India has marginally improved its ranking to 32nd position in terms of providing pension and retirement benefits to citizens compared to last year, according to a report.
India has marginally improved its ranking to 32nd position in terms of providing pension and retirement benefits to citizens compared to last year, according to a report. The country’s score in the Melbourne Mercer Global Pension Index (MMGPI) 2019 rose to 45.8 from 44.6 last year.
The MMGPI, which covers 37 countries, is based on how they fare on providing pension and retirement benefits to citizens across different income groups.
India stood at 32nd position in 2019 out of 37 countries, while it was ranked at 33rd place in 2018 out of 34 countries in the list.
India’s index value increased largely due to the improvement in all three sub-indices of adequacy, sustainability and integrity.
As per the index, the improvement was due to slight increase in scores across 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 report said that the draft wages and social security reforms, that have been initiated in India, indicate the intent of policy makers in creating an inclusive and sustainable pension system.
Given the demographic diversity and the large percentage of workforce in the unorganised sector, reforms in the pension system will take time to manifest themselves, it said.
The report added that index value can further be enhanced by complementing above reforms with greater participation of organised sector in supplemental pension plans.
“With the general trend moving towards defined contribution voluntary plans, the companies are focusing on building awareness among employees on the need to save towards retirement,” Preeti Chandrashekhar, India Business Leader, Health & Wealth, Mercer said.
“Enhanced communication and awareness should increase engagement and greater participation in pension arrangements in the organized sector,” she added.
Efforts by the government to introduce new pension system has shown good results, the report said.
It cited the Atal Pension Yojana (APY) which is available to all citizens below the age of 40, but is aimed at the unorganised sector and encourages them to save voluntarily before retirement.
The report also mentioned new schemes introduced by the government for different segments of workers in the unorganised sector like the PM Karam Yogi Maan-Dhan Scheme for retailers and shop keepers, PM Kisan Pension Yojan (PM-KMY) for small and marginal famers and the recently announced contributory scheme Pradhan Mantri Shram-Yogi Maan-Dhan (PM-SYM) that covers workers in the unorganized sector with equal contribution by the government.
In the overall list, the Netherlands had the highest index value (81.0), while Thailand had the lowest value (39.4).
Sub-index wise, Ireland had the highest score for adequacy (81.5), Denmark for sustainability (82.0) and Finland for integrity (92.3).
Thailand scored the lowest for adequacy (35.8), Italy for sustainability (19.0) and Philippines for integrity (34.7).