The Indian retirement system has been ranked last in the global pension index, according to a Mercer report. Denmark has been rated as the country with the best retirement system globally, while Australia, Germany, Japan, Singapore and the UK have increased their pension age to offset the increase in life expectancies.
India's index value fell from 43.5 in 2014 to 40.3 in 2015, primarily because of a recent review conducted by the Economic Intelligence Unit that showed a material reduction in its household savings rate.
The Melbourne Mercer Global Pension Index (MMGPI) report 2015 is now in its seventh year, and has measured 25 retirement income systems against more than 40 indicators, under the sub-indices of adequacy, sustainability and integrity. The report covers almost 60% of the global population, and also suggests how governments can provide adequate and sustainable benefits that protect their citizens against longevity risk, ie. the risk of their aging population outliving their savings. This year's MMGPI looked beyond the annual rankings to observe changes over the last seven years and assess which pension systems will continue to deliver and which ones are at risk.
"The National Pension System (NPS) is gradually gaining popularity in India. Continuing to improve education and communication will help increase coverage of pension arrangements for the working population in the organised sector, particularly popularising the corporate model of NPS among Indian employers," said Anil Lobo, India business leader for retirement, Mercer India.
Author of the report and senior partner at Mercer, David Knox, said, "Implementing the right reforms to improve pension systems and provide financial security in retirement has never been more critical for both individuals and societies."
The Index is used internationally both to highlight the relative strengths of pension systems and to identify opportunities and options for improvement.
Suggested measures to improve India's system include introducing a minimum level of support for the poorest aged individuals, increasing coverage of pension arrangements for the unorganised working class, introducing minimum access age so that it is clear that benefits are preserved for retirement purposes, and improving the regulatory requirements for the private pension system.
The Index looks objectively at both the publicly funded and private components of a system as well as personal assets and savings outside the pension system. It is published by the Australian Centre for Financial Studies (ACFS) in conjunction with Mercer and is funded by the Victorian State Government.
Source:-The Economic Times
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