India's retirement savings and income system index has improved over the last year and the performance is likely to improve significantly as pension coverage of the unorganised sector increases, says a report.
According to the Melbourne Mercer Global Pension Index, India's overall value increased from 42.4 in 2012 to 43.3 in 2013, out of 100. Of the 20 nations on the list, India is ranked at the 19th position.
However, India's score in the adequacy sub-index, which essentially measures how much income individuals are likely to have at retirement, improved from 37.4 in 2012 to 41.2 in 2013.
"It is heartening to see India's overall index improve in 2013," Mercer Retirement Business Leader Arvind Usretay said, adding that "the overall index value for India could significantly improve with increased pension coverage of the unorganised sector".
The passage of the Pension Bill is a landmark step for India towards ensuring this kind of coverage through the National Pension System (NPS). NPS remains the 'true' pension option available to individuals apart from employer provided retirement schemes, he added.
In the overall list of 20 nations, India was ranked last but one. It was topped by Denmark, followed by the Netherlands and Australia in the second and third place respectively.
According to David Knox, Senior Partner at Mercer and author of the research "as countries grapple with rising life expectancies, increased government debt, uncertain economic conditions and a global shift to defined contribution plans, there are still many lessons to be learnt and new solutions to be found, particularly for the post-retirement years."
An index value between 35-50 indicates a system that has some desirable features, but also has major weaknesses and/or omissions that need to be addressed. Without these improvements, the efficacy and sustainability are in doubt, the report said.
This year's Melbourne Mercer Global Pension Index covered 20 countries. The index measures the adequacy, sustainability and integrity of a country's pension system and is produced by Mercer and the Australian Centre for Financial Studies and is funded by the Victorian State Government.
As per the methodology adopted, each country is given a score between 0 and 100. The overall index value represents the weighted average of the three sub-indices - adequacy, sustainability and integrity.