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Study Reveals India's Pension System Among the Weakest
Source: southasia.oneworld.net
Source Date: Tuesday, November 08, 2011
Focus: Information Access, Health
Country: India
Created: Nov 10, 2011

India has one of weakest pension system in the world that needs series of reforms owing to young retirement ages, huge number of pensioners and low take-up of pensions, reveals a study.

London: The Allianz Global Investors Pension Sustainability Index, which tracks the relative sustainability of national pension systems in 44 countries around the world, showed the number of Greek retirees to people of working age remains above the European average.

Greece, India, China and Thailand are home to the weakest national pension systems in the world/ Photo credit: Reuters The country has committed to addressing this ratio as part of a series of pension system reforms demanded by the International Monetary Fund and European Central Bank, who are overseeing the distribution of financial aid to Greece.

In India, China and Thailand, roughly 12 % of the population contribute to a pension, while the weaknesses of Thailand's pension system are compounded by an average retirement age of 55 years, compared with 65 years in most western European countries.

The ratio of retirees aged 65 and older to population aged 15-64 years is expected to top 40 % in China and Thailand by 2050, above the rate forecast for Cyprus, Britain, Luxembourg, Norway, Ireland and Denmark.

Comprehensive pension systems remain the exception rather than the rule across Asia, Allianz GI said. But a rapid rise in sovereign debt across more developed economies has pushed the need for pension fund reform up the national agenda in Ireland, France and Spain this year, the index shows.

Further afield, Estonia, Hungary, Latvia, Lithuania, Poland and Romania have channelled contributions to privately funded second schemes to the 'pay as you go' public system in order to strengthen fiscal positions. Conversely, Norway and Finland benefited from their comparatively solid public finances.

"The negative impact of the financial crisis on accumulated funds and national economies has tested the resolve of many governments," said Renate Finke, senior economist at AllianzGI.

"In central and eastern Europe, for instance, some countries decided to put their hand into the proverbial pension-fund cookie jar in response to the dramatic rise in debt to GDP ratios," the economist said.

The world's strongest pension systems can be identified in Sweden, Denmark, New Zealand, the Netherlands and Australia, the study showed. All countries benefit from highly developed, privately funded systems which lessen the potential burden on public finances.
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