Pension system ranking shows improvement

India has marginally improved its ranking to 32nd position out of a total of 37 markets, in terms of providing pension and retirement benefits to citizens compared to last year, according to a report. The country was in 33rd place in 2018 out of 34 countries in the list.

These rankings are shown in the Melbourne Mercer Global Pension Index (MMGPI) released recently. The country's score in the Index in 2019 rose to 45.8 from 44.6 last year.

India's index value increased largely due to improvement in all three sub-indices — adequacy, sustainability and integrity. Improvements were seen in various dimensions, including net household savings, greater flexibility in managing retirement and part time work, steady progress in governance and reporting around private pension plans.

The MMGPI 2019 report says that the draft wages and social security reforms, that have been initiated in India, indicate the intent of policymakers to create an inclusive and sustainable pension system.

Given the demographic diversity and the large percentage of the workforce in the unorganised sector, reforms in the pension system will take time to manifest themselves, the report says.

Steps for further improvement

The report adds that the overall index value for the Indian system could be increased through measures including:

• introducing a minimum level of support for the poorest aged individuals;
• increasing coverage of pension arrangements for the unorganised working class;
• introducing a minimum access age so that it is clear that benefits are preserved for retirement purposes;
• improving the regulatory requirements for the private pension system;
• increasing the pension age as life expectancy continues to increase;
• increasing the level of contributions in statutory pension schemes.

Source: Asia Insurance Review