Still, the National Pension System (NPS), which was launched by the government in June as part of Pradhan Mantri Jan Dhan Yojana, will help the country improve its index, the study said.
The country's index value fell from 43.5 in 2014 to 40.3 in 2015, primarily due to a recent review conducted by the economic intelligence unit that showed a material reduction in its household savings rate, Melbourne Mercer Global Pension Index (MMGPI) report said.
Enhanced participation in the National Pension System will help the country increase its index value, it added. Denmark has been rated as the country with the best retirement system in the world.
Australia, Germany, Japan, Singapore and the UK have increased their pension age to offset the increase in life expectancies. Now in its seventh year, the MMGPI measured 25 retirement income systems against more than 40 indicators, under the sub-indices of adequacy, sustainability and integrity.
The report covers close to 60 per cent of the world's population and suggests how governments can provide adequate and sustainable benefits that protect their citizens, against longevity risk.
The report rated Denmark as the country with the best retirement system for the fourth consecutive year in 2015, with an overall score of 81.7. However, it said that the Indian retirement system continues to rank last.