The world is ageing, and we are not ready. The 2026 global pension index puts Canada in 18th place worldwide on ageing population support for current person needs. Its findings raise a significant question about the workforce that will support retirement, and Japan shows what happens when demographic pressure becomes an everyday economic constraint. This is happening at a time when social pressure to reduce immigration is increasing, just at the moment when economics are demonstrating how much we need increased immigration.

Globally, retirement systems face the same demographic squeeze

Retirement systems around the world are being asked to support longer lives with a changing balance between workers and retirees. The countries managing that transition best are those building it into pension funding and retirement design now.

The 2026 Marsh CFA Institute Global Pension Index, released October 20, compares 55 retirement income systems covering 66% of the world’s population. Its central warning is that falling fertility and rising longevity are putting pressure on systems designed around very different demographic assumptions.

The Netherlands leads with a score of 85.8, followed by Denmark at 84.1 and Iceland at 84.0. Singapore, Israel and Australia complete the six systems receiving an A grade. Australia joins that group for the first time this year.

The index assesses three dimensions: adequacy, sustainability and integrity. These address the benefits a system provides, its capacity to keep providing them, and the safeguards under which it operates. Different countries lead on different measures: Kuwait scores highest for adequacy, Denmark for sustainability and Finland for integrity.

There has been progress for those looking further out into the future. The average overall score increased by 1.1 points from 2025, while Australia, the United Arab Emirates, Oman, Panama and China improved their grades. But even the strongest systems face demographic change.

“Pension systems are under real strain,” said Christine Mahoney, Global Defined Benefit and Defined Contribution Leader at Marsh People and Investments.

The report identifies three priorities: clearer pension objectives, funding future retirement obligations, and greater flexibility in retirement ages and income products. As more people combine employment and retirement, systems need to accommodate transitions that extend beyond a single final day of work.

That is a global challenge. Canada’s results show why it is also an immediate domestic policy issue.

Canada earns a B, with a substantial gap between governance and outcomes

Canada scores 70.6, placing it 18th among the 55 systems in the release’s ranking. It receives a B grade, below the United Kingdom, New Zealand, Mexico and Hong Kong, and just above France.

Global comparison

Source: 2026 Marsh CFA Institute Global Pension Index news release. Selected systems, not the complete ranking.

Canada’s component scores are more revealing than its overall position.

Canada scores substantially better on integrity than on either adequacy or sustainability. What this tells us is that sound institutions and safeguards do not, by themselves, guarantee sufficient retirement income or eliminate long-term pressures. And those pressures include conservative, anti-immigrant rhetoric, social movements and parties/governments who want to slow immigration at the worst possible moment.

The index assesses the retirement income system as a whole. It is not a verdict on the Canada Pension Plan. CPP is far from approaching insolvency. But it is a clear statement on where we stand, and what the future will hold without intervention.

The Office of the Chief Actuary’s revised 32nd CPP report finds the legislated contribution rate sufficient to finance the base plan over the long term under its assumptions. It projects that a growing portion of investment income will help pay benefits as the system matures. That is part of the funding design.

Canada has different financing arrangements across its retirement system. CPP combines contributions and investment income. Old Age Security and the Guaranteed Income Supplement are financed through general tax revenues, as described in the Library of Parliament’s overview. Workplace pensions and personal savings add further layers.

Retirement Funding Vehicles in Canada … and the Trends

An ageing population therefore creates several distinct challenges: maintaining adequate household incomes, financing public benefits and services, and sustaining the workforce and productive capacity on which those commitments ultimately depend. Canada is ageing as immigration policy tightens. The demographic shift is already visible.

Statistics Canada’s September 2026 population release puts the share of Canadians aged 65 and older at 20% on July 1, 2026. The median age reached 40.9 years. The agency reports that very high international migration had previously helped stabilize or reduce average and median ages; changing migration patterns have contributed to renewed increases.

Canada’s total fertility rate was 1.25 children per woman in 2024, a record low and well below the roughly 2.1 associated with population replacement in the absence of migration. Even a sustained improvement in births would take roughly two decades to begin replenishing the adult workforce.

Meanwhile, the federal 2026–2028 Immigration Levels Plan sets permanent resident admissions at 380,000 annually. It targets 385,000 new temporary worker and student arrivals in 2026, falling to 370,000 in 2027 and 2028, and aims to bring the temporary resident population below 5% of the total population by the end of 2027.

It’s important to distinguish between temporary visitors and immigrants. Permanent resident admissions include people already living in Canada, while temporary arrival targets measure a different flow. Neither figure is a direct measure of net population growth.

The plan increases the economic immigration share to 64% by 2027 and 2028. Its stated approach is to reduce temporary arrivals while placing more emphasis on skills and labour-market needs. This exposes a gap. The pension index does not prescribe an immigration target. But its findings strengthen the case for evaluating immigration policy alongside retirement, health care and workforce planning.

Slower population growth does not remove the cost of ageing

Canada needs to match population growth with housing, infrastructure and public services. A demographic argument for immigration does not excuse admitting people into conditions where they cannot find a home, secure appropriate work or access care.

But reducing immigration also has consequences that need to be measured.

Working-age newcomers can expand employment, pension contributions and tax revenues. They can also fill jobs essential to an ageing society, including health care, construction and personal support. The size of that contribution depends on employment, earnings, age, retention and whether their qualifications are recognized.

A trained professional working far below their skill level represents lost productive capacity. Immigration policy cannot deliver its full economic benefit if licensing, housing or labour-market barriers prevent people from doing the work Canada needs.

Japan shows what demographic pressure looks like in practice

The practical policy question is what combination of these measures can sustain living standards. If migration is reduced, governments should explain how other measures will compensate for the resulting change in labour supply and revenues, and how quickly those measures can work.

Japan offers a concrete example of a country adapting after a prolonged decline in its working-age population.

According to the OECD’s 2025 Employment Outlook country note, Japan’s working-age population fell from 87.3 million in 1995 to 73.7 million in 2024, a decline of 16%. Over the same period, its old-age dependency ratio more than doubled, from 21% to 49%, approximately 49 people aged 65 and older for every 100 people aged 15 to 64. That is an age-based comparison, not a count of pensioners per employed worker.

The consequences are visible in business operations. The OECD reported widespread labour shortages in 2025, alongside substantial increases in older-worker employment. Japan has also seen growth in its foreign population.

Its experience shows both adaptation and the limits of adaptation. Employers can retain older workers and expand recruitment, but those measures require changes in working conditions, compensation and access to training.

The OECD’s 2026 economic survey describes pension reforms expanding coverage for part-time and irregular workers and improving incentives to combine work with pension income. It also reports relative old-age poverty of 20%, above the OECD average of 12.5%.

Japan receives a C grade and a score of 58.0 in the 2026 pension index, including 48.5 for sustainability. Those results cannot be attributed to immigration policy alone. Pension design, employment practices, productivity and economic history all contribute.

The lesson for Canada is that demographic adjustment becomes harder when several pressures arrive together: fewer potential workers, more demand for care, and retirement incomes that remain inadequate for some households.

Canada needs a plan that connects the decisions with consequences

For Canadian businesses, this is a workforce and investment issue as well as a pension issue. Retirement can remove experienced employees faster than firms can replace their knowledge. Caregiving demands can constrain the hours of workers who remain. Recruitment difficulties can limit expansion even where customer demand exists.

An effective, credible response needs several parts.

Connect immigration targets to workforce and infrastructure plans. Publish the expected implications for employment, public revenues and service capacity, and invest in the housing and credential recognition that make successful settlement possible.

Make longer working lives a viable choice. Choice is the imporyant word. Flexible schedules, phased retirement and accessible training can help retain experience. Policy must also continue to include the many people whose health or physically demanding work makes continued employment unrealistic. Our population is increasingly disabled at younger ages and this is a reality we cannot ignore.

Improve retirement coverage and income adequacy. Strong fund management cannot compensate for every gap in contributions, earnings or workplace pension access.

Invest in productivity with measurable results. Technology and better business processes can help a smaller workforce produce more, but projected gains should not be treated as accomplished facts.

Support people who want children. Housing, child care and economic security belong in a long-term demographic strategy, while recognizing that higher births cannot fill today’s vacancies. Many families are living in poverty and can’t support one child let alone sufficient numbers to support population growth.

Canada’s B grade gives it a foundation from which to act. Japan’s experience shows how much effort is required once an ageing workforce becomes a persistent challenge, exerting pressure on businesses and public services.

Canada can change immigration targets much faster than it can change its age structure. Its retirement strategy needs to account for both.

Source note: Global and Canadian index scores, rankings, policy priorities and the Marsh quotation are drawn from the supplied October 20, 2026 news release, “Aging populations are straining retirement systems worldwide, according to the 2026 Marsh CFA Institute Global Pension Index.” Immigration, demographic and Japan comparisons use the official sources linked above. The policy implications are this article’s analysis; they are not presented as conclusions of the index.