India’s Pension System Ranked Lowest Globally: What’s Holding It Back? |

Updated: October 18, 2025 14:18

Image Source: Observer Research Foundation

India’s pension system ranks lowest globally in the Mercer–CFA Global Pension Index 2025, scoring just 43.8 out of 100. Key issues include poor coverage, fiscal stress, and low adequacy. Experts call for urgent reforms to expand access, improve governance, and ensure sustainable retirement income for India’s aging population.

India’s retirement income framework has received a dismal D-grade in the Mercer–CFA Institute Global Pension Index 2025, placing it at the bottom of a 52-country list. With a score of just 43.8 out of 100, the report highlights deep-rooted challenges in adequacy, sustainability, and integrity of India’s pension system.

Key Highlights From The Global Assessment

- India ranks 45th out of 47 evaluated countries, trailing behind Argentina, Turkey, and the Philippines

- The index evaluates pension systems on three pillars: adequacy (40%), sustainability (35%), and integrity (25%)

- India’s low score stems from limited pension coverage, especially among informal sector workers, and inadequate retirement savings

- Fiscal stress and demographic shifts—such as a growing aging population and shrinking workforce participation—undermine long-term sustainability

- Lack of financial literacy and limited access to structured retirement planning tools further weaken pension outcomes

- The report urges reforms including broader coverage, increased minimum pension levels, and improved governance to build trust and resilience

Structural And Strategic Challenges

India’s pension system remains underdeveloped, with a heavy reliance on government-backed schemes like EPFO and NPS, which still exclude large swathes of the population. Informal workers, gig economy participants, and rural citizens often lack access to any retirement safety net.

Industry Context

While countries like the Netherlands, Iceland, and Singapore lead the index with robust, inclusive, and well-regulated pension systems, India’s fragmented approach and low contribution rates continue to hinder progress. The need for a unified, transparent, and scalable pension framework is more urgent than ever.

Market Outlook

Experts believe that India must prioritize pension reforms to avoid future economic strain. As life expectancy rises and traditional family support structures weaken, a reliable retirement income system is essential for long-term financial stability.

Sources: Business Standard, Business Today, MSN News

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