Global Pension Index
- Recently Mercer CFA institute released global pension index 2022 by taking few important parameters.
- This institute calculate pension system by considering adequacy ( weightage 40% ), sustainability ( weightage 35% ) and integrity ( weightage 35% ) parameters.
- The Iceland, Netherlands and Denmark gets 84.7, 84.6 and 82 point with 1st, 2nd and 3rd rank respectively with A grade.
- India ranked 40th position in the pension ranking system.
|
Index |
Indicating parameters |
% Weightage |
|
Adequacy |
Benefits |
40% |
|
System design |
||
|
Savings |
||
|
Government supports |
||
|
Home ownership |
||
|
Growth assets |
||
|
Sustainability |
Pension coverage |
35% |
|
Total assets |
||
|
Demography |
||
|
Public expenditure |
||
|
Government debt |
||
|
Economic growth |
||
|
Integrity |
Regulation |
25% |
|
Communication |
||
|
Governance |
||
|
Protection |
||
|
Operating costs |
Grading of Global Pension Index
|
Grade |
Marks |
Country |
|
A |
> 80 |
Iceland, Netherland, Denmark |
|
B+ |
75 – 80 |
Israel, Finland, Australia, Norway |
|
B |
65 – 75 |
Sweden, Singapore, UK, Switzerland, Uruguay, Canada, Ireland, New Zealand, Chile, Belgium, Germany |
|
C+ |
60 – 65 |
Hong Kong, US, Colombia, France, Malaysia, Portugal, Spain, UAE |
|
C |
50 – 60 |
Saudi Arabia, Poland, Mexico, Brazil, Peru, Italy, Austria, South Africa, China, Japan, Taiwan, South Korea |
|
D |
35 – 50 |
Indonesia, Turkey, India, Philippines, Thailand, Argentina |
|
E |
<35 |
Nil |
Features of Global Pension Index
Grade A
- First class and robust retirement system that delivers good benefits and high level of integrity
Grade B
- Sound structure with many good features but some areas need to be improvement that of Grade A system
Grade C
- The Grade C system has some good features but also has major risks and/or shortcomings that should be addressed; without these improvements, its efficacy and/or long-term sustainability can be questioned
Grade D
- The Grade D system has some desirable features, but also has major weaknesses and/or omissions that need to be addressed; without these improvements, its efficacy and sustainability are in doubt.
Grade E
- A poor system that may be in the early stages of development or non-existent
Why Developing Countries Rank Needs Improvement?
- The UK received B grade, grade of US is C+, grade of China C whereas grade of India is D. India’s ranks 40th out of 44 countries but it is not about to worry. The global pension index is just ranking and think about it.
- As per author’s thinking if we change India or China’s population to top category pension ranking country, what will happened?
- Population is one of the parameters to be considered in this situation. If the Iceland, Denmark or Netherlands population is same as that of China / India’s population, ranking is quite different.
- Overall, these are just parameters. Enjoy life !!
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