With little social security coverage, the workforce in India has to manage pension savings on its own for the most part
Mumbai: India has ranked 40th out of the 43 pension systems globally and needs to undertake strategic reforms to revamp the pension system to ensure adequate retirement income, pointed out the 2021 Global Pension Index report.
With little social security coverage, the workforce in India has to manage pension savings on its own for the most part. The coverage under private pension arrangement is just about 6 per cent in India. With over 90 per cent of the total workforce being in the unorganised sector, measures should be taken to get a larger workforce under pension savings, said the survey.
While Iceland had the most organised pension system and ranked first with an overall index value of 84.2, the Netherlands took the second place with an index value of 83.5, followed by Denmark, Israel, Norway, Australia, Fin-land and Sweden at the eighth position. The three countries that ranked worse than India were the Philippines with 41st position, Argentina with 42nd position and Thailand occupying the last rank. India had stood at the 34th position out of the 39 pension systems rated in 2020.
According to the survey, India had an overall index value of 43.3 among the countries analysed. The index highlights key strengths of retirement pension systems around three sub-indexes—adequacy, sustainability and integrity to measure each retirement system against more than 50 indicators, where India scored 33.5, 41.8 and 61.0, respectively.
The adequacy sub-index represents the adequacy of the benefits that are being provided, the sustainability sub-index represents the likelihood of the current system providing benefits in the future, while the integrity sub-index includes legislative requirements that influence the overall governance and operations of the system.
The Global Pension Index is a collaborative research project sponsored by CFA Institute, the global association of investment professionals, in collaboration with the Monash Centre for Financial Studies, part of Monash Business School at Monash Univer-sity, and Mercer Consulting.