In Global Pension Index 2019, India has been grouped among countries that have desirable pension systems but with major weaknesses that need to be addressed. The efficacy and sustainability of such systems would be in doubt if improvements are not made. About India’s pension system, the Melbourne Mercer Global Pension Index 2019 notes: “India’s retirement income system comprises an earnings-related employee pension scheme, a defined contribution employee provident fund, and supplementary employer managed pension schemes that are largely defined contribution in nature. Government schemes have been launched as part of universal social security program aimed at benefitting the unorganised sector. The National Pension System is gradually gaining popularity.”

The Indian index value increased from 44.6 to 45.8 in 2019 due to increase in sub-indexes like adequacy, sustainability and integrity. However, India is way behind nations listed on top of the Pension Index. Here is a look at the pension systems of five such countries:

Netherlands and Denmark

Both these countries score above 80 on the index. The Pension Index report defines their systems as “a first class and robust retirement income system that delivers good benefits, is sustainable and has a high level of integrity.”

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In the Netherlands, the pension system comprises a flat-rate public pension and a quasi-mandatory earnings-related occupational pension linked to industrial agreements. “Most employees belong to these occupational schemes which are industry-wide defined benefit plans with the earnings measure based on lifetime average earnings,” the report says about the Dutch pension system.

The retirement system in Denmark consists of “a public basic pension scheme, a means-tested supplementary pension benefit, a fully funded defined contribution scheme and mandatory occupational scheme.

Australia

Australia scores 75.3 on the Global Pension Index 2019. The report says, “Australia’s retirement income system comprises a means-tested age pension (paid from general government revenue); a mandatory employer contribution paid into private sector arrangements (mainly DC plans); and additional voluntary contributions from employers, employees or the self-employed paid into private sector plans.”

Finland, Norway

Both these countries score between 65-75 on the Index. According to the report, these countries have a “system that has a sound structure, with many good features, but has some areas for improvement that differentiates it from an A-grade system. ”

In Finland, the retirement system includes a basic state pension, which is pension-income tested, and a range of statuary earnings-related schemes.

The retirement income system of Norway consists of an “earnings-related social security pension with a minimum pension level, and mandatory occupational pension plans. There are also many voluntary arrangements to provide additional benefits.”

Some other countries scoring 65-75 on the index are Singapore, New Zealand, Canada, Chile, Ireland, Switzerland and Germany.