Global Pension Index 2025 has assigned India a poor “D” grade, ranking among the lowest globally in the Mercer CFA Institute report. The index benchmarks the adequacy, sustainability, and integrity of pension systems across 50+ countries and highlights India’s urgent need for reforms.
Dated 17.10.2025 : It was recently reported that India was assigned a poor “ D “ grade in the Global Pension Index
The Global Pension Index, specifically the Mercer CFA Institute Global Pension Index (MCGPI), is an annual study that benchmarks retirement income systems around the world.
What it is:
- It compares different countries’ retirement income systems using more than 50 indicators.
- It assesses systems across three weighted sub-indices:
- Adequacy (current benefits and system design features) – typically weighted 40%.
- Sustainability (future viability and long-term resilience) – typically weighted 35%.
- Integrity (governance, regulation, and communication) – typically weighted 25%.
- The index aims to highlight shortcomings in each system and suggest possible areas of reform to provide more adequate, sustainable, and trustworthy retirement benefits.
Who prepares it:
The Global Pension Index is a collaborative research project co-sponsored and prepared by:
- Mercer (a global leader in helping clients realize their investment objectives, shape the future of work and enhance health and retirement outcomes).
- CFA Institute (the global association of investment professionals).
- The Monash Centre for Financial Studies (MCFS) (a research center at Monash University, Australia) supports the project.
What is the ranking of India ?
Based on the Mercer CFA Institute Global Pension Index 2025, India’s performance is as follows:
- Ranking: India’s pension system ranked among the lowest, often cited near the bottom of the index (e.g., 45th out of 47 countries in one analysis).
- Overall Score and Grade: India received an overall index score of 43.8 (a slight dip from 44.0 in 2024) and was assigned a ‘D’ Grade. This grade indicates a system with some desirable features but also major weaknesses that require urgent attention, putting its efficacy and sustainability in doubt.
- Weakest Link: Adequacy was India’s weakest pillar, receiving an ‘E’ Grade, which reflects extremely low income replacement levels for retirees and limited social assistance for the elderly poor.
- Key Challenges Highlighted:
- Low Coverage: A very large portion of the workforce, especially in the informal sector, lacks access to formal pension or retirement benefits.
- Poor Adequacy: The pension benefits are generally low relative to the needs of retirees.
- Sustainability Risk: Concerns exist about the system’s long-term financial viability amid demographic shifts and fiscal constraints.
- Regulatory Fragmentation: Oversight across different schemes (like NPS and EPFO) is fragmented.
The report suggests reforms such as introducing a minimum income floor for the poorest elderly, expanding coverage to the unorganised workforce, and strengthening regulatory oversight.
Steps India is suggested to take to improve the position :
The suggestions for India to improve its position in the Global Pension Index generally focus on enhancing the adequacy, sustainability, and integrity of its retirement income system, especially by addressing the vast informal sector.
Based on the recommendations from the Global Pension Index reports, the key steps India is suggested to take include:
Enhancing Adequacy (Current Benefits)
The core challenge for India is the low income replacement level for retirees, particularly for the elderly poor.
- Introduce a Minimum Income Floor: Establish a minimum pension guarantee or income floor for the poorest elderly citizens to provide a basic safety net and address old-age poverty.
- Prevent Early Withdrawals: Set a minimum access age to pension funds to ensure that benefits are preserved and available for actual retirement purposes, rather than being depleted prematurely.
- Inflation-Linked Benefits: Introduce mechanisms, such as investing in inflation-linked bonds or adjusting benefits, to ensure that the value of pensions is protected against inflation, maintaining the purchasing power of retirees.
Improving Sustainability (Future Viability)
Sustainability is hindered by low coverage, limited asset accumulation, and demographic pressures.
- Expand Coverage to Informal Workers: Significantly expand pension coverage to the large unorganised and informal workforce through simplified enrolment procedures, incentives, and tailored micro-pension products, thereby gradually increasing the overall pension asset base.
- Increase Pension Assets-to-GDP Ratio: Implement policies that encourage greater pension participation and contributions to build pension assets over time. India’s current ratio is low compared to global peers.
- Promote Financial Literacy: Launch nationwide campaigns and incorporate pension education into the school curriculum to raise awareness and financial literacy about the importance of retirement savings.
Strengthening Integrity (Governance and Trust)
Integrity relates to the regulation, governance, and transparency of the pension system.
- Strengthen Regulatory Oversight: Enhance and unify the regulatory requirements and governance for the private and voluntary pension system to boost public trust and ensure the security of funds.
- Allow Investment Flexibility: Allow for greater investment diversification for pension funds (e.g., greater flexibility in asset allocation) to enhance long-term returns, while maintaining robust governance.
- Improve Transparency: Ensure transparent public disclosure regarding investments held, returns, and risks of pension funds.
- Unified Regulatory Framework: Consider streamlining the fragmented regulatory environment, which currently has different bodies overseeing various schemes (e.g., EPFO and PFRDA), to enhance policy coherence and efficiency.
Which Countries have got “ A “ grade ?
he countries considered to be in the top-most league (receiving an “A” grade) based on the 2025 Mercer CFA Institute Global Pension Index are:
- Netherlands
- Iceland
- Denmark
- Singapore
- Israel
These countries are recognized for having a robust retirement income system that delivers good benefits, is sustainable, and has a high level of integrity.
What about our Asian neighbors ?
India has received an overall score of 43,8 with “ D “ grade and the score is lowest among the 52 countries reviewed. Major weaknesses include very low coverage for the vast informal sector, inadequate retirement income for many, and a lack of a nationwide minimum pension guarantee .
China has received an overall score of 56.7 , put in category “ C “ . Its system is rated significantly better than India’s, showing modest gains, but it still faces reform pressure related to long-term sustainability and adequacy .Indonesia with overall score of 51.0 and Malaysia with overall score of 60 .6 are in “ C “Category . Even Vietnam with score of 53.7 and Thailand with overall score of 50.6 are in “ C “ category