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India's retirement income system improves performance in 2013

Score in adequacy sub-index increased from 37.4 in 2012 to 41.2 in 2013

Shivani Shinde Nadhe  |  Pune 

India’s overall performance in the 2013 Global has improved with particular improvement to the adequacy of India’s system.

India’s overall index value increased from 42.4 in 2012 to 43.3 in 2013, out of a possible 100, primarily due to a revised score relating to maintaining the value of benefits after resignation.

India’s score in the adequacy sub-index, which essentially measures how much income individuals, are likely to have in retirement, increased from 37.4 in 2012 to 41.2 in 2013.

“It is heartening to see India’s overall index improve in 2013. The overall index value for India could significantly improve with increased pension coverage of the unorganized sector. The passage of the Pension Bill is a landmark step for India towards ensuring this kind of coverage through th National Pension System (NPS).” said Arvind Usretay, Retirement Business Leader, Mercer.

Denmark, the Netherlands and Australia held onto the top three spots. Denmark became the first country to achieve an ‘A’ Grade in 2012 and have held onto the position in 2013 despite their overall score falling to 80.2 from 82.9.

Denmark’s well-funded pension system with its high level of assets and contributions, the provision of adequate benefits and a private pension system with developed regulations are the primary reasons for its top spot.

The Global is now in its fifth year and has increased from 11 countries in 2009 to 20 countries in 2013 with Mexico and Indonesia the latest additions. It now covers more than 55% of the world’s population.

The Index looks objectively at both the publicly funded and private components of a system as well as personal assets and savings outside the pension system.

It measures the adequacy, sustainability and integrity of a country’s pension system and is produced by Mercer and the Australian Centre for Financial Studies and is funded by the Victorian State Government.

* India’s overall score increases from 2012

* Denmark’s score slides but holds onto no. 1 spot

* Fundamental change in approach to post-retirement solutions needed

* Index increases to 20 countries, covering over 55% of world population

First Published: Mon, October 07 2013. 14:00 IST