Pensions at a Glance 2017
OECD and G20 Indicators
The 2017 edition of Pensions at a Glance highlights the pension reforms undertaken by OECD countries over the last two years. Moreover, one special chapter focuses on flexible retirement options in OECD countries and discusses people’s preferences regarding flexible retirement, the actual use of these programs and the impact on benefit levels.
This edition also updates information on the key features of pension provision in OECD countries and provides projections of retirement income for today’s workers. It offers indicators covering the design of pension systems, pension entitlements, the demographic and economic context in which pension systems operate, incomes and poverty of older people, the finances of retirement-income systems and private pensions.
Net pension replacement rates
Whilst the gross replacement rate gives a clear indication of the design of the pension system, the net replacement will matter more to the individual, as it reflects their disposable income in retirement in comparison to when working. For average earners, the net replacement rate from mandatory pension schemes averages 63% across the OECD, which is 10 percentage points higher than the average gross replacement rate. This reflects the higher effective tax and social contribution rates that people pay on their earnings than on their pensions in retirement, mostly due to the progressivity of tax systems, some tax advantages to pensions and the absence of pension contributions on pension benefits. Net replacement rates vary across a large range, from less than 30% in Mexico and the United Kingdom to over 100% in the Netherlands and Turkey for average-wage workers. For low earners (with half of average worker earnings), the average net replacement rate across OECD countries is 73% while it is 59% for high earners (150% of average worker earnings).
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