Canada Ranks 10th in Retirement Security in 2016 Natixis Global Retirement Index

Business Wire

Wealth trends, health system help nation join world leaders
Canadians feel growing responsibility to finance own retirements
Index highlights proactive public, fiscal policies that contribute to retirement quality

TORONTO--(BUSINESS WIRE)-- Canada ranks 10^th for retirement security, according to the 2016 Global Retirement Index, released today by Natixis Global Asset Management. The Index examines key factors that drive retirement security and provides a comparison tool for best practices in retirement policy across 43 countries.

Among the leading countries for retirement security identified by the Index, Northern Europe dominates the top 10, including Norway at No. 1, followed by Switzerland, Iceland, Sweden, Germany, The Netherlands and Austria. Besides Canada, the top non-European nations are New Zealand (4) and Australia (6). The United States is 14^th on the list.

“Retirement used to be simple: Individuals worked and saved, employers provided a pension, and payroll taxes funded government benefits, resulting in a predictable income stream for a financially secure retirement,” said John Hailer, CEO of Natixis Global Asset Management in the Americas and Asia. “Demographics and economics have rendered the old model unsustainable, but the leaders in our index, including Canada, are finding innovative ways to adapt to the new reality and provide a blueprint for the rest of the world.”

The Natixis Global Retirement Index, introduced in 2013, creates an overall retirement security score based on four factors that affect the lives of retirees. Finances in retirement are an important component, but three other sub-indices that gauge material wellbeing, health, and quality of life are included to provide a more holistic view. With this year’s edition, Natixis has focused on a smaller number of countries than in the past, mainly developed economies where retirement is a pressing social and economic issue.

Canada Places 10th

The index shows Canada has relatively high per-capita income and low levels of income inequality. Canada also spends substantial amounts on healthcare and provides excellent health insurance coverage, according to index data compiled by Natixis.

On the other side of the ledger, low interest rates and relatively high levels of government debt are not as favorable to Canada’s retirees. The former makes it difficult for older Canadians to keep up with increased living costs; the latter could affect the country’s ability to finance social programs over the long term.

Canadians recognize shift in retirement funding responsibility

Canadian investors are acutely aware of the increasing need for individuals to fund a greater share of retirement. In a survey of investors conducted by Natixis earlier this year, 72% say the costs associated with old age will fall increasingly to them rather than to the government.

Although 72% of Canadians in the study identified retirement as their highest financial priority, many may be underestimating how much money they need to save in order to retire comfortably. Investors estimate they will need to replace only 60% of their current income when they retire, well short of the 75% to 80% generally assumed by planning professionals. They set aside 10.5% of income for retirement, below the average rate of 12.1% among investors from 22 nations in that study. A high proportion (45%) said they don’t participate in a workplace-based savings program.

Canadian investors see clear hurdles to financial security in retirement, identifying their three greatest challenges as long-term care and healthcare costs, outliving their assets and inflation. When asked how they would make up for an income shortfall, more than half (52%) say they will continue to work in retirement.

“Canada is one of the world’s leaders in retirement security, benefitting from both strong social programs that support retirees and proactive policies that encourage citizens to save for the future,” said Abe Goenka, CEO of Natixis Global Asset Management Canada. “While we can be proud of what we have achieved, we can still learn from other global leaders to further strengthen our retirement system and help make savings a reality.”

Four Global Trends

Policymakers and employers can learn from four major trends that characterize the top-ranked nations.

Access: An aging workforce and increased lifespans in many Western countries have made traditional pay-as-you-go models for government retirement benefits unsustainable. As individuals assume greater responsibility for their retirement funding, public policy makers in leading countries must ensure that workers have access to individual or work-based savings programs.
Incentives: Smart policy expands incentives for individuals to save for retirement in order to help reduce the long-term challenges in providing support for retirees. Favorable tax treatment for retirement savings helps workers put away more money, making it more likely they can take care of their own needs.
Engagement: Automatic enrollment in workplace retirement plans is a step in the right direction. Good policy also ensures that workers have the right balance of investments and enough information to help them maximize the benefits of plan participation.
Economics: Retirement security extends beyond the savings vehicles themselves. It includes consideration for an aging population that will be living on a fixed income. Monetary, fiscal and healthcare policies all play roles in ensuring that retirees are self-sufficient.

“With individuals assuming greater responsibility for their retirement funding, it will be up to policymakers, employers and the investment industry to find innovative solutions to ensure workers have the tools and incentives they need to save enough for retirement,” Hailer said. “Achieving retirement security is a daunting goal, but it is within reach if all stakeholders do their part. Failure is not an option.”

To see the 2016 Natixis Global Retirement Index and download the full report, go to www.durableportfolios.com/Global-Retirement-Index-2016.

Methodology

The Global Retirement Index was compiled by Natixis Global Asset Management with support from CoreData Research, a U.K.-based financial research firm. The index includes International Monetary Fund (IMF) advanced economies, members of the Organization for Economic Co-operation and Development (OECD) and the BRIC countries (Brazil, Russia, India and China). The report captured data from a variety of sources, including the World Bank. The researchers calculated a mean score in each category and combined the category scores for a final overall ranking of the 43 nations studied.

About Natixis Global Asset Management

Natixis Global Asset Management serves thoughtful investment professionals with more insightful ways to understand and manage risk. Through our Durable Portfolio Construction^® approach, we help them construct more strategic portfolios that seek to produce better outcomes in today’s unpredictable markets. We draw from deep investor and industry insights and partner closely with our clients to put objective data behind the discussion.

Natixis is ranked among the world’s largest asset management firms.¹ Uniting over 20 specialized investment managers globally ($884.9 billion AUM²), we bring a diverse range of solutions tailored to meet every strategic challenge. From insight to action, Natixis helps our clients better serve their own with more durable portfolios.

Headquartered in Paris and Boston, Natixis Global Asset Management, S.A.’s assets under management totaled $884.9 billion (€776.4 billion) as of March 31, 2016.² Natixis Global Asset Management, S.A. is part of Natixis. Listed on the Paris Stock Exchange, Natixis is a subsidiary of BPCE, the second-largest banking group in France. Natixis Global Asset Management, S.A.’s affiliated investment management firms and distribution and service groups include Active Investment Advisors;³ AEW Capital Management; AEW Europe; AlphaSimplex Group; Axeltis; Darius Capital Partners; DNCA Investments;⁴ Dorval Finance;⁵ Emerise;⁶ Gateway Investment Advisers; H2O Asset Management;⁵ Harris Associates; IDFC Asset Management Company; Loomis, Sayles & Company; Managed Portfolio Advisors;³ McDonnell Investment Management; Mirova;⁵ Natixis Asset Management; Ossiam; Seeyond;⁷ Vaughan Nelson Investment Management; Vega Investment Managers; and Natixis Global Asset Management Private Equity, which includes Seventure Partners, Naxicap Partners, Alliance Entreprendre, Euro Private Equity, Caspian Private Equity and Eagle Asia Partners. Visit ngam.natixis.com for more information.

More about John Hailer, CEO of the Americas and Asia, Natixis Global Asset Management

John Hailer is responsible for distribution strategies worldwide and oversees the business activities of the firm’s asset management affiliates in the Americas and Asia. He is a key spokesperson for the Durable Portfolio Construction Research Center and has worked to position Natixis as a global solutions provider for clients worldwide.

¹Cerulli Quantitative Update: Global Markets 2015 ranked Natixis Global Asset Management, S.A. as the 17^th largest asset manager in the world based on assets under management as of December 31, 2014.
² Net asset value as of March 31, 2016. Assets under management (AUM) may include assets for which non-regulatory AUM services are provided. Non-regulatory AUM includes assets which do not fall within the SEC’s definition of ‘regulatory AUM’ in Form ADV, Part 1.
³A division of NGAM Advisors, L.P.
⁴A brand of DNCA Finance.
⁵ A subsidiary of Natixis Asset Management.
⁶A brand of Natixis Asset Management and Natixis Asset Management Asia Limited, based in Singapore and Paris.
⁷A brand of Natixis Asset Management.

¹ Cerulli Quantitative Update: Global Markets 2016 ranked Natixis Global Asset Management, S.A. as the 16^th largest asset manager in the world based on assets under management as of December 31, 2015.