India’s pension system has landed at the bottom of the global rankings, underscoring persistent challenges in coverage, adequacy and regulation.
According to the Mercer CFA Institute Global Pension Index 2025, India has been graded ‘D’, placing it alongside Turkey, Argentina, and the Philippines – countries whose pension systems show “some desirable features but major weaknesses that need urgent attention”.
India’s overall index value slipped to 43.8 in 2025 from 44 last year, according to the Mercer report, which evaluated 52 countries on three key parameters – adequacy, sustainability and integrity with weights of 40 per cent, 35 per cent and 25 per cent, respectively.
The country’s weakest score was in adequacy, which received a grade ‘E’, while sustainability and integrity fared marginally better at ‘D’ and ‘C’, respectively.
Mercer’s report said India’s ranking could improve by introducing a minimum income floor for the poorest elderly citizens, expanding coverage to the unorganised workforce, building assets over time, and strengthening regulations for private pension schemes.
While India struggles with structural reforms, its Asian neighbour Singapore has broken into the top tier (Grade A) of the global pension index for the first time. The Netherlands retained the number one spot, with Iceland, Denmark, and Israel also in the top tier.
Singapore has steadily strengthened its pension system over the years, focusing on transparency and helping citizens better understand what they can expect in retirement, said Tim Jenkins, partner at Mercer, according to a Bloomberg report.
Macro-level gaps
India’s pension assets-to-GDP ratio remains a major concern. The Economic Survey 2024-25 highlighted that the country’s total pension assets – comprising Employees’ Provident Fund Organisation (EPFO) holdings (17 per cent) and National Pension System (NPS) assets (4.5 per cent) – together account for just over 21 per cent of GDP. In comparison, OECD countries boast pension assets that exceed 80 per cent of GDP on average.
The survey also flagged low awareness and poor financial literacy as barriers to expanding pension coverage, especially within the informal sector.
“A fundamental step in integrating a significant portion of the informal sector into the pension framework is raising awareness about pensions and financial literacy using modern, application-based interfaces that allow seamless access to these services,” the survey said.
There are also concerns about regulatory fragmentation, with the NPS falling under the Pension Fund Regulatory and Development Authority (PFRDA) under the finance ministry, while the EPFO operates under the labour ministry.
“A uniform regulator is essential for efficient oversight of the pension sector,” Atanu Sun, former chairman of NPS Trust and ex-MD & CEO of SBI Life Insurance, told The Telegraph.
Grievances
At the micro level, pensioners under both the EPFO and NPS flagged long-standing issues.
“The minimum and maximum pension under the Employees’ Pension Scheme – ₹1,000 and ₹7,500 per month – have remained unchanged for years. This is unrealistic and must be revised immediately,” said a retired private-sector employee.
Another retiree from a central PSU added, “Under NPS, 40 per cent of the retirement corpus has to be invested in annuities, but these are not inflation-adjusted. This needs urgent review.”