India improves in pension index

The index value for India in Melbourne Mercer global pension index has improved from 40.3 in 2015 to 43.4 in 2016 because of an increase in the net replacement rate. It is a measure of the adequacy of post-retirement income. The index was published by the Australian Centre for Financial Studies in collaboration with Mercer, a consulting firm. India has secured 25th ranking out of 27 ahead of only two countries-Japan and Argentina. India has scored an index value of 39.5 for adequacy, 40.9 for sustainability and 53.4 for integrity. Denmark and the Netherlands have topped the rankings with the index values of 80.5 and 80.1 respectively. In the index, China has ranked 23rd with an index value of 45.2.

India’s position in the index has improved due to the tax incentives offered by the country for participation in the National Pension System (NPS) and the introduction of the Universal Account Number (UAN) for the Employees’ Provident Fund (EPF). In addition, government’s Atal Pension Yojana has also improved coverage for pension in the unorganised sector.

The number of people above the age of 60 has increased to around 100 million which is about 9% of the total population. It is expected that by 2020 around 150 million people will be at the age of above 60 and will require access to the formal pension.


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