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Pensions at a Glance 2015

OECD and G20 indicators

image of Pensions at a Glance 2015

The 10-year anniversary edition of Pensions at a Glance highlights the pension reforms undertaken by OECD and G20 countries over the last two years. Two special chapters provide deeper analysis of first-tier pension schemes and of the impact of short or interrupted careers, due to late entry into employment, childcare or unemployment, on pension entitlements. Another chapter analyses the sensitivity of long-term pension replacement rates on various parameters. A range of indicators for comparing pension policies and their outcomes between OECD and G20 countries is also provided.

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How incomplete careers affect pension entitlements

This chapter assesses the impact of shorter, more fragmented careers on the pension entitlements from mandatory schemes taking into account all pension components including pension credits and other redistributive mechanisms in pension systems. The analysis focuses on delayed labour market entry and career interruptions related to childcare and unemployment.The analysis shows that with slightly more than a 1% drop in old-age pension for every year without a job on average, pension systems play a key role in offsetting the potential losses in retirement income due to delayed or interrupted employment. In the absence of any redistribution, the pension would fall by 2‑2.5% based on the economic assumptions used in the OECD model. Pension credits and other redistributive components of pension systems while not being able to fully offset the contribution gaps related to delayed or interrupted employment, are therefore effective instrument to boost earnings-related pensions. The effects vary widely across countries and depend on the periods covered, the pensionable earnings used during these periods, and the provision of other redistributive tools in pension systems.The results also highlight that pension systems are not typically designed to offset all kinds of income shocks which affect individual life courses. The increasing diversity of work paths requires a more comprehensive and integrated approach to the challenges faced by individuals through effective labour market, education, family and pension policies.

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