard of living in retirement,” wrote David Knox, senior partner at human-resource consultants Mercer and lead author of the study, published Monday.

Story continues below advertisement

Many of the hardest-hit people will be women. They have suffered disproportionately large job losses in this downturn because many work in sectors, such as restaurants and retailing, that have been hit the hardest by lockdown restrictions.

The gender gap in retirement preparation also reflects the fact that women have traditionally taken on the caregiver role, whether it be for children or elderly parents, said Scott Clausen, partner at Mercer Canada.

“That has typically resulted in a tendency for more women to work part-time or take breaks from their career, which reduces their ability to make pension contributions and accumulate time in a pension plan,” he said in an interview. “There is no doubt that COVID has exacerbated the situation over the last year” especially as school closings forced many children to stay home.

The report is not entirely bleak. It suggests Canada is facing the growing retirement challenge in better shape than many other countries. This country’s pension system ranks ninth out of 39 countries, the same position it held last year when the survey included only 37 countries.

Canada’s solid “B” grade in the survey puts it on a rough par with countries such as Australia, Germany and Sweden. All those nations fall behind the only two countries to earn an “A” grade – the Netherlands and Denmark – but rank ahead of the United States and Britain, both of which received “C-plus” grades.

However, no country’s pension plan is exempt from the challenges created by COVID-19, according to the report, sponsored by financial educator CFA Institute in collaboration with the Monash Centre for Financial Studies in Australia and Mercer.

A major challenge for retirement planners everywhere is the falling returns from most pension assets. Declining bond yields, reduced company dividends and lower rentals from property investments have shrunk prospective returns, the report notes.

Story continues below advertisement

On top of that, Canada and most other countries have run up large amounts of government debt as they struggle to support households and businesses. All things being equal, this leaves governments with less room to pay government pensions in future.

Canadian companies and governments have a few ways to address these challenges, said Mr. Clausen at Mercer Canada.

One priority should be to expand the reach of workplace pension plans to include more people.

The percentage of the labour force covered by registered pension plans has actually declined in recent years, falling from 33 per cent in 2007 to 32 per cent in 2017, according to Statistics Canada. “Two thirds of people are looking after themselves,” Mr. Clausen noted with concern.

Many employers are reluctant to take on the burden of operating a pension plan, but alternatives are emerging. In recent years, a handful of organizations, ranging from Mercer to the CAAT Pension Plan, have introduced pension schemes open to a range of eligible employers. These multiemployer plans remove the administrative and governance burden of running a pension plan from individual companies and could be one vehicle for increasing participation in pension plans, Mr. Clausen suggested.

Another idea would be to raise contribution limits to registered retirement savings plans, allowing individuals to save more for their senior years.

Story continues below advertisement

“It has been almost 30 years since the 18 per cent [of earned income] contribution limit was introduced,” Mr. Clausen said. “Individuals are living longer, interest rates are lower, and with COVID, return expectations are also lower. That 18 per cent isn’t sufficient any more. What was adequate in 1990 isn’t adequate in 2020.”

Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.

Coronavirus information
Coronavirus information
The Zero Canada Project provides resources to help you manage your health, your finances and your family life as Canada reopens.
Visit the hub

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow the author of this article:

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies