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Pension Country Profile: United States - OECD.org

Pension Country profile : United States (Extract from the OECD Private Pensions Outlook 2008) Contents Each Pension Country profile is structured as follows: How to Read the Country profile This section explains how the information contained in the Country profile is organised. Country profile The Country profile is divided into six main sections: Demographics and macroeconomics Country Pension design Pension funds data overview Reference information Overview of private Pension system by type of plan and financing vehicle Acronyms, Symbols and Conventional Signs Glossary The OECD Private Pensions Outlook 2008 contains a set of Country profiles which describe in a concise manner the design of private Pension systems in individual OECD countries.

Pension Country Profile: United States (Extract from the OECD Private Pensions Outlook 2008) Contents Each Pension Country Profile is structured as follows: ¾ How to Read the Country Profile This section explains how the information contained in the country profile is organised.

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Transcription of Pension Country Profile: United States - OECD.org

1 Pension Country profile : United States (Extract from the OECD Private Pensions Outlook 2008) Contents Each Pension Country profile is structured as follows: How to Read the Country profile This section explains how the information contained in the Country profile is organised. Country profile The Country profile is divided into six main sections: Demographics and macroeconomics Country Pension design Pension funds data overview Reference information Overview of private Pension system by type of plan and financing vehicle Acronyms, Symbols and Conventional Signs Glossary The OECD Private Pensions Outlook 2008 contains a set of Country profiles which describe in a concise manner the design of private Pension systems in individual OECD countries.

2 This document is an extract from this publication. For further information on the Outlook, please see 5. HOW TO READ THE Country PROFILESOECD PRIVATE PENSIONS OUTLOOK 2008 ISBN 978-92-64-04438-8 OECD 2009156 How to Read the Country ProfilesThis section provides Country profiles,describing private Pension arrangements inindividual OECD countries. Each Pension countryprofile is divided into six main sections: Demographics and macroeconomics Country Pension design Pension funds data overview Private Pension system s key characteristics Reference information Overview of private Pension system by type ofplan and financing vehicleThe figure below shows how the first threesections are organised on the first page of eachcountry and macroeconomics The first section presents a selection of keydemographics and macroeconomics indicators thatprovide a sense of the size of the Country and itseconomy.

3 GDP figures are from the OECD ReferenceSeries database. Population figures are from theOECD Population and Labour Force Pension designThis section is split into two parts: Potential average Pension benefitThis figure displays a broad estimate of thetotal Pension income which an average-earningindividual may receive from various sources (state,mandatory, and voluntary occupational pensions)after a full working lifetime. It is expressed as apercentage of the earnings the pensioner had justbefore retirement. These figures draw and expandon a microeconomic approach used in thepublication Pensions at a Glance, looking at futureindividual Pension entitlements under 2004parameters and Pension incomes projected here, however,should be considered only as broad indications ofwhat may happen, as they are conditional on anumber of assumptions.

4 It is assumed thatindividuals are covered by public Pension plansthroughout their careers. For the countries whereoccupational Pension plans are common, average-earning individuals are assumed to be coveredthroughout their careers by occupational pensionplans that are typical of market practice in thatcountry. In countries where private pensionaccounts are compulsory, they are assumed to haveparticipated in the compulsory system throughouttheir careers. Those with shorter, or periodicallyinterrupted, careers should expect lower benefitsthan those which are set out in this public Pension can be an earnings-relatedpension (a Pension computed by reference to a rate ofemoluments, whether actual emoluments or not andwhether final or average emoluments), a flat ratepension (a Pension payable at a rate fixed otherwisethan by reference to a rate of emoluments or to therate of another Pension ), a minimum Pension (theminimum level of Pension benefits the plan pays outin all circumstances), a basic state Pension (a non-earnings related Pension paid by the State to5.)

5 AUSTRALIAPRIVATE PENSIONS OUTLOOK 2008 ISBN 978-92-64-04438-8 OECD 2009158 AustraliaCountry Pension designPension funds data overviewNote: Data from 2007 or latest available Ratio of over 65-year-olds to the labour : OECD, various and macroeconomicsNominal GDP (AUD bn) per capita (USD)45 (000s)21 force (000s)11 over 65 (%) investments (AUD bn) investments as a % of contributions as a % of benefits as a % of number of funds264 614290 917306 553324 789366 567 Source:OECD Global Pension 2 average Pension benefitAs a percentage of final earningsNote: Additional Pension income may comefrom other sources such as voluntaryoccupational Pension , personal Pension ,general savings or investments, : OECD occupational Pension Superannuation fundsPublic Pension Means-tested pensionStructure of private Pension systemSource: OECD Global Pension , occupationalOccupational trustee managed superannuation fund: corporateOccupational trustee managed superannuation fund: industryPublic sector occupational Pension plans, often compulsory for public sector employeesMandatory/Quasi-mandatory, personalTrustee managed public offer superannuation fund: retail fundsTrustee managed superannuation fund: small APRA fundsTrustee managed superannuation fund: self-managed superannuation fund (SMSFs)Trustee managed superannuation fund: approved deposit fundVoluntary, personalRetirement savings accounts (RSAs): capital guaranteed individual savings account or policy32145.

6 HOW TO READ THE Country PROFILESOECD PRIVATE PENSIONS OUTLOOK 2008 ISBN 978-92-64-04438-8 OECD 2009157individuals with a minimum number of serviceyears), or a means-tested Pension ( Pension granted toa person after examination of his/her financial state).Data cover public pensions and othermandatory or quasi-mandatory private pensionplans. Voluntary plans are also included if theycover at least 30% of the working Pension income may come from othersources, such as individual savings, but these arenot included in the five countries, several projections arepresented as private Pension systems are in aparticular state of change. Structure of private Pension systemsThe second part displays a bulleted listsummarising the structure of private pensionsystems according to the Pension plans currently inplace in the funds data overview The third section presents selected pensionfund indicators from 2003 to 2007 from the OECDG lobal Pension Statistics project ( ).

7 For further data and analysis, readerscan refer to Chapter 2 of this Pension system s key characteristicsThe information provided in this section coverseight private Pension system key characteristics: Overview Coverage Typical plan design Contributions Benefits Fees Taxation Market informationDepending on data availability, thesecharacteristics are developed for each existingcategory of Pension plan (mandatory vs. voluntarypension plan, occupational vs. personal pensionplan). Information provided in this section refers toDecember 2007 or to the latest available informationThis section includes references to keylegislation reforms, provides the name of regulatoryand supervisory authorities and displays officialstatistical references and sources on private of private Pension systems by type of plan and financing vehicleThis last section gives a detailed description ofthe various private Pension plans found in eachcountry as well as the statistical data coverage ofthe OECD Global Pension following figure gives an example of suchan overview.

8 The first two columns provide thename and the description of each Pension plans included in the OECD GPS databaseare marked with a tick in the next column,excluding OECD estimates. Under the columnheadings Type of plan and Financing vehicle aregiven the correspondence of each Pension planwith the OECD Classification by funding vehicle andby type (see OECD (2005), Private Pensions: OECDC lassification and Glossary, OECD, Paris).Source: OECD Global Pension of private Pension system by type of plan and financing vehicleIncluded in OECD GPS databaseType of planFinancing vehicleVoluntary Mandatory/ Quasi-mandatory Occupa-tional PersonalPension fundBook reservePension insurance contractBanks or investment companiesOccupational trustee managed superannuation fund: corporateSponsored by a single non-government employer, or group of employers.

9 Either defined benefit, defined contribution, or hybrid. Employer contributions may comprise or exceed the mandatory 9% contribution. Benefits can be Pension , lump sums, or combinations thereof. Trustees are independent or comprise of equal numbers of employer and employee trustee managed superannuation fund: industryEstablished under an agreement between the parties to an industrial award. Multi-employer sponsored. Defined contribution. Employer contributions comprise the mandatory 9% contribution. Benefits generally lump-sum or allocated (account-based) pensions. Trustee comprised of equal numbers of employer and employee managed public offer superannuation fund: retail fundsPooled superannuation products sold commercially and competitively through intermediaries, including master trusts (private Pension investments) and personal superannuation products.

10 Trustee must meet capital requirements. Often sponsored by financial institutions such as life insurance companies or managed superannuation fund: small APRA fundsSuperannuation funds, regulated by the prudential regulator, that have less than five members and are operated by an independent trustee that meets capital requirements. Can pay lump-sum or allocated (account based) Pension savings accounts (RSAs): capital guaranteed individual savings account or policyRetirement savings accounts (RSAs): these are non-trust-based superannuation accounts that are offered directly off the balance sheets of either life companies or Approved Deposit Taking Institutions (banks, credit unions, friendly societies). RSAs are governed by separate legislation (the Retirement Savings Account Act 1997).


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