Out of the 20 countries, India stands 19th in terms of retirement service standards.
The Melbourne Mercer Global Pension Index (MMGPI) has assigned Grade-D to Indian retirement system indicating doubtful sustainability and efficacy of the pension fund industry. Also, India ranked 19th in terms of retirement standards by scoring out 44.1 out of 100, says MMGPI.
The survey was conducted in 20 countries covering around 55% of world population and looked at three indices - adequacy, sustainability and integrity. Each index weighed 100 points and ranks were assigned on the basis of average of these factors. With more than 80 points Denmark ranked first in terms its retirement services while Netherlands and Australia stood at second and third position respectively.
Performance of Indian pension system
Arvind Usretay, India Business Leader – Retirement Mercer says that the index can be improved by increasing participation from the unorganized sector through tailor made products. He suggested introducing a minimum level of support for the senior citizens in the most economically deprived sections of society through social security programs.
“Since the report has taken many developed economies like UK and USA, India was ranked in the bottom. However, we are of the view that Indian pension fund industry is still in nascent stage and it will grow drastically once financial literacy improves,” says, a senior official from one of the state owned pension funds houses.
The report makes a few recommendations to improve retirement security in India
· Promote work for senior citizens
· Provide planning advice
· Encourage higher levels of retirement savings
· Facilitate the conversion of property into retirement income
· Stimulate micro-insurance and micro pensions for the poor
· Enhance pension fund performance
· Promote annuities markets
