Canada’s
pension system
received a better score in an ongoing survey of programs around the world, but still has room for improvement.
Canada was given a grade of B, the same as last year, by the Mercer CFA Global Institute Pension Index 2025, but its score rose to 70.4 out of 100 from 68.4.
“We have a strong system,” F. Hubert Tremblay, partner and senior wealth adviser at Mercer Canada, said. “And one of the main strands of the Canadian pension system is that we have a diversified system with multiple sources of income into
retirement
.”
“When I’m talking about multiple sources of income into retirement, I’m talking about all those pillars,” Tremblay said. “Yes, we are good with the government plans. The plans are not too generous, but they are sustainable over the long term, so that’s good and they have really good governance. That’s a strength of our system.”
Where Canada comes up short is in the area of workplace-sponsored plans, he said. They are good in the public sector, but much weaker in the private sector.
Mercer raised Canada’s score based on new information about the pension system’s creditworthiness, updated economic growth data from the International Monetary Fund and “clarification” regarding the protection of funds.
The index’s grading and scoring is based on three metrics: adequacy, sustainability and integrity, with grades assigned from A to E. Canada received grades of B, B and A in those three sub-indexes. The B-grade systems were described as having a “sound structure with many good features,” but they have “some areas for improvement that differentiate it from an A-grade system.”
The 2025 Mercer index graded 52 systems, covering 65 per cent of the world’s population.
Other countries that received Bs included Switzerland, the United Kingdom, New Zealand, France and Germany.
The Netherlands, Iceland, Denmark, Israel and Singapore were singled out as having the best pension systems in the world, all receiving As.
The most notable difference between the top countries and Canada was that they have mandatory private-sector workplace pension contribution programs.
Canada can improve its pension performance by increasing coverage for people, mostly in the private sector, who don’t have a workplace-sponsored scheme, increasing the participation of older people in the workforce to reduce the numbers of Canadians who are living longer, but may not have enough money to pay for their retirement, increasing household savings and reducing the ratio of government debt to gross domestic product.
Higher household savings could help fund retirement and controlling government debt is critical to ensuring programs such as OAS and GIS are funded.
Mercer also tackled the issue of the federal government urging major
pension funds
, which include but are not limited to the Canada Pension Plan, Healthcare of Ontario Pension Plan and the Ontario Teachers’ Pension Plan, to invest more at home.
In October, Industry Minister Mélanie Joly told the
Financial Times
that “I’ve had lots of conversations with our banks and our
pension funds
. There’s a sentiment that we need to think about Canada first and that we need to put capital where our mouth is.”
But a pension’s first priority is to provide retirement income for its members and their families.
Mercer recommended that governments offer direct subsidies, tax concessions, financial incentives and public and private partnerships to encourage the pension plans to invest more in Canada.
“Canada has so far asked and not constrained pension plans,” Tremblay said. “So, that’s in the direction we are suggesting.”
READ OUR RED INK SERIES
Governments around the world are awash in debt, and Canada is no exception. But just how severe is the problem and what will the consequences be? With the federal deficit in the spotlight ahead of the Nov. 4 budget, the Financial Post is exploring the state of sovereign debt in Canada and beyond in a weeklong series called Red Ink. From a primer on Canadian indebtedness to the consequences of a U.S. default, we’ll explore some major questions about government debt and the looming deficit.
Check back here every day for more from the series.
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National Bank of Canada has been searching out answers for why the United States economy has remained resilient in the face of elevated pressure from the uncertainty caused by tariffs. So far, it’s landed on a few reasons including the artificial intelligence investment boom, soaring stock markets and rate cuts by the U.S. Federal Reserve.
Add to that list looser financial conditions, which, “according to an index published by Goldman Sachs, are currently the most accommodative they have been in three-and-a-half years,” Jocelyn Paquet, an economist at National Bank of Canada Capital Markets, said in a note, adding, “that lower short-term interest rates will contribute to loosening financial conditions even further.”
Paquet cited a Federal Reserve model that suggested looser conditions could add one per cent to U.S. gross domestic product over the next year.
That’s a good thing, right? Maybe not.
“When you add to these figures the anticipated effect of AI investment, the wealth effect, and fiscal policy, there is reason to fear that the economy could overheat in 2026,” she said.
Today’s data: Statistics Canada releases GDP data for August and a flash estimate for September.
Today’s earnings: Imperial Oil Ltd., Cenovus Energy Inc., Canadian National Railway Co.
Financial fears lead to sleepless nights and recurring thoughts about “what if” scenarios or past decisions. Many generation Xers and baby boomers are also managing late-career risks and weighing retirement options while supporting adult children or caring for aging parents.
But regardless of age, legacy planning, mortgages on a primary or secondary property and the potential for high living costs or unexpected health expenses are a lot to carry, even for those who have done well financially. However, naming your fears is the first step toward easing your anxiety and making more confident choices with your money. Read more here.
Are you worried about having enough for retirement? Do you need to adjust your portfolio? Are you starting out or making a change and wondering how to build wealth? Are you trying to make ends meet? Drop us a line at
wealth@postmedia.com
with your contact info and the gist of your problem and we’ll find some experts to help you out while writing a Family Finance story about it (we’ll keep your name out of it, of course).
McLister on mortgages
Want to learn more about mortgages? Mortgage strategist Robert McLister’s
Financial Post column
can help navigate the complex sector, from the latest trends to financing opportunities you won’t want to miss. Plus, check out his
mortgage rate page
for Canada’s lowest national mortgage rates, updated daily.
Financial Post on YouTube
Visit the Financial Post’s
YouTube channel
for interviews with Canada’s leading experts in business, economics, housing, the energy sector and more.
Today’s Posthaste was written by Gigi Suhanic, with additional reporting from Financial Post staff, Canadian Press and Bloomberg.
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