India low on global pension index; proactive regulation can bring meaningful change
A study says steps like introducing minimum level of support for the poor can lead to increase in India’s index value
The pension and retirement income system in India has figured in the lowest category in the world, according to the Melbourne Mercer Global Pension Index 2018, published by Mercer, a human resources consulting firm, along with Australian Centre for Financial Studies and Monash University.
The other countries in this category along with India are Japan, South Korea, China, Mexico and Argentina. According to the study, these countries have a system that has some desirable features, but also have major weaknesses or omissions that need to be addressed. Without improvements on these weaknesses, the efficacy and sustainability of these systems are in doubt.
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The index has categorised 34 countries’ pension systems based on their adequacy, sustainability and integrity. Adequacy index takes into account factors like tax support, savings and system design. Sustainability includes factors like pension coverage, contributions, government debt and economic growth. Integrity index is a measure of aspects like regulation, governance and costs.
The top category with countries having a “robust retirement income system” includes only two countries, Netherlands and Denmark. These countries have a score of over 80 in the index, while the category which includes India has a score between 35 and 50. India scored 44.6 in 2018, which is marginally lower than its score at 44.9 in 2017.
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