NEW DELHI: India's pension system was given a poor 'D' in the Mercer CFA Institute Global Pension Index 2025, which assessed 52 retirement income systems covering nearly 65% of the world's population.
The Index—built around three key pillars of Adequacy (40%), Sustainability (35%), and Integrity (25%)—ranked India at 43.8 points, placing it in the 'D' category, far below the global average score of 64.5.
This year's top performers included The Netherlands (85.4), Iceland (84.0), Denmark (82.3), Singapore (80.8), and Israel (80.3)—all earning an 'A' grade for robust and sustainable pension systems.
In contrast, India's fragmented pension architecture—combining the Employee Provident Fund Organisation (EPFO), the Employees' Pension Scheme, and limited social protection programmes for informal workers—continues to face structural gaps that undermine retirement security for most citizens.
According to the report, Adequacy remains India's weakest link, earning an 'E' grade (34.7). This reflects extremely low income replacement levels for retirees and limited social assistance for the elderly poor.
On Sustainability, India scored 43.8 ('D' grade), indicating concerns about the system’s long-term resilience amid demographic shifts, low participation from informal workers, and limited savings.
The Integrity pillar fared slightly better with a 'C' grade (58.4), though the report highlighted the need for stronger regulatory oversight and transparency to enhance trust in private and occupational pension schemes.
Time for a Universal Basic Pension?
The report said India's low ranking underscores the urgency of pension reform, particularly as the country's working-age population begins to age.
The report recommended that India establish a minimum income floor for the elderly poor. It asks the country to expand pension coverage across the vast unorganized sector, set a minimum access age to safeguard retirement savings, and strengthen regulation for private and voluntary pension plans.
Vivek Iyer, partner and financial services risk advisory leader, Grant Thornton Bharat, says the low score is not a surprise and is a reflection of years of lack of focus on retirement planning, which is changing in India.
"Offering universal social security is something that India cannot afford right now from a fiscal prudence standpoint, but having said that, increased focus of the government on raising employment, strengthening regulatory focus through PFRDA and increased investor awareness around retirement planning are some of the positive steps that are being undertaken," he says.
He pointed out that even a country like Singapore took 16 years to move from a C category to the top category.
Less than one-third receive pensions in India
Only 29% of elderly receive pensions, leaving the vast majority financially vulnerable, a recent report India’s Ageing Society: The Landscape Today by Give Grants had noted.
The report noted that India is witnessing a silent but profound demographic shift as its elderly population (aged 60 and above) grows at an unprecedented rate, now making up over 10% of the total population. This figure is projected to double to nearly 20%—or 34.7 crore people—by 2050. Yet the surge is unfolding against the backdrop of economic insecurity, eroding family support systems, and glaring healthcare gaps.
The report drew on data from the India Ageing Report 2023 (jointly prepared by UNFPA India and the International Institute for Population Sciences), along with research from NITI Aayog and the Ministry of Statistics and Programme Implementation.