India's retirement income ranks the lowest among 25 countries in the world with Denmark being rated as the numero uno, said a study for retirement income conducted by the Melbourne Mercer Global Pension Index (MMGPI).
India's score at the MMGPI largely remained unchanged at a grade of D which is score between 35 and 50 and indicates a system that has some sound features but major omissions or weaknesses. A D-grade classification may also occur in the relatively early stages of the development of a particular country's retirement income system, such as in India, China, Indonesia and Korea.
Rising life expectancies, increased government debt in many countries, uncertain economic conditions and a global shift to defined contribution (DC) plans mean that a new landscape is developing.
Pension systems around the world either social security systems or private sector arrangements, have come under more pressure than ever before, says the survey. This study of retirement income systems has confirmed that there is great diversity between the systems around the world with scores ranging from 43.5 for India to 82.4 for Denmark.
It is interesting to note that from last year while the adequacy rate has decreased for India which relates to the pension system proving adequate retirement income, the integrity rate has increased reflecting the growing confidence in the pension system to deliver retirement benefits in the future. However for countries like China, integrity scored lesser than its adequacy.
"While some countries have well-established retirement systems that have stood the test of time, others are just developing, especially those within the Asian region," said MMGPI.
"India scored well in the integrity of their retirement system, which speaks to the strong regulations on governance and protection of employee benefits. However, improving the minimum level of support for the poor, improving the regulations of private pension plans and addressing issues on increasing life expectancy will help raise the score in the future" said Arvind Usretay, Mercer's India Retirement Business Leader, commenting on the results.
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