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Canada rates as above average in a ranking of global pension systems but its score is expected to improve in the years ahead, as enhancements to the Canada Pension Plan (CPP) come on stream.

The latest edition of the Melbourne Mercer Global Pension Index, published on Monday, gives Canada an overall score of 66.8, which puts it ahead of the average (59.9) for the 30 countries assessed.

The index scores pension systems based on 40 different metrics in three basic areas, their adequacy, sustainability, and integrity.

Canada’s overall score ticked up slightly from last year’s 66.4, but Mercer notes that its sustainability mark declined a bit based on a new indicator that measures the level of real economic growth in the country.

“Canada’s recent change to maintain the eligibility for Old Age Security at age 65, rather than gradually increase this eligibility to age 67, resulted in a slight decline in its sustainability score,” says Scott Clausen, partner in Mercer Canada’s wealth business, in a statement.

“One of the top recommendations for all countries is to increase the eligibility age for state pension plans to reflect increasing life expectancy — something that is already occurring in many developed countries around the world,” he notes.

According to the index, Denmark boasts the world’s top ranked pension system for the sixth straight year, with an overall score of 78.9, followed by the Netherlands and Australia, with scores of 78.8 and 77.1, respectively. The U.S. is ranked below average with a score of of 57.8.

Looking ahead, Mercer suggests that Canada’s score is likely to head higher as the index does not yet reflect the CPP enhancement, given that contribution increases will not start to be phased in until 2019.

“The upcoming enhancement to the Canada Pension Plan, including the fully funded nature of the enhancement, is expected to help increase Canada’s overall score in the coming years,” said Clausen; adding that Mercer hopes that Québec will soon announce a similar enhancement to the Québec Pension Plan (QPP).

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