India is ranked 41st out of 44 countries on the pension ranking.
India placed 41st out of 44 nations in the Mercer CFS Global Pensions Index, down from 40th out of 43 countries in 2021. In a report by the Economic Times, the study indicated that the nation has to improve its legal system and increase the scope of private pension plans (ET).
The study based on the survey stated that “given the lack of state welfare coverage in the nation, the sufficiency and durability sub-indices can be greatly enhanced by enhancing coverage under pension scheme arrangements.”
The 44 nations studied by the Mercer CFS Global Pensions Index represent 65% of people worldwide. The value of the index increased from 2021 but fell short of 2020. With a score of 45.7, India placed 34th out of 39 nations in 2020. The index value in 2022 was 44.4.
Adequacy, sustainability, and integrity are the subheads under which the index evaluates the nation’s pension system. India scored 33.5, 41.8, and 61 in these three categories.
The poll also showed that India has a low penetration of private investment. The state of pension plans needs to be improved because the unorganized sector employs 95% of all workers.
According to a survey, India’s pension scheme has advanced a few levels from 2021 and is currently ranked 41 out of the 44 nations assessed. According to the report, India placed 41 out of 44 withdrawal revenue systems examined with an overall indication score of 44.4, up to 43.3 in 2021.
Based on the 2022 Mercer Acca Global Pensions Index check, rank improvement was principally caused by a rise in net alleviation rates ( MCGPI).
The MCGPI is a thorough analysis of 44 international pension systems, representing 65% of the people worldwide. It compares withdrawal income systems in several countries, highlights the shortcomings of each design, and recommends potential directions for reform that could help provide more good and lasting withdrawal benefits.
The paper claims that increasing content under pension scheme arrangements can significantly improve the acceptability and viability of sub-indices in India, which now lack social security content.
Regulations in India might be strengthened to provide private pension plans with less security, which would improve the integrity of the system.
In India, there is a low penetration of individual pension plans. As the unorganized sector accounts for over 95% of the entire pool, there is a need for significant facilitation to ensure that these employees are included in the pension system. When new labor canons are implemented, they will provide access to similar information and help improve the acceptability and durability of sub-indices, it was noted.
MCGPI’s ranking of the nations with the best retirement income systems
1. Iceland
2. Netherlands
3. Denmark
4. Finland
5. Israel
6. Australia……
42 .Argentina
43 . Philippines
44. Thailand
The Study
The Monash Center for Financial Sciences (MCFS), a major US-based worldwide asset management company, the CFA Academy, an international network of investment professionals, and Mercer collaborated to create the global pension index.
The 44 international pension systems surveyed represented 65% of the world’s population. The study identifies the flaws in each and suggests potential fixes for long-term retirement benefits. Each retirement system is evaluated using more than 50 factors, with the weighted average of sufficiency, sustainability, and integrity included in the index.
The index evaluated each retirement pension system‘s strengths based on three main criteria: sufficiency, sustainability, and integrity. In each sub-index, India received 37.6, 40.7, & 60.4, respectively. According to the report, “an improvement in the net average rates and the new scoring system to compute minimum pension” are to blame for India’s improvement in its adequacy score from 33.5 in 2021.
Increasing Regulations
Given the absence of social security in the country, it was underlined that by expanding coverage under private pension schemes, India might significantly raise the adequacy and durability of sub-indices. To offer private solid pension schemes, the report recommended tightening restrictions.
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Given that the unorganized sector employs more than 95% of the country’s workers, India requires a robust private pension scheme to provide more excellent coverage and equitable benefits.
The government has implemented a number of pension reforms over the previous ten years, and these reforms are. According to the report, this is anticipated to encourage more significant private pension membership and higher savings.
As per Sivananth Ramachandran, director of Capital Markets Policy initiatives, India, CFA Institute, India is facing a short-term relationship with inflation from rising prices, rising interest rates, and growing deficits in current accounts but is better placed to temp them because of its robust economy.
He continued that policymakers should continue to focus on long-term issues like expanding pension cover for the unorganized sector and enhancing retirement benefits for the poor. Chandrashekhar observed that India’s flawed social security system made the epidemic, international conflicts, and variable interest rates worse.
With an overall index score of 84.7, Iceland topped the list in the study, followed by the Netherlands (84.6) and Denmark (82.0). Thailand, on the other side, earned the lowest index score of 41.7.
edited and proofread by nikita sharma
