Mercer's Hubert Tremblay highlights how Canadian pension funds can enhance retirement security for plan participants
Canada’s pension system recently inched upwards in the global rankings, according to Mercer’s CFA Institute Global Pension Index score, rising from 68.4 in 2024 to 70.4 in 2025. While this may signal an upside shift for Canadian pension plans, Hubert Tremblay acknowledged that the 1.8-point gain reflects a more accurate or favourable assessments of existing conditions rather than structural changes.
“When there’s little change in the Index, it's because we have a better understanding of pensions,” said Tremblay, partner and senior wealth advisor at Mercer Canada. “But we also need to consider that the Index is based on a lot of data, like demographic data and economic data. And we update data annually. For example, this year, the debt as a percentage of GDP - the measure we're using for this - has improved Canada's score. But it's not the result of a reform. It's the result of economic developments and the way we measure things.”
Yet, Tremblay identified private sector pension coverage as Canada’s most pressing retirement challenge. With fewer than 10 per cent of private sector workers enrolled in defined benefit (DB) plans - and limited uptake of defined contribution (DC) plans - he believes expanding access should be a national priority. He also underscored the disparity with the public sector, where about 80 per cent of workers have DB coverage.
Tremblay also pointed to a troubling combination that many plan sponsors and plan members face: inadequate coverage paired with insufficient personal savings.
“Less coverage should mean more savings,” he said. “But if we have less coverage and low savings, that’s where there’s an issue.”
Rising costs of living, including housing and inflation, make it difficult for many Canadians to set aside money for retirement, despite a favorable tax environment for doing so. For Tremblay, education is essential as workers need a better understanding of the importance of long-term financial planning and how to use existing tools effectively.
However, efforts to address this are complicated by the political and economic reluctance to mandate employer contributions. Tremblay argued that improving retirement outcomes in Canada doesn’t require forcing employers to contribute more but it does require their active involvement. He acknowledged employers can play a critical role by simply making it easier for employees to save.
Even without direct contributions, Tremblay noted that employers can create group savings structures, which lower investment fees and improve efficiency through pooled participation. He acknowledged that some employers prioritize salaries as a recruitment tool over pension benefits but said cost-effective retirement savings plans can still be part of the solution.
“If they can open a structure to at least promote employees’ savings for retirement at affordable cost, that’s a really powerful tool that employers can promote to their employees and could make all the difference for employees as well,” he said.
He believes employers can act as facilitators, similar to the role he envisions for governments.
“If governments want to access pension assets to develop the economy, they should try to put some incentives and not constraints. They should ask and not mandate,” said Tremblay, emphasizing the delicate tension between serving pension plan members and contributing to broader national goals.
Pension funds, he noted, hold significant assets and are tasked with maximizing returns for their members, nothing else should compromise that primary obligation.
“Every time there are additional constraints that are put on them, that kind of goes against their main purpose of maximizing the returns,” he said. “If they have too many constraints put on them, that could affect the way they execute their fiduciary duties.”
The Canadian government’s growing interest in encouraging domestic investment - particularly in infrastructure initiatives - puts that balance under pressure. Tremblay believes pension plans must weigh such opportunities through the same lens they apply globally through risk, return, and diversification.
Moving forward, Tremblay believes that expanding retirement coverage is one of the few areas where Canada can take concrete action, especially through public policy. He sees this as the most direct path to strengthening the system.
To make progress, he said, both government and employers need to act - not necessarily by offering more financial support, but by improving access to information, tools, and structures that help individuals plan and save. This includes using technology to provide better forecasting and retirement planning resources.
While he truly believes Canada has a solid foundation, Tremblay emphasized that individuals must ultimately become more engaged and understand the components of what makes up the country’s largest pension plans, pointing to the CPP and La Caisse as an example.
“We have a strong retirement system, and we put a lot of money aside for pensions. We do that a lot more than many countries around the globe,” he said, noting that the countries pensions are also well governed. “Now, we need to understand how to use it in the best way possible."
