A new global index warns that demographic change is testing the limits of retirement systems worldwide - including Canada's
Canada maintained a B grade in the newly released 2026 Marsh CFA Institute Global Pension Index, but the annual benchmark sounded an increasingly urgent warning about the long-term pressures aging populations are placing on retirement income systems.
The 18th annual index, produced by Marsh (NYSE: MRSH) and CFA Institute in collaboration with the Monash Centre for Financial Studies in Melbourne, Australia, benchmarks 55 retirement income systems across the globe - covering approximately 66% of the world's population - on three sub-indices: adequacy, sustainability, and integrity.
Canada scored 70.6 overall in 2026, up marginally from 70.4 in 2025, with sub-index scores of 67.1 for adequacy, 66.6 for sustainability, and 81.7 for integrity. Canada's integrity score - among the strongest in the B tier - reflects the country's strong regulatory governance and member protections.
"Pension systems are under real strain," said Christine Mahoney, Global Defined Benefit and Defined Contribution Leader at Marsh People and Investments. "Governments that clarify their pension objectives, strengthen funding, and build flexibility into retirement design will be far better positioned to deliver dignified, secure retirements for the generations ahead."
Where Canada stands - and what holds it back
Canada's B grade places it in the same tier as Switzerland, the United Kingdom, New Zealand, Hong Kong SAR, and France; systems with sound structures and many strong features, but with meaningful areas for improvement that separate them from the A-grade tier.
The six systems receiving an A grade in 2026 were the Netherlands (85.8), Denmark (84.1), Iceland (84.0), Singapore (82.0), Israel (81.9), and Australia (80.6), which broke into the top tier for the first time this year.
Canada's core structural challenge has remained consistent across multiple editions of the index: limited occupational pension coverage in the private sector.
Many Canadians employed outside the public sector, including self-employed individuals, gig workers, and employees at small and medium-sized businesses, have no access to a workplace retirement savings plan. Without an element of compulsion or automatic enrolment, the index notes, many individuals will not save adequately for the future.
The demographic pressure behind the headline
This year's index features a dedicated chapter on aging populations, and the data it draws on is directly relevant to Canadian advisors building long-term income plans for clients.
Globally, 43 of the 55 systems examined now have fertility rates below 2.1 - the replacement rate required to sustain a stable population - according to United Nations World Population Prospects 2024 data cited in the report. Twenty-three have rates below 1.5.
Life expectancy at age 65 in more developed regions has increased by approximately 50.9% since 1950 and now stands at 20 years. Life expectancy at age 80 has grown by approximately 68.8%, to 10 years.
For advisors, those figures translate into longer withdrawal periods, greater longevity risk, and the need for income strategies that hold together across a retirement that may last 25 to 30 years or more - well beyond the assumptions built into many standard financial plans.
Mona Naqvi, Managing Director of the CFA Institute Research and Policy Center, said the challenge is consistent across all systems: "Delivering reliable income as demographics shift and markets change. No single policy or investment decision can achieve that. It takes sound system design and governance, alongside careful oversight of investments by those with a fiduciary duty to savers and retirees."
The aged dependency ratio - the proportion of the population aged 65 and over relative to the working-age population - is projected to increase significantly in the coming decades across most of the systems included in the index, including Canada's. That structural shift puts pressure on both public pensions and privately funded arrangements, and makes the advice channel more, not less, important as clients require more sophisticated guidance on sequencing, drawdown, and income protection.
Three reforms the index urges - and what they mean for advisors
The 2026 index identifies three policy priorities for governments: establishing clear objectives for retirement systems; strengthening the pre-funding of future retirement obligations; and increasing flexibility in retirement age structures and product design.
On flexibility, the report is pointed. Traditional retirement ages of 60 or 65 are increasingly misaligned with longer, healthier lives - especially as the line between work and retirement continues to blur, driven by the growth of gig employment, contract work, and phased retirement arrangements.
Rigid pension structures and inflexible product designs can penalise clients who want to continue working part-time while drawing some income, or who need to pause pension income temporarily when they return to the workforce.
Tim Jenkins, lead author of the report and Partner at Marsh People and Investments, said every system shares the same fundamental need regardless of where it currently ranks.
"Retirement design must become more flexible - in when people access income, in how products are structured, and in how we think about the line between work and retirement. That flexibility is no longer optional," he said.
For Canadian financial advisors, that message reinforces what many are already hearing from clients. The retirement they are planning for bears little resemblance to the clean break from work that older plan designs assumed. Income strategies that account for part-time employment income, CPP deferral trade-offs, OAS clawback thresholds, and variable spending needs across different life stages are increasingly the norm - not the exception.
