Why Canada is among top 10 countries for retirement security

Canada has risen two spots overall to number nine in a global index measuring retirement security.

The Global Retirement Index (GRI) by Natixis Investment Managers and CoreData Research ranked 43 countries in an annual assessment of welfare in retirement. The GPI assessed 18 factors in four categories that affect retirement security, including finances in retirement, material well-being, quality of life and health.

Canada’s ranking rose for 2018 mainly because of improved economic conditions and the natural environment, a report about the index says.

The strength of Canada’s financial institutions also stood out, helping to maintain its tenth spot in the finances in retirement category. Canadians’ level of savings and income in retirement improved, and higher scores were awarded for non-performing bank loans, governance, tax pressure and rising interest rates, the report says.

In the quality of life category, Canada placed ninth overall due to better scores for air quality, biodiversity and other environmental indicators. Breaking that down, Canada ranked second for air quality and seventh for personal happiness.

Canada’s employment and income equality scores also rose, in the material well-being category, but a decline in the income per capita indicator led to a drop in the country’s ranking to the 22nd spot in the overall category.

The top three countries overall are Switzerland, Iceland and Norway.

Challenges facing retirement security

The world is facing a retirement security crisis, the report says, noting that the “traditional three-pillar model” that involved workers using savings, employer pensions and government benefits to fund their retirements is no longer a stable solution.

One reason is the increase in aging populations that’s leading to rising payout liabilities for employers, it says. If you add stagnant wage growth, increasing personal debt and the rising cost of living to the equation, the model becomes unsustainable.

These factors are “straining the resources of individuals, employers and governments around the world,” said Jean Raby, CEO at Natixis Investment Managers, in a release.

The report calls for “active participation” from policy makers, employers, individuals and other stakeholders to reduce the burden on retirees.

Read the report here.

Methodology: The Global Retirement Index assesses factors that drive retirement security across 43 countries where retirement is a pressing social and economic issue. Compiled by Natixis Investment Managers, with support from CoreData Research, it includes International Monetary Fund advanced economies, members of the OECD and the BRIC countries. The report captured data from a variety of sources, including the World Bank. The researchers calculated a mean score in each category and combined the category scores for a final overall ranking of the 43 nations studied.

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The staff of Advisor.ca have been covering news for financial advisors since 1998.