Explained: India's pension system ranked lowest in world, Singapore tops

According to the Global Pension Index 2025, few nations have cracked the code, with the Netherlands, Iceland, and Denmark leading, and India, Philippines, and Thailand among those lagging far behind

India’s retirement income system continues to trail global best practices, as the Global Pension Index 2025 ranks India with a D-grade and a score of 43.8 out of 100 — notably behind top-performing systems.  

According to the Global Pension Index 2025, published by Mercer and the CFA Institute, few nations have cracked the code on balancing adequacy, sustainability, and trust — with the Netherlands, Iceland, and Denmark once again leading, and India, Philippines, and Thailand among those lagging far behind.  "The research highlights significant diversity between systems around the world, with index scores ranging from 43.8 to 85.4. The Netherlands, Iceland, Denmark, Singapore, and Israel rank highest. These nations offer strong benefits, sound regulation, and solid asset bases. India ranks lowest," said the report.

 

The Global Pension Index 2025, benchmarks 52 retirement income systems across the world, covering about 65 per cent of the world’s population. Using three pillars — adequacy (40 per cent weight), sustainability (35 per cent), and integrity (25 per cent) — the index provides a comparative view of how well countries’ pension systems are delivering.  

Summary of the Global Pension Index 2025 results

 

In the 2025 ranking, India scores 43.8 in overall rating, which places it firmly in the D-grade category. Looking at subindices:

 

On adequacy, India is weak, reflecting that pension benefits are not high enough relative to needs.

 

On sustainability, it scores poorly, emphasising the stress on financing future pensions given the ageing populations and fiscal constraints.

 

On integrity, India does relatively better but still lags top systems — showing gaps in governance, transparency, and regulatory robustness. 

 

By contrast, A-grade systems such as the Netherlands, Iceland, Denmark, Singapore, and Israel top the list, combining strong benefits, sustainable funding practices, and high system integrity. 

 

India’s system is cited among the “worst” performers, not because it lacks ambition, but because decades of underinvestment, governance opacity, limited formal coverage and constrained investment freedom have stunted its system’s maturity.

 

The index underlines that while no country was downgraded in 2025, several have improved, signifying the pressure on behind systems like India’s to catch up. 

 

What the low score means for India

 

India’s low ranking is not just about numbers. It highlights structural challenges in delivering meaningful retirement incomes for a large and growing elderly population. Some key takeaways:

 

1. Low coverage and limited pensions for many workers

A large share of India’s workforce is informal, without access to formal pension or retirement benefit schemes. This limits adequacy of income replacement for many.

 

2. Fiscal burden and sustainability risk

With public finances stretched and social security needs rising, sustaining pension outflows over decades becomes difficult. Without reforms, India may find itself under pressure to subsidise or scale back pension commitments.

 

3. Governance and transparency gaps

Index findings emphasise that strengths in integrity (disclosure, regulation, governance) are essential for confidence in pension systems. For India, improving trust and regulatory oversight is crucial to strengthen pensions.

 

4. Constraints on private pension fund investments

The report notes that many systems impose investment restrictions to protect members’ benefits. Indeed, India restricts direct real estate exposure for pension funds (zero per cent in many cases) as part of its regulatory architecture. 

 

Global context and India’s position

 

Globally, retirement wealth is growing. Among OECD countries, retirement assets grew 10 per cent in 2024, reaching around $63.1 trillion, driven by equity markets and broader pension participation.  

India’s retirement income system comprises an earnings-related employee pension scheme, a DC employee provident fund (EPFO) and supplementary employer-managed pension schemes that are largely DC in nature

 

In the 2025 index, top performers continue to maintain strong scores. Singapore is one of the new additions to A-level systems, joining the elite ranks. 

 

India’s comparative position: With a rating of 43.8 and grade D, it sits among several countries in the “D” category. This underscores the gap between aspiration and delivery in India’s pension infrastructure. 

India’s Retirement Income System — Key Highlights (Global Pension Index 2025)

 

India’s retirement income system comprises:

 

• An earnings-related employee pension scheme
• A defined contribution (DC) employee provident fund (EPFO)
• Supplementary employer-managed pension schemes, mostly DC in nature
• Government pension programs launched under the universal social security initiative for the unorganised sector

 

How India can improve its pension index score?

 

According to the Mercer–CFA Institute report, India’s overall index value could rise by:

 

•  Introducing a minimum level of support for the poorest aged individuals
•  Expanding pension coverage to include the large unorganised workforce, helping build pension assets over time
• Setting a minimum access age to ensure benefits are preserved for true retirement use
• Strengthening regulatory oversight and governance for private pension systems

 

Index performance (2025 vs 2024)

 

India’s overall index score fell slightly from 44.0 in 2024 to 43.8 in 2025.

 

The decline was mainly due to the addition of a new question in the sustainability sub-index, which lowered India’s score marginally. 

Why Singapore topped:

 

Singapore’s retirement system — primarily built around the Central Provident Fund (CPF) — has been recognised as the world’s best for the second year in a row.

It scored 86.0 out of 100 on the Mercer–CFA Institute Global Pension Index 2025, ranking first globally ahead of the Netherlands and Iceland.

 

The  Central Provident Fund, which covers all employed citizens and permanent residents through mandatory contributions from both workers and employers. Back in 2009, the city-state managed only a C on the global index — by last year, it had risen to a B+.

 

Singapore’s CPF is a mandatory, defined-contribution system where both employers and employees contribute regularly.

 

Funds are individually owned, invested prudently, and earn a guaranteed risk-free return.

 

The CPF ensures long-term sustainability, with minimal reliance on government subsidies or debt.

 

CPF members have comprehensive coverage — contributions fund retirement, healthcare, and housing, making it one of the most integrated social security systems globally.

 

The basic retirement payouts are sufficient to cover essential living expenses for most retirees, supporting financial independence in old age.

 

In this year’s ranking, the US came in 30th, the UK 12th and Japan 39th. India was ranked lowest with a 'D' rating, coming in behind Argentina, the Philippines and Turkey, which were also all rated 'D'. Australia, whose pension system is highly regarded globally, dropped a notch to seventh position below Sweden. 

Regional takeaways

 

Europe: Continues to dominate the top ranks, with Northern and Western European nations maintaining balance between public and private pillars.

 

Asia-Pacific: Wide divergence — Singapore, Australia, and Hong Kong outperform peers, while India, Thailand, and the Philippines lag.

 

Americas: Canada and Chile lead the region; Argentina and Mexico face underfunding and political volatility.

 

Middle East and Africa: New entrants like Kuwait (B-grade) and Oman (C+) show early progress in institutional reform.