As a proud founding partner of European Retirement Week, EFAMA hosted an online event on 25 November dedicated to effective national pension reform, a crucial step in scaling up Europe’s capital markets and tackling the growing pension gap. Patrick Augustin and Sebastien Betermier from McGill University presented the lessons learned from their comparative analysis of multiple EU and non-EU countries, explaining why many European countries lag behind in mobilising long-term savings and what can be learned from high-performing systems such as those in Sweden, Canada, and Australia. They were joined by Corinne Lamesch from ALFI, co-publisher of the report.

Professor Sébastien Betermier from McGill University examined how unfunded public pension liabilities can drive up bond yields and create risks for bond investors. Citing his GRI-supported research comparing U.S. public pension shortfalls and municipal bond yields during financial crises, Betermier spoke about a non-linear “hockey stick” effect whereby borrowing costs rise sharply only once pension gaps exceed roughly 100% of annual state revenue.

Canada needs new infrastructure, but there’s a catch-22: developers can’t move forward without financing, and investors are wary of early-stage risk. So how do we break the cycle? Banking on the United States is risky, which is why McGill’s Sebastien Betermier tells us that Canada’s infrastructure banks need a sense of direction from Ottawa as we decouple our economies. There are also other countries – such as Australia – we can turn to for advice.