OECD Pensions at a Glance

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1999-1363 (online)
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OECD’s biennial report on pension systems across OECD countries. Each edition opens with an overview comparing pension policies of OECD countries and the role of reforms and private pensions. This is followed by a series of country reports analyzing the situation in each OECD country.

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Pensions at a Glance 2011

Pensions at a Glance 2011

Retirement-income Systems in OECD and G20 Countries You or your institution have access to this content

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17 Mar 2011
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9789264096288 (PDF) ; 9789264095236 (print)

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The theme of this fourth edition of Pensions at a Glance is pensions, retirement and life expectancy. Many countries have increased pension ages in the face of population ageing and longer lives. Some have introduced an automatic link between pensions and life expectancy. Improvements to the incentives to work rather than retire are also a common part of recent pension-reform packages. However, ensuring that there are enough jobs for older workers remains a challenge. 

An in-depth look at these important policy issues is provided by five special chapters on: pension ages, retirement behaviour, pension incentives to retire, the demand for older workers and linking pensions to life expectancy. This edition updates information on the key features of pension provision in OECD countries and provides projections of retirement income for today’s workers. It offers an expanded range of 34 indicators, covering the design of national retirement-income provision, pension entitlements, incomes of older people, the finances of pension systems, the demographic and economic context in which pension systems operate and private pensions. 

More countries are analysed than in previous editions, including four new members of the OECD: Chile, Estonia, Israel and Slovenia. Where possible, data are also provided for the other major economies in the G20: Argentina, Brazil, China, India, Indonesia, Russia, Saudi Arabia and South Africa. Along with data on the European Union’s 27 member states, this brings to 43 the number of economies covered in the report. 

About Pensions at a Glance...

 "An extraordinarily useful and careful compilation of pension information for a wide-range of countries, presented in a common format and following a thoughtful structure. The authors have brought cross-national pension comparisons to a new level, and they are to be commended for their intensive efforts. [This] represents some of the smartest comparative work out there, by people intimately familiar with the nuances – and complexities – of comparative pension work." 

- Olivia Mitchell, Director of the Boettner Centre for Pensions and
Retirement Research, 
 Wharton School, University of Pennsylvania

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  • Foreword
    This fourth edition of Pensions at a Glance provides an expanded range of indicators for comparing pension policies and the outcomes of these policies between OECD countries. The indicators are also, where possible, provided for new OECD member countries and the other major economies that are members of the G20. In Part I, five special chapters provide deeper analysis of the central issues of pensions, retirement and life expectancy.
  • Three Solutions to the Pensions Paradox
    Pension policy has always involved balancing the adequacy of benefits with their affordability. This balancing act has got harder as a result of the recent economic and financial crisis. It adds to the existing and much greater challenge to pension systems arising from population ageing. Despite these short-term problems, it is important to remember that pensions are a long-term issue.
  • ISO Country Codes
  • Executive Summary
    Controversies over pension reforms in general – and increases in pension age in particular – have never been far from the news headlines since the previous edition of Pensions at a Glance was published in June 2009. It is appropriate, therefore, that the theme of this 2011 edition is pensions, retirement and life expectancy and the links between them.
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  • Expand / Collapse Hide / Show all Abstracts Policy Issues: Pensions, Retirement and Life Expectancy

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    • Pensionable Age and Life Expectancy, 1950-2050
      Around half of OECD countries have already begun increasing pension ages or plan to do so in the future: 18 countries for women and 14 countries for men. Recent increases in pensionable ages have often proved controversial because of their greater visibility to politicians and voters. By 2050, the average pensionable age in OECD countries will reach nearly 65 for both sexes: an increase of nearly 2.5 years for men and 4 years for women on 2010. However, life expectancy is projected to grow faster than these increases in pension age. Life expectancy at pensionable age is forecast to increase by about 3 years for men and 2.5 years for women between 2010 and 2050.
    • Trends in Retirement and in Working at Older Ages
      This chapter examines labour-market behaviour of older workers, their pattern across countries and over time. There was a strong trend to early retirement throughout the 1970s and 1980s. However, this came to an end in the mid 1990s, and during the 2000s, the proportion of 50-64 years olds participating in the labour market has started to creep up. A detailed analysis of pathways into retirement suggest that at least half of men use routes such as unemployment, sickness or disability benefits in half of countries. Women also often leave the labour market to care for family members. Older workers appear to have fared relatively well in the economic downturn that followed the global financial crisis in most OECD countries. This contrasts with previous recessions, where older workers were often the first to lose their jobs and found it hardest to find new employment. A decomposition of governments’ long-term projections of the finance of the pension system shows that these are highly dependent on further increases in participation rates at older ages and effective retirement ages.
    • Pensions Incentives to Retire
      Individuals’ decisions about work and retirement depend on the financial incentives embedded in retirement-income systems. This chapter presents measures of the pension incentive to retire, showing how the retirement income system can act as an implicit tax or subsidy on remaining in work. The analysis looks at the main retirement "window" in OECD countries, from age 60 to 65. In addition to increases in pensionable ages (set out in Chapter 1), recent pension reforms in most countries have involved policies to reduce the incentive to retire early and increase the incentive to retire after the normal pension age. However, the incentive to retire early remains strong in a minority of OECD countries. And there are ways in which most countries could further improve their pension system. The chapter concludes with nine policy conclusions that would reward people for working longer.
    • Helping Older Workers Find and Retain Jobs
      The financial incentives in pension systems, explored in Chapter 3, undoubtedly play an important role in retirement decisions. But if there are barriers to working longer on the demand side, pension reforms designed to improve work incentives may be less effective. This chapter describes various barriers affecting employers and employees and what might be done to tackle them. There are still ageist attitudes among employers, particularly over the ability of older workers to adapt to change. Legislation against age discrimination and public-information campaigns have been effective in some, but by no means all, countries that have adopted these policies. In some countries, older workers cost too much and early retirement provides an all-too convenient way of adjusting the size of the workforce. Strict employment-protection legislation can make it costly to hire older workers. Employment opportunities of older workers may be limited because their skills have become devalued or they receive little help in finding new jobs. Available employment opportunities may be unattractive because of poor working conditions or unsuitable and inflexible working-time arrangements. Finally, this chapter discusses the issue of jobs for younger and older workers. It finds that there is no evidence that older workers deprive youths of jobs. In fact, the reverse is true.
    • Linking Pensions to Life Expectancy
      Increases in pensionable age, described in Chapter 1 above, are only one policy response to the fact that people are living longer. Around half of OECD countries have elements in their mandatory retirement-income provision that provide an automatic link between pensions and a change in life expectancy. This is a result of: i) mandatory defined-contribution schemes substituting for or adding to public pension provision; ii) transformation of public, earnings-related plans into notionalaccounts schemes; and iii) a link between benefit levels or qualifying conditions for pensions and life expectancy. Furthermore, there has been a marked shift from defined-benefit to defined-contribution provision in voluntary, private pensions. These changes have important implications for the way the cost of providing for pensions as life expectancy increases is shared. Increasingly, this will be borne by individual retirees in the form of lower benefits. This chapter measures the degree of uncertainty inherent in projections of life expectancy. Pension entitlements for example individuals in all 34 OECD countries are calculated under different scenarios – from slow to rapid increments in longevity. These calculations are then used to assess the degree to which the additional cost of longer lives has been shifted onto future generations of retirees with longer life expectancy.
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    • Architecture of National Pension Systems
      Retirement-income regimes are diverse and often involve a number of different programmes. Classifying pension systems and different retirement-income schemes is consequently difficult. The taxonomy of pensions used here consists of two mandatory "tiers": a redistributive part and a savings part. Voluntary provision, be it individual or employer-provided, makes up a third tier.
    • Basic, Targeted and Minimum Pensions
      Retirement-income programmes designed to ensure adequacy of old-age incomes make up the first tier of the OECD’s taxonomy of pension systems, which was set out in the previous indicator of the architecture of national pension schemes. Safety-net retirement benefits are worth 21.6% of economy-wide mean earnings on average. Eleven countries provide a minimum pension above this safety-net level. For full-career workers, the average retirement income – including these contributory minimum pensions – is 24.4% of economy-wide average earnings. About a third of older people receive some support from basic, targeted or minimum pensions on average.
    • Income-Replacement Pensions
      The second tier of the OECD’s taxonomy of retirement-income provision comprises income-replacement pensions. The summary here shows the key parameters and rules of these schemes that determine the value of entitlements, including the long-term effect of pension reforms that have already been legislated.
    • Normal, Early and Late Retirement
      The rules for eligibility to retire and draw a pension are very complex, often reflecting conflicting government objectives. On the one hand, encouraging people to work longer as the population ages has been a major feature of many pension reforms. On the other hand, government have often been concerned to protect workers perceived as vulnerable and unable to continue their jobs to an older age.
    • Methodology and Assumptions
      The indicators of pension entitlements that follow here in Part II.2 and the analysis of pension "savings gaps" in Part II.6 use the OECD pension models. The methodology and assumptions are common to the analysis of all countries, allowing the design of pension systems to be compared directly. Future entitlements under today’s parameter and rules.
    • Gross Pension Replacement Rates
      The gross replacement rate shows the level of pensions in retirement relative to earnings when working. For workers with average earnings, the gross replacement rate averages 57% in the 34 OECD countries. But there is significant cross-country variation. At the bottom of the range, Ireland, Japan, Mexico and the United Kingdom offer future replacement rates of less than 35% to people starting work today. Iceland and Greece, at the top of the range, offer replacement rates of more than 95%. Other countries with high projected replacement rates (between 70% and 90%) are Austria, Denmark, Hungary, Luxembourg, the Netherlands and Spain.
    • Gross Pension Replacement Rates: Public and Private Schemes
      Private pensions play a large and growing role in providing for old age. This is illustrated with calculations of gross pension replacement rates that have been separated out between public and private sectors. The OECD average for replacement rates of an average earner from public schemes alone is 42%, compared with 57% with mandatory private pensions included. When voluntary private pensions, under typical rules, are added, the average replacement rate is 64% for an average earner.
    • Tax Treatment of Pensions and Pensioners
      The personal tax system plays an important role in old-age support. Pensioners often do not pay social security contributions. Personal income taxes are progressive and pension entitlements are usually lower than earnings before retirement, so the average tax rate on pension income is typically less than the tax rate on earned income. In addition, most income tax systems give preferential treatment either to pension incomes or to pensioners, by giving additional allowances or credits to older people.
    • Net Pension Replacement Rates
      For average earners, the net replacement rate across OECD averages 69%, which is 12 percentage points higher than the gross replacement rate. This reflects the higher taxes and contributions that people paid on their earnings when working than they pay on their pensions in retirement. Net replacement rates again vary across a large range, from under 40% in Mexico, Ireland and Japan to well over 100% in Greece for average earners. For low earners (with half of mean earnings), the average net replacement rate across OECD countries is 83%. For high earners (150% of mean earnings) the average net replacement rate is 63%, lower than for low earners. As with gross replacement rates, the differences with earnings reflect progressive features of pension systems, such as minimum benefits and ceilings on pensionable earnings.
    • Net Pension Replacement Rates: Public and Private Schemes
      The OECD average for net replacement rates of an average earner from public schemes alone is 50%, compared with 68% with mandatory private pensions included. When voluntary private pensions, under typical rules, are added, the average net replacement rate is 77% for an average earner.
    • Pension Replacement Rates: Couples
      Most of the indicators of pension entitlements in this report are based on analysis of a single person. In many countries, pension systems are effectively "individualised": the position of a married couples is the same as that of two single people with the same level of earnings. In others, however, marriage has an effect on pension entitlements.
    • Investment Risk and Private Pensions
      The financial and economic crisis of 2008 has meant that investment risk has been at the forefront of policy makers minds when thinking about pensions. Private pension funds in OECD countries lost 24% of their value on average, worth USD 5.4 trillion. However, it is important to bear in mind that private pensions are only a part of the overall retirement-income package: a major part of retirement income is generally not affected by investment risk. In some countries, means-tested pensions protect low-income workers from much investment risk and the tax system can also act as an "automatic stabiliser" of retirement incomes.
    • Gross Pension Wealth
      Pension wealth measures the total value of the lifetime flow of retirement incomes. For average earners, pension wealth is 9.6 times annual earnings on average in OECD countries. The figure is higher for women – 11.1 times individual earnings – because of their longer life expectancy.
    • Net Pension Wealth
      Net pension wealth, like the equivalent indicator in gross terms, shows the present value of the lifetime flow of pension benefits. But it also takes account of taxes and contribution paid on retirement incomes. Both figures for pension wealth are expressed as a multiple of individual gross earnings. For average earners, net pension wealth for OECD countries averages 8.2 times gross individual earnings for men and 9.6 for women. Val
    • Progressivity of Pension Benefit Formulae
      The progressivity index is designed to summarise the relationship between pension in retirement and earnings when working in a single number. The results show variation from 100 in pure basic schemes (such as Ireland and New Zealand), through zero in Hungary to a negative result in Sweden, indicating that the retirement-income system overall is regressive. The average index across OECD countries is 37. Regional differences are striking, with the index averaging 80 in the Anglophone countries: public pensions are strongly progressive. In southern European countries, by contrast, it averages just 8, indicating a very strong link between earnings and pension benefits.
    • Pension-Earnings Link
      In some countries, such as Hungary, Italy and the Slovak Republic, there is a very strong link between pension entitlements and pre-retirement earnings. In contrast, flat-rate benefits in Ireland and New Zealand mean that there is no link between pension and earnings.
    • Weighted Averages: Pension Levels and Pension Wealth
      The indicators so far have shown replacement rates, relative pension levels and pension wealth for people at different levels of earnings. By taking a weighted average of these indicators over the earnings range, the measures presented here show the average for the pension level at the time of retirement and pension wealth, the lifetime value of pension payments. The first of these is designed to show the level of the average retirement income, taking account of the different treatment of workers with different incomes. The average pension level is 55.3% of economy-wide average earnings across the OECD34 countries. The second aims to summarise the total cost of providing old-age incomes. Weighted average pension wealth is an average of 10.3 times annual economy-wide average earnings for men and 12.0 for women.
    • Incomes of Older People
      Incomes of older people are generally lower than those of the population, even when differences in household size are taken into account. On average in OECD countries, over 65s had incomes of 82% of the population as a whole in the mid-2000s. Older people’s incomes grew faster than the population’s between the mid-1980s and the mid-2000s in 13 out of the 25 countries where data is available. In most OECD countries, public transfers provide the bulk of income in old age.
    • Old-Age Income Poverty
      On average, 13.5% of over 65s in OECD countries live in income poverty, defined as an income below half the national median. There is large variation between countries, from two with practically no old-age poverty to four with poverty rates double the OECD average. Poverty rates are higher for older people than for the population as whole, which averages 10.6%. A greater proportion of older women live in poverty than older men and old-age poverty rates increase with age.
    • Old-Age Income Poverty
      On average, 13.5% of over 65s in OECD countries live in income poverty, defined as an income below half the national median. There is large variation between countries, from two with practically no old-age poverty to four with poverty rates double the OECD average. Poverty rates are higher for older people than for the population as whole, which averages 10.6%. A greater proportion of older women live in poverty than older men and old-age poverty rates increase with age.
    • Public Expenditure on Pensions
      Public spending on cash old-age pensions and survivors’ benefits in the OECD increased 15% faster than the growth in national income between 1990 and 2007, from an average of 6.1% of gross domestic product (GDP) to 7.0%. Public pensions are often the largest single item of government expenditure, accounting for 17% of total government spending on average.
    • Contributions
      Pension contribution rates have remained broadly stable since the mid-1990s. The average contribution rate in the 25 OECD countries that levy separate public contributions increased from 19.2% in 1994 to 19.6% in 2009, reaching a high of 20.0% in 2004. This probably reflects governments’ concerns over the effect on employment of high labour taxes. Indeed, these concerns seem to have taken precedence over the pressure on pension-system finances from aging populations and maturing of schemes. In the 23 countries for which data are available, revenues from these contributions were worth an average of 5.1% of national income, representing 14.2% of total government revenues raised from taxes and contributions.
    • Long-Term Projections of Public Pension Expenditure
      Public spending on pensions has been on this rise in most OECD countries for the past two decades, as shown by the previous two indicators. Long-term projections show that pension spending is expected to go on growing in 25 out of 29 OECD countries where data are available. On average pension expenditure is forecast to grow from 8.4% of gross domestic product (GDP) in 2010 to 11.4% of GDP in 2050.
    • Fertility
      The total fertility rate is below the replacement level – the number of children needed to keep the total population constant – in 29 out of 34 OECD countries for 2005-10. The only exceptions are Israel and Mexico (with 2.8 and 2.2 children per woman, respectively) and Iceland, Turkey and the United States (at replacement level of 2.1). However in more than two-thirds of OECD countries there has been a moderate increase in fertility rates over the last decade. Fertility rates have a profound implication for pension systems because they, along with life expectancy, are the drivers of population ageing.
    • Life Expectancy
      The remarkable increase in life expectancy is one of the greatest achievements of the last century. Lives continue to get longer, and this trend is predicted to continue. In 2005-10, life expectancy at birth averaged 76.1 years for men and 81.8 years for women. Among women, the figure was highest in Japan (86.2 years), followed by France, Switzerland, Italy and Spain. For men, life expectancy at birth was highest in Iceland (80.2 years) followed by Switzerland, Australia, Japan and Sweden.
    • Old-Age Support Ratio
      Population ageing is one of the main driving forces behind the wave of pension reforms in recent years. The old-age support ratio is an important indicator of the pressures that demographics pose for pension systems. It measures how many people there are of working age (20-64) relative to the number of retirement age (65+). At the moment, there are just over four people of working age for every one of pension age on average. OECD countries have been ageing for some time: between 1950 and 1980, the average support ratio decreased from 7.2 to 5.1. However, the decline in the more recent period has been slower, with the fall from 5.1 to 4.1 taking 30 years. From 2010, population ageing is expected to accelerate. By 2025, the support ratio is projected to reach three and fall further to just over two in 2050.
    • Earnings
      "Average earnings" are an important metric underlying the presentation of system parameters and the results of pension modelling. The distribution of earnings is used to calculate composite indicators, such as the progressivity of pension systems, the structure of the retirement-income package and weighted averages.
    • Coverage of Private Pensions
      Private pension arrangements have been growing in importance in recent years as pension reforms have reduced public pension entitlements. In 17 OECD countries, private pensions are mandatory or quasimandatory (that is, they achieve near-universal coverage of employees through collective bargaining agreements). In a further six OECD countries, voluntary private pensions (occupational and personal) cover a significant part of the work age population: more than 40%.
    • Institutional Structure of Private Pension Plans
      Private pension plans can be funded through various financing vehicles. In 2009, for OECD countries for which data were available, on average, 74% of OECD private pension assets were held by pension funds, 19% were held in pension insurance contracts run by life and pension insurance companies, 4% were held in retirement products provided by banks or investment management companies, and 3% were book reserves. Within pension funds, DC plans are playing an increasing role, even if DB plans still dominate pension fund assets in some countries, largely due to their historical prominence as the favoured arrangement for occupational (workplace) pensions in many countries.
    • The Pension Gap
      There are 18 countries with a mandatory pension scheme giving a replacement rate below the average for the 34 OECD countries. This "pension gap" is over 28% of pay for an average earner in Ireland and for women in Mexico. It also exceeds 25% in the United Kingdom and for men in Mexico. Pension contributions required to fill the pension gap and bring the overall replacement rate up to the OECD average can be up to 7.5% of earnings if contributions are made for the full career. However, most workers do not start paying into a voluntary private pension until well into their careers. As a result, contribution rates of 10-15% would be required in six countries for workers with 20 years missing from their contribution records.
    • Assets in Pension Funds and Public Pension Reserve Funds
      Substantial assets have been accumulated in most OECD countries to help meet future pension liabilities. Total pension funds’ assets were the equivalent to nearly 68% of gross domestic product (GDP) in 2009. Half of OECD countries have built up public pension reserves to help pay for state pensions. In these countries, public pension reserves were worth nearly 20% of GDP.
    • Asset Allocation of Pension Funds and Public Pension Reserve Funds
      At the end of 2009, traditional asset classes (primarily bonds and equities) were still the most common kind of investment in pension fund and public pension reserve fund portfolios. Proportions of equities and bonds vary considerably across countries but there is, generally, a greater preference for bonds.
    • Investment Performance of Pension Funds and Public Pension Reserve Funds
      During 2009, pension funds experienced a positive real investment rate of return of 6.5% on average. Despite this recovery, by 31 December 2009 their asset values were still on average 9% below their December 2007 levels. In 2009, public pension reserve funds regained the ground lost during the 2008 crisis. By the end of 2009, the total amount of PPRF assets was on average 7.3% higher than at the end of 2008, and 13.9% higher than in December 2007.
    • Pension Fund Operating Costs and Fees
      Private pension systems efficiency, as measured by the total operating costs in relation to assets managed, varies considerably between countries, ranking from 0.1% of assets under management to 1.2% Fees charged to plan members to cover these costs vary considerably in structure and level across countries.
    • DB Funding Ratios
      Funding ratios of exchange-listed companies’ defined-benefit plans were still significantly lower at the end of 2009 as compared to end 2007.
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  • Expand / Collapse Hide / Show all Abstracts Country Profiles

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    • Guide to the Country Profiles
      The country profiles use a common framework. First, there is a brief summary of the national retirement-income system and a table of key indicators. This background table comprises average earnings, public pension expenditures, life expectancy and the dependency ratio (the number of pensioners for every 100 workers). Data both for the country in question and the average for the OECD as a whole are presented.
    • Australia
      Australia: Pension system in 2008 Australia’s retirement income system has three components: a means tested Age Pension funded through general taxation revenue; the superannuation guarantee, a compulsory employer contribution to private superannuation savings; and voluntary superannuation contributions and other private savings, which are encouraged to support self provision in retirement.
    • Austria
      Austria: Pension system in 2008 The pension system consists of a defined-benefit public scheme with an income-tested top-up for low-income pensioners.
    • Belgium
      Belgium: Pension system in 2008 The pension system has two components: an earnings-related public scheme with a minimum pension and a meanstested safety net.
    • Canada
      Canada: Pension system in 2008 The pension system offers a universal flat-rate benefit, which can be topped up with an income-tested benefit, and earnings-related public schemes.
    • Chile
      Chile: Pension system in 2008 The pension system has three components: a redistributive first tier, a second tier of mandatory individual accounts and a voluntary third tier. The individual accounts, introduced in 1981, are of the defined-contribution type. The redistributive first tier was substantially extended in a pension reform in 2008.
    • Czech Republic
      Czech Republic: Pension system in 2008 The public pension scheme has a basic element and an earnings-related part calculated according to a progressive formula.
    • Denmark
      Denmark: Pension system in 2008 There is a public basic scheme. A means-tested supplementary pension benefit is paid to the financially most disadvantaged pensioners. There is also a scheme based on individuals’ contribution records, viz. the ATP. In addition, compulsory occupational schemes negotiated as part of collective agreements cover about 90% of full-time employees.
    • Estonia
      Estonia: Pension system in 2008 The system combines an earningsrelated public scheme with mandatory contributions to funded pensions. There is also a flat-rate, basic element and a safetynet, national pension.
    • Finland
      Finland: Pension system in 2008 There is a basic state pension (national pension), which is income-tested, and a range of statutory earnings-related schemes, with very similar rules for different groups. The schemes for private-sector employees are partially pre-funded while the public-sector schemes are pay-as-you-go financed (with buffer funds to even out future increases in pension contributions).
    • France
      France: Pension system in 2008 In the private sector, the pension system has two tiers: an earnings-related public pension and mandatory occupational schemes, based on a points system. The public scheme also has a without means test minimum contributory pension (minimum contributif). In addition there is a targeted minimum income for the elderly (minimum vieillesse).
    • Germany
      Germany: Pension system in 2008 The statutory public pension system has a single tier and is an earnings-related PAYG system. Calculation of pensions is based on pension points. There is a socialassistance safety net for low-income pensioners.
    • Greece
      Greece: Pension system in 2008 Pensions are provided through an earnings-related public scheme with two components plus a series of minimum pensions/social safety nets.
    • Hungary
      Hungary: Pension system in 2008 The new system combines an earningsrelated public pension with mandatory fully funded defined-contribution schemes. This applies to new labourmarket entrants and people aged 4 or under at the time of reform. Older workers could choose between this mixed system or a pure pay-as-you-go, public pension. The modelling assumes that workers are covered by the mixed system.
    • Iceland
      Iceland: Pension system in 2008 The public pension has three components, including a basic and two incometested schemes. There are also mandatory occupational pensions with a hybrid (albeit mainly defined-benefit) formula.
    • Ireland
      Ireland: Pension system in 2008 The public pension is a basic scheme paying a flat rate to all who meet the contribution conditions. There is also a means-tested pension to provide a safety net for the low-income elderly. Voluntary occupational pension schemes have broad coverage: over half of employees.
    • Israel
      Israel: Pension system in 2008 The state pension comprises a universal insurance pension combined with means-tested income support. Until 2008 second-pillar pensions were common, but voluntary. As of January 2008 mandatory contributions to definedcontribution pension funds have been introduced.
    • Italy
      Italy: Pension system in 2008 The new Italian pension system is based on notional accounts. Contributions earn a rate of return related to GDP growth. At retirement, the accumulated notional capital is converted into an annuity taking account of average life expectancy at retirement. It applies in full to labourmarket entrants from 1996 onwards.
    • Japan
      Japan: Pension system in 2008 The public pension system has two tiers: a basic, flat-rate scheme and an earningsrelated plan (employees’ pension scheme).
    • Korea
      Korea: Pension system in 2008 The Korean public pension scheme was introduced relatively recently. It is an earnings-related scheme with a progressive formula, since benefits are based on both individual earnings and the average earnings of the insured as a whole.
    • Luxembourg
      Luxembourg: Pension system in 2008 The public pension scheme has two components: a flat-rate part depending on years of coverage and an earningsrelated part. There is also a minimum pension.
    • Mexico
      Mexico: Pension system in 2008 Old-age pensions are covered under a defined-contribution scheme mandatory for private sector workers, privately managed and funded. The contributions are made by workers, employers and government. There is a minimum pension for those who listed at least 24 years.
    • Netherlands
      Netherlands: Pension system in 2008 The pension system has two main tiers, consisting of a flat-rate public scheme and earnings-related occupational plans. Although there is no statutory obligation for employers to offer a pension scheme to their employees, industrial-relations agreements mean that 91% of employees are covered. These schemes are therefore best thought of as quasi-mandatory.
    • New Zealand
      New Zealand: Pension system in 2008 The public pension is flat rate based on a residency test. The KiwiSaver, an autoenrolment defined-contribution private retirement savings scheme with capped public subsidies was introduced in 2007. Employed KiwiSaver members were estimated to be over 30% of the workforce by the end of 2008.
    • Norway
      Norway: Pension system in 2008 The new public pension system, beginning in 2011, will consist of an income pension, and a guarantee pension for people with no or only a small income pension. The guarantee pension is income-tested against the income pension. In 2006, a mandatory occupational pension was introduced in the private sector.
    • Poland
      Poland: Pension system in 2008 The scheme is based on a system of notional accounts. People under 30 (born in 1969 and after) at the time of the reform must also participate in the funded scheme; people aged 30-50 (born between 1949 and 1968) could choose the funded option. However, the choice had to be made in 1999 and it was irrevocable, with the exception of those who could retire early.
    • Portugal
      Portugal: Pension system in 2008 Portugal has an earnings-related public pension scheme with a means-tested safety net.
    • Slovak Republic
      Slovak Republic: Pension system in 2008 The earnings-related, public scheme is similar to a points system, with benefits that depend on individual earnings relative to the average. Low-income workers are protected by a minimum amount of earnings on which pension is calculated. All pensioners are eligible for social assistance benefits. Definedcontribution plans were introduced at the beginning of 2005.
    • Slovenia
      Slovenia: Pension system in 2008 There is an earnings-related pension with a minimum pension. There is a social-assistance scheme for low-income pensioners.
    • Spain
      Spain: Pension system in 2008 The Spanish public pension system consists of a single, earnings-related benefit in the contribution level, with a means-tested minimum pension. There is also a non-contribution means-tested level, which replaces the previous special social assistance scheme.
    • Sweden
      Sweden: Pension system in 2008 The earnings-related part is based on notional accounts and there is a small mandatory contribution to individual, defined-contribution funded pensions. There is also a pension-income-tested top-up. Occupational pension plans – with defined-benefit and defined-contribution elements – have broad coverage.
    • Switzerland
      Switzerland: Pension system in 2008 The Swiss pension system has three main parts. The public scheme is earnings related, but has a progressive formula. There is also a system of mandatory occupational pensions and an income-tested supplementary benefit.
    • Turkey
      Turkey: Pension system in 2008 An earnings-related public scheme with an income-tested safety net and a flat-rate supplementary pension.
    • United Kingdom
      United Kingdom: Pension system in 2008 The public scheme has two tiers, (a flatrate basic pension and an earningsrelated additional pension), which are complemented by a large voluntary private pension sector. Most employee contributors "contract out" of the state second tier into private pensions of different sorts. An income-related benefit (pension credit) targets extra spending on the poorest pensioners.
    • United States
      United States: Pension system in 2008 The publicly provided pension benefit, known as social security, has a progressive benefit formula. There is also a meanstested top-up payment available for low-income pensioners.
    • Argentina
      Argentina: Pension system in 2008 The pension system has two main components: a basic component and an additional social insurance component. For those aged 70 and above there is also an additional age-related social insurance component, as well as a social assistance component.
    • Brazil
      Brazil: Pension system in 2008 The Regime Geral de Previdência Social (RGPS), covers the private sector workforce. It is financed through payroll taxes, shared by the employer and the employee, revenues from sales taxes and federal transfers that cover shortfalls of the system. It is a mandatory, pay-asyou- go financed single-pillar scheme, which is operated by the National Social Security Institute.
    • China
      China: Pension system in 2008 China has a two-tier pension system, consisting of a basic pension and a mandatory employee contribution to a second-tier plan. This system, which was introduced in 1998, was significantly revised in 2006. It covers urban workers and many of the parameters depend on province-wide (rather than national) average earnings.
    • India
      India: Pension system in 2008 Workers are covered under the earningsrelated employee pension scheme and defined-contribution employee provident fund administered by the Employees Provident Fund Organisation (EPFO) and other employer managed funds.
    • Indonesia
      Indonesia: Pension system in 2008 Employees in private sectors are covered by a defined-contribution plan.
    • Russian Federation
      Russian Federation: Pension system in 2008 The pension system has different components: labour pensions, state pensions, and voluntary pension savings at non-state (private) pension funds.
    • Saudi Arabia
      Saudi Arabia: Pension system in 2008 Employees in the public and private sectors. Voluntary coverage for persons who are self-employed, are working abroad, or no longer satisfy the conditions for compulsory coverage.
    • South Africa
      South Africa: Pension system in 2008 The public pension is flat rate based on a residency test. There are also voluntary occupational schemes but coverage for these is not high.
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