Canada's
pension system is one of the best in the world, though there is room
for improvement and the recent global financial crisis has affected its
sustainability, a report said Wednesday.
The second annual Melbourne Mercer global pension index ranked Canada fifth out of 14 countries for its pension system's adequacy, sustainability and integrity.
Canada
was fourth last year, but more countries were included in this year's
rankings, including Switzerland, which finished second behind the
Netherlands.
Canada's overall score was lower at 69.9 compared to 73.2 last year.
"Not
surprisingly, the (global financial crisis) has threatened the
sustainability of public and private pension systems in several
countries through the decline in asset values and an increase in
government debt," said David Knox, a senior partner with consultancy
group Mercer, which did the study on behalf of the Australian Centre for
Financial Studies.
"This was reflected most acutely in the scores for Canada, the United Kingdom and the United States."
Scott
Clausen, another partner with Mercer, said Canada could take moves to
improve its pension system, such as increasing coverage in
employment-based pension plans, particularly for "middle-income
employees in the private sector."
It was also recommended that Canada consider raising the government-pension age of 65 as life expectancy continues to increase.
"Increased
life expectancy is a theme that is common to all of the countries in
the index," Knox said. "As the gap between pension age and life
expectancy widens, pressure on public pension systems will increase.
This highlights the need for governments to continue to review their
state pension or retirement age, and focus on increasing the adequacy of
the private system."
Rounding out the top five rankings is
this study was Sweden at third and Australia at fourth. The United
States was 10th, down from sixth last year.
Janet Novack wrote a comment on why the US pension system ranks low:
A new report comparing pension systems in 14 countries, ranks the U.S. a lowly 10th,
behind the Netherlands, Switzerland, Sweden, Australia, Canada, the
United Kingdom, Chile, Brazil and Singapore. It leads France, Germany,
Japan and China.
The index, compiled by Mercer and the Australian
Centre for Financial Studies, attempts to compare the widely varying
systems of the countries in three broad areas: adequacy, sustainability
and integrity. Not surprisingly, the U.S. ranks low on adequacy—lower
than Australia, Canada or any of the European nations. But it scores
slightly above average on sustainability, meaning the ability to
deliver what’s been promised. The U.S. had a score of 54 on adequacy
and 59 on sustainability, compared with an average of 63 on adequacy
and 52 on sustainability for all 14 countries and 76 on adequacy and 72
on sustainability for the top-ranked Netherlands.
By contrast,
France scored 75 on adequacy, but only 30 on sustainability. That
nation, of course, is now wracked by protests over President Nicolas
Sarcozy’s push to make its pension system more sustainable by raising
the minimum age for a partial pension from 60 to 62 and for a full
pension from 65 to 67. In the U.S., the minimum age to receive Social
Security retirement benefits is already 62, while the “full retirement
age” for Social Security is now 66 and is slated to rise slowly to 67
for those born in 1960 or later. President Obama’s deficit reduction
commission might recommend it go higher.
The
U.S. integrity score of 60 was also well below the average of 73.
That category includes such factors as regulation and costs.
Overall,
the pension experts judged the U.S. system, as well as those in the UK
and Canada, as less sustainable than just a year ago, when they
conducted their first joint international study. David Knox, the senior
partner in Mercer’s Retirement, Risk and Finance business who oversaw
the study, said those three nations were the “most severely affected”
by “declines in asset values since 2008 and increases in government
debt.’’ Consultant Mercer is a subsidiary of Marsh & McLennan
Companies.
Pensions are fast becoming the hot
political issue of the next decade. Demographics, exploding debt and
longer lifespans are all weighing on global pension systems. This is a
long-term structural theme that will require tough political choices and
compromises from all stakeholders. Below, an update on protests in France.
Pensions!
You build a house out of cards and it gets blown over....well you guys know the rest..basically if your over 64 your good if you are between 50-64 consider might as well consider it gone...their is no natural price discovery hasn't been for 30 years and even 60 years before that we've always had the fed to micromanage the collateral damage of natural markets that show the ponzi criminals for what they really are....
All that matters is, what side of the bed that a central banker thats the flavor of the week wakes up on to determine who's monopoly notes are worth what and in turn who's pension is worth what this week...
Dominoes anyone?
-edit below 40 might make it through the next 10 years....in the mid/long run perspective we are watching a guaranteed monetary crisis and global correction of the division of labor...people should be working on gardens right now...or getting land to grow one..the only way we can actually have a economy where people can publicly market goods in a non-coercive manor and actually get paid in something that takes more time to produce then create...
Pensions!
You build a house out of cards and it gets blown over....well you guys know the rest..basically if your over 64 your good if you are between 50-64 consider might as well consider it gone...their is no natural price discovery hasn't been for 30 years and even 60 years before that we've always had the fed to micromanage the collateral damage of natural markets that show the ponzi criminals for what they really are....
All that matters is, what side of the bed that a central banker thats the flavor of the week wakes up on to determine who's monopoly notes are worth what and in turn who's pension is worth what this week...
Dominoes anyone?
Hah, great, another stress test!
Ha Ha I love it.... U.S. ranks above average on promise to deliver....I have no doubt they will deliver the amount promised. Unfortunately penisioners will be unable to buy anything. I'm sure here in Canada we will be right behind them once our real estate bubble bursts
Ranking fifth in a column that is insolvent from first place is good? Who gives a rip Leo?
Australia's banks are rated as some of the strongest in the world...and watch what happens to those (along with your vaunted Canadian counterparts) in the next two years.
Get a grip....please....
.
I have to agree.
This is classic ignoring the elephant in the room.
It's like discussing the color of the drapes while the house is burning down.