Retirement-income systems in OECD Countries.

283 Pages·2009·2.207 MB·English

by  OECD

Pensions at a Glance 2009
RETIREMENT-INCOME SYSTEMS IN OECD COUNTRIES Pensions at a Glance
Pension and retirement policies have changed dramatically in recent years, as governments have tried
2009
to balance the goals of adequate retirement incomes and the long-term financial sustainability
of pension systems in the face of population ageing. Pensions at a Glance 2009 provides a consistent
framework for comparing pension policies between countries along with reliable data.
RETIREMENT-INCOME SYSTEMS
This third edition updates information on key features of pension provision in OECD countries
and provides projections of retirement income for today’s workers. It offers an expanded range of IN OECD COUNTRIES
indicators, including measures of assets, investment performance, coverage of private pensions,
public pension spending, and the demographic context and outlook.
Four special chapters provide an in-depth look at important issues in pension policy today. The first
examines the implications of the present financial and economic crisis on pension systems. Which
countries and which individuals are most affected? What can governments do to help and which
policies should they avoid? The second looks at incomes and poverty of older people, looking at P
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trends over the past two decades. In many countries, the position of pensioners has improved relative n
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to the population as a whole, but there remain pockets of old-age poverty. The third updates the io
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analysis of pension reforms in the second edition of Pensions at a Glance. How have pension systems s

changed in the period 2004-08? The final special chapter considers coverage of voluntary private a
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pensions, extending the analysis to look at how this varies with age and earnings. It also evaluates five a

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different policies to expand coverage. la
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“An extraordinarily useful and careful compilation of pension information for a wide-range of countries, c
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presented in a common format and following a thoughtful structure. The authors have brought cross- 2
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national pension comparisons to a new level, and they are to be commended for their intensive 0
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efforts. [This] represents some of the smartest comparative work out there, by people intimately

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familiar with the nuances – and complexities – of comparative pension work.” E
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– Olivia Mitchell, Director of the Boettner Centre for Pensions and Retirement Research, Wharton E
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School, University of Pennsylvania E
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www.oecd.org/els/social/pensions/PAG
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The full text of this book is available on line via these links: D
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www.sourceoecd.org/finance/9789264060715 O
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www.sourceoecd.org/socialissues/9789264060715 N
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Pensions at a Glance
2009
RETIREMENT-INCOME SYSTEMS
IN OECD COUNTRIES
ORGANISATION FOR ECONOMIC CO-OPERATION
AND DEVELOPMENT
The OECD is a unique forum where the governments of 30 democracies work together to
address the economic, social and environmental challenges of globalisation. The OECD is also at
the forefront of efforts to understand and to help governments respond to new developments and
concerns, such as corporate governance, the information economy and the challenges of an
ageing population. The Organisation provides a setting where governments can compare policy
experiences, seek answers to common problems, identify good practice and work to co-ordinate
domestic and international policies.
The OECD member countries are: Australia, Austria, Belgium, Canada, the Czech Republic,
Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Korea,
Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, the Slovak Republic,
Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States. The Commission of
the European Communities takes part in the work of the OECD.
OECD Publishing disseminates widely the results of the Organisation’s statistics gathering and
research on economic, social and environmental issues, as well as the conventions, guidelines and
standards agreed by its members.
This work is published on the responsibility of the Secretary-General of the OECD. The
opinions expressed and arguments employed herein do not necessarily reflect the official
views of the Organisation or of the governments of its member countries.
This document has been produced with the financial assistance of the European Union.
The views expressed herein can in no way be taken to reflect the official opinion of the
European Union.
Also available in French under the title:
Panorama des pensions 2009
LES SYSTÈMES DE RETRAITES DANS LES PAYS DE L’OCDE
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© OECD 2009
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FOREWORD
Foreword
T
his third edition of Pensions at a Glance provides a range of indicators for comparing pension
policies between OECD countries. Four special chapters provide deeper analysis that should help
inform debates about the design of retirement-income systems and pension reforms.
With the economic and financial situation ever changing, and frequent changes to pension
systems as a response, please notethat this report reflects the position as at the end of May2009.
The report was prepared by a team, led by Edward Whitehouse, in the Social Policy Division of
the OECD’s Directorate for Employment, Labour and Social Affairs. Anna Cristina D’Addio and
Andrew Reilly were responsible for maintaining and updating the OECD pension models and for
drafting the discussion of the main indicators. National officials supplied active and invaluable help
in modelling information on their countries’ pension and tax systems. The results of the OECD
pension models have been confirmed and validated by national authorities.
The special chapters on “Pension systems during the financial and economic crisis” and “The
pension gap and voluntary retirement savings” were written by Edward Whitehouse, with
contributions from colleagues in the Directorate for Employment, Labour and Social Affairs and from
Pablo Antolín, André Laboul, Robert Ley, Jean-Marc Salou, Fiona Stewart and Juan Yermo of the
OECD’s Directorate for Financial and Enterprise Affairs. Delegates to the OECD Working Party on
Social Policy provided useful input to earlier drafts of these chapters. EdwardWhitehouse wrote the
special chapter on “Recent pension reforms”. Edward Whitehouse and Asghar Zaidi of the Social
Policy Division of OECD were responsible for “Incomes and poverty of older people”. This chapter
draws heavily on the database collected for the OECD report published in 2008, Growing Unequal?.
The report has also benefited from guidance and commentary of numerous colleagues in the
OECD, notably Martine Durand, Michael Förster, John P. Martin, Mark Pearson and Monika Queisser.
The report is a product of a joint project co-financed by the European Commission and the
OECD. The OECD pension models, that underpin most of the indicators presented, use the APEX
(Analysis of Pension Entitlements across Countries) infrastructure, which was developed by Axia
Economics with the help of funding from the OECD and the World Bank.
PENSIONS AT A GLANCE 2009: RETIREMENT-INCOME SYSTEMS IN OECD COUNTRIES – ISBN 978-92-64-06071-5 – © OECD 2009 3

TABLE OF CONTENTS
Table of Contents
Editorial – Pension Policy: Weathering the Storm. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
The Framework of Pensions at a Glance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Structure of the report. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Methodology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Overview of retirement-income provision. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Architecture of national pension systems. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Part I
Policy Issues
1. Pension Systems during theFinancial and Economic Crisis. . . . . . . . . . . . . . . . . . . . 25
1. Which groups are hardest hit by the crisis in pensions?. . . . . . . . . . . . . . . . . . . . . 25
2. In which countries are pensions most affected? . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
3. Policy responses: what to do and what not to do. . . . . . . . . . . . . . . . . . . . . . . . . . . 36
4. Conclusions: security through diversity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
2. Incomes and Poverty of Older People. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
1. Incomes of older people. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
2. Old-age income poverty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
3. The redistributive role of the state: taxes and benefits. . . . . . . . . . . . . . . . . . . . . . 74
4. Looking forward. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
5. Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
3. Recent Pension Reforms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
1. Coverage of pension systems. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
2. Adequacy of retirement benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
3. Financial sustainability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
4. Economic efficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
5. Administrative efficiency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
6. Security of benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
7. Pension reform: process and politics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
PENSIONS AT A GLANCE 2009: RETIREMENT-INCOME SYSTEMS IN OECD COUNTRIES – ISBN 978-92-64-06071-5 – © OECD 2009 5
TABLE OF CONTENTS
4. The Pension Gap and Voluntary Retirement Savings . . . . . . . . . . . . . . . . . . . . . . . . . . 97
1. The pension gap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
2. Coverage of voluntary private pensions by age and earnings. . . . . . . . . . . . . . . . . 103
3. Contributions to private pensions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
4. Policies to encourage private pension savings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
Part II
Indicators of Pension Policies
Pension Entitlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
Gross pension replacement rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
Gross pension replacement rates: Public and private schemes . . . . . . . . . . . . . . . . . 118
Net pension replacement rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
Gross pension wealth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
Net pension wealth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
Progressivity of pension benefit formulae . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126
Pension-earnings link . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
Weighted averages: Pension levels and pension wealth . . . . . . . . . . . . . . . . . . . . . . . 130
Retirement-income package. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
Retirement-income Systems. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136
Pension expenditure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138
Coverage of private pensions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140
Assets in private pension funds and public reserves. . . . . . . . . . . . . . . . . . . . . . . . . . 142
Demographic and Economic Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145
Life expectancy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146
Fertility. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148
Old-age dependency ratio. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150
Average earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152
Part III
Country Profiles
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157
Key features of pension-system design . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157
Guide to the country profiles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164
Australia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165
Austria. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169
Belgium. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172
6 PENSIONS AT A GLANCE 2009: RETIREMENT-INCOME SYSTEMS IN OECD COUNTRIES – ISBN 978-92-64-06071-5 – © OECD 2009
TABLE OF CONTENTS
Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177
Czech Republic. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180
Denmark. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184
Finland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189
France . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 194
Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199
Greece . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202
Hungary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 206
Iceland. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 210
Ireland. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 213
Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216
Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220
Korea . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 224
Luxembourg. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227
Mexico. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 230
Netherlands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 233
New Zealand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 237
Norway . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 240
Poland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 244
Portugal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 248
Slovak Republic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 253
Spain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 256
Sweden . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 259
Switzerland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 265
Turkey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 269
United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 272
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 276
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