India has been ranked at a lowly 25 among 27 pension systems globally while Denmark maintained the top position for the fifth year, says a survey. The Netherlands and Australia have taken second and third slots, respectively.
According to Melbourne Mercer Global Pension Index (MMGPI) 2016, India showed maximum improvement in global pension and its index value has improved to 43.4 in 2016 from 40.3 in 2015.
Ageing populations, declining birth rates and lack of robust retirement systems will see many countries struggle under the burden of providing adequate pensions to their senior citizens without drastic action, the survey stated.
“New initiatives by the Government of India in providing tax incentives under the National Pension System both during accumulation stage and withdrawal at retirement are increasing its popularity among employees in the corporate sector,” said Anil Lobo, India Business Leader-Retirement, Mercer.
Further, Atal Pension Yojana (APY), which was launched in 2015 has also contributed to increase in coverage for pension among workers in the unorganised sector, Lobo added.
As per the report, possible measures to further enhance India’s system include increasing coverage of pension arrangements for the unorganised working class and introducing minimum access age so that it is clear that benefits are preserved for retirement purposes.
It suggested other measures such as improving regulatory requirements for the private pension system, continuing to improve the required level of communication to members and increasing level of contributions in statutory pension schemes.
It added that there is work to be done to achieve the coveted ‘A Grade’, only ever held by Denmark and the Netherlands.
“Additionally, UAN (universal account number) has eased transfer and traceability of transfer of provident fund under statutory pension plan,” Lobo said.
Also, the government has increased the pension age from 58 years to 60 years under statutory pension plan EPS 95 which offers regular stream of income on retirement, he said.
“This move has been largely welcomed by the members as most of them continue to remain employed till the age of 60 years,” Lobo added.
MMGPI is comparison of global pension systems, and this year, it covered close to 60 per cent of the world’s population, measuring 27 systems against more than 40 indicators to gauge their adequacy, sustainability and integrity.
It includes countries across the Americas, Europe and the Asia-Pacific.