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Mercer CFA Institute Global Pension Index 2023: India ranked 45th out of 47; Netherland tops

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Mercer CFA Institute Global Pension Index 2023According to the 15th annual Mercer CFA Institute Global Pension Index (MCGPI 2023), India is ranked 45th out of 47countries. The overall index value of India increased from 44.5 in 2022 to 45.9 in 2023. India was ranked 41st out of 44 in 2022.

  • The 2023 Index is topped by the Netherlands with overall index value of 85.0, followed by Iceland (83.5) and Denmark (81.3).
  • With the lowest index value of 42.3, Argentina is ranked 47th in MCGPI 2023.
  • The MCGPI 2023 compares 47 retirement income systems across the globe and covers 64% of the world’s population.

About MCGPI:

i.The MCGPI measures retirement income systems around the world and highlights some shortcomings in each system, and suggests possible areas of reform that would provide more adequate and sustainable retirement benefits.

ii.The Global Pension Index is a collaborative research project of the following institution

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

Sub Indices:

The Global Pension Index uses the weighted average of the sub-indices of adequacy, sustainability and integrity to measure each retirement system against more than 50 indicators.

Mercer CFA Institute Global Pension Index 2023:

RankCountryIndex Value

Key Points:

i.The MCGPI 2023 includes three new retirement income systems including Botswana, Croatia, and Kazakhstan.

ii.Several Asian systems, including China, Korea, Singapore, and Japan, have undertaken reforms to improve their scores in the last five years.

  • Singapore is ranked 7th out of 47 in the MCGPI 2023 and retained its top spot among asian countries.
  • Hong Kong SAR (21st) and Japan (30th) have secured the 2nd and 3rd spot in Asia.

iii.The study also highlighted that dropping birth rates have put strain on various economies and pension systems in the long run, lowering the sustainability scores of countries such as Italy and Spain.

iv.Comparison with respect to sub-indices Values:

  • The retirement income systems with the highest values across the sub-indices were Portugal for adequacy (86.7), Iceland for sustainability (83.8), and Finland for integrity (90.9).
  • The retirement income systems with the lowest values across the sub-indices were South Korea for adequacy (39.0), Austria for sustainability (22.6), and the Philippines for integrity (25.7).
  • India’s sub-indices values were adequacy (41.9), sustainability (43.0), and integrity (56.5).

India’s Assessment in the Report:

i.The report further stated that India’s retirement income system comprises the following

  • Earnings-related employee pension scheme
  • DC (defined contribution) employee provident fund (EPFO)
  • supplementary employer-managed pension schemes that are largely DC in nature

ii.According to the report, India’s pension system is slowly but firmly improving, with further potential for improvement.

Recent related News:

i.HDFC Pension Management Company Limited has launched a first-of-its-kind ‘National Pension System (NPS) Preference Index’ on the occasion of 2nd edition of NPS Diwas which was observed on 1st October 2023.

ii.The Employees Provident Fund Organisation (EPFO) has formed 3 committees to frame draft schemes for pension, provident fund and insurance under EPFO, in line with the provisions of the Code on Social Security 2020. 

About Mercer:
Chief Executive Officer(CEO)– Martine Ferland
Headquarters– New York, United States
Established – 1945