Pensions at a Glance 2013: OECD and G20 Indicators

1 Consult this publication on line at work is published on the OECD iLibrary, which gathers all OECD books, periodicals and statistical for more at a Glance 2013 OECD anD G20 inDiCatOrsPensions at a Glance 2013 OECD anD G20 inDiCatOrsContentsChapter 1. Recent pension reforms and their distributional impactChapter 2. The role of housing, financial wealth and public services for adequate living standards in old ageChapter 3. Design of pension systemsChapter 4. pension entitlementsChapter 5. Incomes and poverty of older peopleChapter 6. Finances of retirement-income systemsChapter 7. Demographic and economic contextChapter 8. Private Pensions and public pension reservesChapter 9. Pensions at a Glance 2013 : Country profilesisbn 978-92-64-20392-1 81 2013 22 1 PPensions at a Glance 2013 OECD anD G20 inDiCatOrs20139 HSTCQE*cadjcb+ Pensions at a Glance2013 OECD AND G20 INDICATORSThis work is published on the responsibility of the Secretary-General of the OECD.

2 Theopinions expressed and arguments employed herein do not necessarily reflect the officialviews of the OECD or of the governments of its member countries or those of theEuropean document and any map included herein are without prejudice to the status of orsovereignty over any territory, to the delimitation of international frontiers and boundariesand to the name of any territory, city or 978-92-64-20392-1 (print)ISBN 978-92-64-20393-8 (PDF)OECD Pensions at a Glance :ISSN 1995-4026 (print)ISSN 1999-1363 (online)European UnionCatalogue number: KE-01-13-683-EN-C (print)Catalogue number: KE-01-13-683-EN-N (PDF)ISBN 978-92-79-33752-9 (print)ISBN 978-92-79-33750-5 (PDF)The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The useof such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israelisettlements in the West Bank under the terms of international to OECD publications may be found on line OECD 2013 You can copy, download or print OECD content for your own use, and you can include excerpts from OECD publications, databases andmultimedia products in your own documents, presentations, blogs, websites and teaching materials, provided that suitableacknowledgment of the source and copyright owner is given.

3 All requests for public or commercial use and translation rights should besubmitted Requests for permission to photocopy portions of this material for public or commercial use shall beaddressed directly to the Copyright Clearance Center (CCC) the Centre fran ais d'exploitation du droit de copie(CFC) cite this publication as:OECD ( 2013 ), Pensions at a Glance 2013 : OECD and G20 Indicators , OECD AT A Glance 2013 : OECD AND G20 Indicators OECD 20133 ForewordThis fifth edition ofPensions at a Glanceprovides a range of Indicators for comparing pensionpolicies and their outcomes between OECD countries. The Indicators are also, where possible,provided for the other major economies that are members of the G20. Two special chapters(Chapters 1 and 2) provide deeper analysis of recent pension reforms and their impact and of the roleof housing, financial wealth and public service for retirement income report was prepared by the Pensions team in the Social Policy Division of the OECDD irectorate for Employment, Labour and Social Affairs.

4 The team comprises Anna Cristina D Addio,Andrew Reilly, Kristoffer Lundberg and Maria Chiara Cavalleri. National officials particularlydelegates to the OECD Working Party on Social Policy and members of the OECD pension expertgroup provided active and invaluable input to the report. For OECD countries, the results of theOECD pension models have been confirmed and validated by national 1 on Recent pension reforms and their distributional impact was written byAndrew Reilly, Maria Chiara Cavalleri and Anna Cristina D 2entitled The role ofhousing, financial wealth and public services for adequate living standards in old-age waswritten by Anna Cristina D Addio and Monika Queisser. Both chapters were edited by Ken ne Mohier prepared the manuscript for Indicators related to private Pensions were mainly provided by the OECD s private-pensionsunit in the Directorate for Financial and Enterprise Affairs: Pablo Antol n, St phanie Payet andRomain report has benefited from the commentary of many national officials and colleagues in theOECD Secretariat, notably Monika Queisser and Stefano Scarpetta.

5 It is a joint project co-financed bythe European Commission and the OECD. The OECD pension models, that underpin the Indicators ofpension entitlements, use the APEX (Analysis of pension Entitlements across Countries) modelsdeveloped by Axia OF CONTENTSPENSIONS AT A Glance 2013 : OECD AND G20 Indicators OECD 20135 Table of contentsEditorial Pensions under 9 Executive reforms and their distributional pension 18 Distributional impact of pension 26 Conclusions and policy 58 Chapter role of housing, financial wealth and public services for adequatelivingstandards in old 60 Measuring adequacy of living 62 Living standards in retirement: Incomes and poverty in old 69 Wealth and the adequacy of retirement 76 Summary and 109 Annex the 115 Annex 118 Chapter of pension 119 Architecture of national pension 120 Basic, targeted and minimum 122 Earnings-related 124 Normal, early and late 126 Effective age of labour market 128 Chapter 131 Methodologyand 132 Gross pension replacement 134 Gross pension replacement rates: Public and private 136 Tax treatment of Pensions and 138 Net pension replacement 140 Net pension replacement rates: Public and private 142 Investment risk and private 144 Gross pension 146 TABLE OF CONTENTSPENSIONS AT A Glance 2013 .

6 OECD AND G20 Indicators OECD 20136 Net pension 148 Changes in pension 150 Progressivity of pension benefit 152 pension -earnings 154 Weighted averages: pension levels and pension 156 Retirement-income 158 Chapter and poverty of older 161 Incomesofolder 162 Old-age income 164 Chapter of retirement-income expenditure on 170 pension -benefit expenditures: Public and 172 Long-term projections of public pension 174 Chapter and economic 180 Old-age support 182 Earnings: Averages and 184 Chapter Pensions and public pension 187 Coverage of private 188 Institutional structure of private pension 190 The pension 192 Assets in pension funds and public pension reserve 194 Asset allocation of pension funds and public pension reserve 196 Investment performance of pension funds and public pension reserve 198 pension fund operating costs and 200DB funding 202 Chapter at a Glance 2013 205 Guide tothe country 232 Czech 260 TABLE OF CONTENTSPENSIONS AT A Glance 2013 : OECD AND G20 Indicators OECD 302 New 318 Russian 325 Saudi 335 South 354 United 357 United 362 Look for the StatLinks2at the bottom of the tables or graphs in this book.

7 To download the matching Excel spreadsheet, just type the link into your Internet browser, starting with the prefix, or click on the link from the e-book OECD Publications on:This book service that delivers Excel files from the printed page! OECDA lertsEDITORIAL Pensions UNDER STRESSPENSIONS AT A Glance 2013 : OECD AND G20 Indicators OECD 20139 Editorial Pensions under stressIn OECD countries, the pension landscape has been changing at an astonishing pace overthe past few years. After decades of debate and, in some cases, political standstill, manycountries have launched significant pension reforms, including higher retirement ages,changes in the way entitlements are calculated and other measures to introduce savings intheir pension countries have very different pension schemes, but this new wave of reformsfaces remarkably similar challenges: how to ensure that pension systems are financiallysustainable and how to give citizens an adequate income in retirement.

8 Tension betweenthese two objectives is not new, but the economic crisis with its impact on public deficits anddebts and thus the need for fiscal consolidation has added urgency. In large pay-as-you-gosystems, especially in continental Europe,financial sustainabilityis the primary concern: howcan the large success of past decades in reducing old-age poverty be maintained whileensuring that the costs of pension provision do not become too high for the next generationsin the context of population ageing? Other countries with smaller public pension systems,such as the English-speaking countries, are more concerned with ensuringadequateretirement incomesby expanding the coverage of private pension schemes and raisingcontribution many reforms had been in the making even before the crisis, a major acceleratorof pension reform was the economic crisis and the resulting need for fiscal consolidation.

9 Inthe 2009 edition ofPensions at a Glance , the OECD noted that, although private pension assetshad taken a hit, pensioners had been largely spared from benefit cuts and sometimes evensaw their public pension benefits increased as part of economic stimulus 2013 , this is no longer the case. Given their large incidence in overall public spending about 17% on average across OECD countries (ranging from 3% in Iceland to 30% in Italy) Pensions are now also being targeted in fiscal consolidation have addressed a number of key elements of pension systems. One of the mostvisible and politically contested measures has been raising the retirement age. pension ageshave increased in most OECD countries. A retirement age of 67 is now becoming morecommon, rather than the exception as was still the case a few years ago.

10 Some countrieshave gone even further, moving to 68 or 69 years, though no other country has gone as far asthe Czech Republic which decided on an open-ended increase of the pension age by twomonths per and more countries are also introducing automatic adjustment mechanisms orsustainability factors; these aim to rebalance pension systems in line with the evolution ofdemographic, economic and financial parameters. In order to address shorter-term budgetconstraints, several countries are adopting, or considering, freezes of benefit levels, inEDITORIAL Pensions UNDER STRESSPENSIONS AT A Glance 2013 : OECD AND G20 Indicators OECD 201310particular of higher-level Pensions . In most cases, exceptions are made for low-incomeretirees by maintaining or increasing old-age safety net benefits.