The Mercer CFA Institute Global Pension Index ranked the 44 systems from across the world covered this year, placing India's retirement income system in 41st place. India's ranking in 2022 is down one spot from its position in 2021, when 43 systems were ranked, when it was ranked 40th.
India's total index value increased from 43.3 in 2021 to 44.4 in 2022, but the country's position fell as a result, mostly because of an increase in net replacement rates and changes to the scoring methodology.
Portugal, which joined the Index this year and is currently rated 24th, is the cause of the drop in rankings.
The defined-contribution (DC) employee provident fund (EPFO), the earnings-related employee pension scheme, and additional employer-managed pension plans, most of which are DC in design, make up India's retirement income system. As part of the universal social security program, government initiatives have been implemented with the unorganized sector in mind.
Recommendations
According to the paper, the following factors could raise India's total index rating for the Indian system:
• Establishing a basic standard of assistance for the most vulnerable seniors.
• Broadening the scope of pension plans available to the unorganized working class
• Setting a minimum access age to ensure that benefits are maintained for retirement purposes
• Improving the private pension system's regulatory standards
The following are the ratings assigned to the Indian market:
India | 2022 | 2021 |
Overall Index Value | 44.4 | 43.3 |
Adequacy | 37.6 | 33.5 |
Sustainability | 40.7 | 41.8 |
Integrity | 60.4 | 61.0 |
Ranking | 41 out of 44 | 40 out of 43 |
Source: Mercer CFA Institute Global Pension Index 2022 | ||
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