Natixis Investment Managers report highlights country’s financial strengths and weaknesses for older citizens
Canada has broken into the top 10 when it comes to retirement security, up two places from last year.
The 2018 Global Retirement Index, conducted by Natixis Investment Managers, scored 43 countries on key measures that impact retirees, with 18 factors assessed across four broad categories: finances in retirement, material wellbeing, quality of life and health.
Canada’s biggest gain compared to others was in the quality of life section where it boasted the second-highest air quality and seventh-highest personal happiness scores. It ranked eighth overall for health.
In the finances category it also ranked eighth best, regressing only in the government indebtedness and age-old dependence sub-sections. The sub-sector scores in the seven categories were: old-age dependency, 44% (down from 46% in 2017); bank non-performing loans, (85% (81%); inflation, 100% (100%); interest rates, 70% (66%); tax pressure, 38% (38%); government indebtedness, 29% (31%); and governance, 92% (91%).
Dave Goodsell, executive director of the Natixis Center for Investor Insight, said: “Coming out of the global financial crisis ten years ago, it seems a lot of pressure has been put on monetary systems, interest rates have been very low, and that’s been the crux of the challenge for retirees.
“So any movement in interest rates is what’s really going to help drive performance in the index. For example, we saw the US move up predominantly based on the Fed’s activities to improve interest rates.”
The index’s 2018 top ten is: 1, Switzerland; 2, Iceland; 3, Norway; 4, Sweden; 5, New Zealand; 6, Australia; 7, Ireland; 8, Denmark; 9, Canada; 10, Netherlands.
For Canada, the main headwinds for those heading into retirement are government indebtedness and age-old dependency, which is when more old people take money out of the system than there is young people paying into the system.
This, said Goodsell, really determines the viability of your pension structure.
He said: “Here’s the problem, if you’re looking at retirement policy there are not a lot of choices in how you manage it and they’re not popular overall.
“One is if you raise the qualified retirement age, you can reduce benefit payments and the third option is often how we look at immigration – can we bring enough young people into the country? As we’ve seen around the world that is not a popular option at this time and place.”
In terms of government indebtedness, he added: “In the past 10 years, global debt has gone up from 55% of GDP globally to 97%. And that’s a really important thing to be aware of because with public debt getting greater, that means there is less to work with in addressing the core things that governments have to do and one of those is funding retirement programmes.”
