India Slips to 45th Position in Global Pension Index, 2023

• 19 Oct 2023

India has fallen from the 41st position among 44 countries in the 2022 Global Pension Index to the 45th position among 47 countries in 2023.

• This decline in the global ranking was revealed in an index published by Mercer, a United States-based consulting company, in collaboration with the not-for-profit organization CFA Institute

Key Points

• Comprehensive Index Criteria: The Global Pension Index assesses retirement income systems in 47 countries, taking into account more than 50 indicators. It comprises three sub-indices: adequacy, sustainability, and integrity.
• Adequacy Sub-Index: The adequacy sub-index evaluates the sufficiency of benefits provided by the pension system.
• Sustainability Sub-Index: The sustainability sub-index examines the likelihood of the pension system's ability to provide benefits in the future.
• Integrity Sub-Index: The integrity sub-index considers legislative requirements influencing the governance and operations of the pension system and the level of public trust in it.
• Marginal Score Improvement: India's score in the Global Pension Index has marginally improved, rising from 44.4 in the previous year to 45.9 in the latest report.
• Components of India's Pension System: The report highlights that India's retirement income system consists of an earnings-related employee pension scheme, a defined contribution (DC) employee provident fund (EPFO), and supplementary employer-managed pension schemes, which are mostly DC in nature.
• Government schemes have been introduced as part of the universal social security program, particularly aimed at the unorganized sector.
• Areas for Improvement: The report suggests that India can enhance its pension system by improving minimum support, expanding pension coverage to unorganized sector workers, and strengthening regulatory requirements for the private pension system.
• Top Performers: The Netherlands leads the Global Pension Index with a score of 85, followed by Iceland at 83.5 and Denmark at 81.3.