Canada's Retirement System Ranking Improves Marginally in 2025
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.”
Mercer looked at the Canada Pension Plan, income supplement programs such as Old Age Security (OAS), the Guaranteed Income Supplement (GIS), workplace private plans and voluntary retirement savings like registered retirement savings plans and tax-free savings accounts to assess the state of the system.
“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.”
I think we can ignore Industry Minister Mélanie Joly's silly comments on pensions investing at home, she needs to stay in her lane.
Maple 8 CEOs have spelled it out in black and white, they don't want tricks, they want to invest more in domestic infrastructure.
Will Carney's government finally partially privatize assets like airports, ports and toll roads so our large pension funds can invest in them?
I certainly hope so but I have my doubts and so do experts advising the federal government (one expert told me airports are a source of perpetual revenues for the federal government, they hardly invest any monies and collect great fees).
We shall see what the Budget says on major projects and privatizing assets, I remain hopeful but skeptical.
As far as the Mercer CFA Global Institute Pension Index 2025, you can download and read more here.
Here are some of the global highlights:
Canada scored marginally better than last year but it's the same old story, despite having some of the best professionally managed pension funds, we are not covering enough Canadians adequately.
And relying on RRSPs, TFSAs, OAS and GIS to top out your paltry Canada Pension Plan benefit that pays for the groceries isn't a retirement strategy, you'll survive but be miserable.
What about housing? Hasn't this become Canada's de facto supplemental retirement program with the CHIP reverse mortgage?
Sure, many homeowners are using it but read the fine print and understand what that means at the end of the CHIP rainbow.
I've been writing this blog for over 15 years and have been beating the drum, we need better coverage and we need radical change to cover private sector workers adequately with a gold plated DB pension, much like public sector workers enjoy.
Well, Leo, Canada's Big Banks don't want that, they want everyone investing in RRSPs and TFSAs.
I couldn't care less what the banks want, I'm telling you we need radical change to significantly bolster our retirement system based on what works -- Maple 8 governance and long term performance.
Till then, I'll continue covering the Mercer CFA Global Institute Pension Index and keep repeating the same remarks.
Below, Mercer Senior Partner Christine Mahoney joins host Mike Wallberg, CFA, to unpack key findings from the Mercer CFA Institute Global Pension Index 2025. She explains how 52 retirement income systems are evaluated on adequacy, sustainability, and integrity—and what those measures reveal about the resilience of retirement systems worldwide.
The discussion explores government influence on pension investments, the principle of “retirement first,” and the role of policy incentives in balancing national priorities with member outcomes. Listen now to hear what’s driving pension reform and innovation globally.
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