Summary of this article
India ranks 43.8 in Mercer CFA Institute Global Pension Index 2025, where adequacy sub-index records grade E, and sustainability score stands at 43.8, indicating the need for systemic challenges and provision of adequate social security
India has scored 43.8 in the latest Mercer CFA Institute Global Pension Index 2025, a decline from its 44 score in the previous year. The slip in India's rating this year indicates the ongoing challenges and the urgent need for comprehensive pension reforms. This is to address the pension needs of the rising ageing population. The report provides a crucial snapshot of the retirement income system worldwide and ranks 52 countries on three key parameters. These include adequacy, sustainability, and integrity. They evaluate:
• Adequacy - to measure the level of income that senior citizens can expect
• Sustainability - to focus on the long-term financial health of the pension system
• Integrity - to assess trustworthiness and governance of pension arrangements
India's Pension System
India's overall score stood at 43.8 out of 100, and that places the country below many other Asian countries, such as Singapore, Hong Kong SAR, and Malaysia, which scored 80.8, 70.6, and 60.6, respectively. The D-grade classification (countries which scored between 35 and 50) of India in the pension index highlights that the system may have some sound features, but there are major weaknesses that must be addressed, without which, its efficacy and sustainability may remain in doubt.
Notably, on the three parameters, India secured lower on the adequacy and integrity compared to the advanced economies. It indicates the urgent need to work on these parameters.
• On the adequacy sub-index, India received grade E, the lowest classification, and an overall sub-index score of 34.7. It underlines the shortcomings in providing people with confidence that their retirement income will be sufficient for old age.
• The sustainability sub-index received a D classification, and a score of 43.8, which is about the system’s ability to handle economic and demographic pressure.
• On the integrity sub-index, India’s score is 58.4 with a C classification. This parameter indicates the regulatory safeguards and systemic trust.
On India's ranking in the Index, Vivek Iyer, Partner and Financial Services Risk Advisory Leader, Grant Thornton Bharat, says, "The Global Pension Index puts India into one of the lowest scoring categories - D Grade with a score of 43.8. The low score is not a surprise and is a reflection of years of lack of focus on retirement planning, which is changing in India."
The report notes that India's retirement income system is defined-contribution-based, with schemes such as Employees' Provident Fund (EPF), Employee Pension Scheme (EPS), and other defined-contribution-based supplementary schemes. However, the government schemes in this segment have been launched as a universal social security program for the unorganised sector.
Iyer says, "Offering universal social security is something that India cannot afford right now from a fiscal prudence standpoint, but having said that, increased focus of the government on raising employment, strengthening regulatory focus through Pension Fund Regulatory and Development Authority (PFRDA), and increased investor awareness around retirement planning are some of the positive steps that are being undertaken. Even a country like Singapore took 16 years to move from a C category to the top category, and we should look at the Indian reforms as a continuum rather than a point in time that we believe should help bring about this change in the coming years."
The report also provides suggestions for the sector's reform:
• “Introducing a minimum level of support for the poorest aged individuals.
• Increasing coverage of pension arrangements for the unorganized working class, thereby gradually increasing the level of assets over time.
• Introducing a minimum access age so that benefits are preserved for retirement purposes.
• Improving the regulatory requirements for the private pension system.”
Besides India, the other countries with D classification are Türkiye, the Philippines, and Argentina. Netherlands, Singapore, Denmark, Israel, and Iceland were classified as A, which means a retirement income system that delivers good benefits, is sustainable, and has a high level of integrity.
