Global Pension Index 2023

Shubham Mittal

7 months ago

The 15th annual Mercer CFA Institute Global Pension Index (MCGPI) has released its rankings for retirement income systems in different countries. The Netherlands claimed the top spot, followed by Iceland and Denmark.

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India demonstrated improvement by moving up to the 45th rank out of 47 systems assessed. The overall index value for India increased from 44.5 in 2022 to 45.9 in 2023. This marks a notable advancement compared to India’s 41st rank out of 44 in the previous year.

About MCGPI

The Mercer CFA Institute Global Pension Index (MCGPI) assesses retirement income systems worldwide and identifies areas for improvement in each system, aiming to provide more sufficient and sustainable retirement benefits.

The Global Pension Index is the result of a collaborative research effort involving the following institutions:

CFA Institute of the United States – A global association of investment professionals.
Monash Centre for Financial Studies (MCFS), a part of Monash Business School at Monash University in Australia.
Mercer – A global leader in redefining the world of work and shaping retirement and investment outcomes.

Global Pension Index 2023

Rank	Country	Index Value
1	Netherlands	85.0
2	Iceland	83.5
3	Denmark	81.3
45	India	45.9
47 (Last)	Argentina	42.3

Key Highlights

The MCGPI 2023 has incorporated three new retirement income systems, including those of Botswana, Croatia, and Kazakhstan.
Several Asian nations, including China, Korea, Singapore, and Japan, have initiated reforms to enhance their scores over the past five years.
- Singapore retains its top position among Asian countries and is ranked 7th out of 47 in the MCGPI 2023.
- Hong Kong SAR secures the 2nd spot (21st overall), while Japan takes the 3rd position in Asia (30th overall).
The study also emphasized that declining birth rates have placed a long-term strain on various economies and pension systems, which has led to lower sustainability scores for countries like Italy and Spain. This highlights the challenges posed by demographic changes to retirement income systems.

Sub-Indices Value

The Global Pension Index employs a weighted average of sub-indices, which include adequacy, sustainability, and integrity, to assess each retirement system based on over 50 indicators.

The countries with the highest scores in the sub-indices are Portugal for adequacy (86.7), Iceland for sustainability (83.8), and Finland for integrity (90.9).
On the other hand, the countries with the lowest scores in the sub-indices are South Korea for adequacy (39.0), Austria for sustainability (22.6), and the Philippines for integrity (25.7).
India’s sub-indice values are as follows: adequacy (41.9), sustainability (43.0), and integrity (56.5).

India’s Assessment

India’s retirement income system is composed of several components, including:
- Earnings-related employee pension scheme
- DC (defined contribution) employee provident fund (EPFO)
- Supplementary employer-managed pension schemes, which are largely DC in nature.
The report indicates that India’s pension system is on a gradual but steady path of improvement, with potential for further enhancements. This suggests that there are opportunities for refining the retirement income system in India to better meet the needs of its citizens.

Shubham Mittal

Shubham Mittal is a renowned current affairs writer and expert in government exam preparation, inspiring readers with insightful articles and guiding aspirants with his expertise.

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