Table 24. Public flat-rate pension programmes in OECD countries Country Pensionable Eligibility requirement Amount of benefit (full pension, Rate of State Subsidy Supple- (1) age (for full pension) (2) unless otherwise indicated) (3) contribution (4) ment (5) Australia 65 (M) 10 yr continuous residence A$ 173.90 a week (for single) None All cost Yes (means- (1908*) 61 (W) (means-test) A$ 290.10 a week (for couple) (Mar.1997) test) (Jul.1997) (5 yr continuous residence if total (27.4%*) years exceed 10) Austria 65 (M) (means-test) Amount to raise pension to 7,887 schillings a None All cost 61 (W) month for individuals, 11,253 schillings for couples, plus 840 schillings per child (30.5%) Belgium 65 (M) (means-test) BF 246,076 a year (for single) None All cost Yes (means- 61 (W) BF 328,098 a year (for couple) (Aug.1997) test) (28.7%*) Canada 65 40 yr residence after age 18 C$ 405.12 a month (Sept.1997) None All cost Yes (means- (1951) (means-test) (14.4%) test) Czech Republic 65 (means-test) Up to 2,460 crowns a month (Jan.1995) None All cost (36.0%) Denmark 67 40 yr residence between 15 and 67 3,810 kroner a month None All cost Yes (means- (1891*) (means-test) (n/a) test) (ATP, for wage earners 67 Having paid contributions from 1964 14,500 kroner a year for those who have paid full Up to 894 kroner a None only) (the year when the scheme was contributions year (ip) (1964) introduced) (n/a) Up to 1.788 kroner a year (er) Finland 65 40 yr residence 2,140 - 2,547 marks per month, according to None (ee) about 36% Yes (means- (1956) (means-test) municipality, marital status, other income received, Up to 20.4% (as of Jan.1996) test) etc. (sp, as of Jan.1996) 2.4-4.9%(er, private) (24.5%) 3.95% (er, public) France (6) 65 (means-test) Up to a basic minimum (41,196 francs a year) The fund for this Much of the taxes (1941*) scheme is largely on alcohol and (45.4%*) funded by the General non-alcoholic Social Contribution drinks finances (3.4% of 95% the fund for this income). scheme. Table 24. Public flat-rate pension programmes in OECD countries (continued) Country Pensionable Eligibility requirement Amount of benefit (full pension, Rate of State Subsidy Supple- (1) age (for full pension) (2) unless otherwise indicated) (3) contribution (4) ment (5) Greece 65 * 25 years of employment in 34,000 drs/month None All cost Yes (for (OGA: for agricultural agriculture or other rural activities disabilities) workers) * Not in receipt of a social security (1961) (7) pension (15.8%) (For non-insured) 65 * No household member should 34,000 drs/month None All cost Yes (for (1982) receive a social security pension dependent * Family income should be no higher members and than the equivalent of an OGA (15.8%) for pension. disabilities) Hungary 60 (M) (means-test) 80% of the minimal old-age pension None All cost 56 (W) (The amount of minimal pension is 40% of the net average earnings.) (n/a) Iceland 67 At least 3 years residence at ages Up to IKr 13,640 a month None (ip) Remaining costs Yes (means- (1909*) 16-66 (n/a) 3.88-6.28% (er) test) Ireland 65 (retirement) Insurance coverage before age 56 Up to £Ir 75.00 a week 5.50% of covered Any deficit Yes (means- (1908*) 66 (old-age) or 57, 156 weeks of paid (weekly allowances paid for adult and child weekly earnings test) contribution, etc. (Maximum pension dependants) plus some addition -- yearly average of 48 contributions, (ip) paid or credited from date of entry; 5.0% of covered Minimum pension -- average of 24, if (29.0%) weekly earnings retired at age 65; average of 20, if plus some addition retired at age 66) (sp) Up to 12% (er) Italy 65 (means-test) Up to 390,300 lire a month, with additional None All cost Yes (means- 125,000 lire a month available for those who live test) alone with no other means of support or if spouse only receives equivalent of the social pension. (18.1% for basic benefit) Japan 65 40 years of contribution ¥785,500 a year ¥12,800 a month 1/3 of the payment (1985) (Apr.1997) cost, plus adminis- (sp) (8) trative cost (23.5%) Luxembourg 60 Residence of at least 10 yrs during the The amount which will fulfil, with other income, None All cost last 20 yrs the guaranteed minimum income set out by the (means-test) state (RMG) (n/a) Netherlands 65 Residence from age 15 through 64 1,542.21 guilders a month for single person 15.40% of income Fund needed (1957) (ip) to bring low 1,069.79 guilders for each of couple None except for benefits up to (37.2%) supplement (er) social minimum Table 24. Public flat-rate pension programmes in OECD countries (continued) Country Pensionable Eligibility requirement Amount of benefit (full pension, Rate of State Subsidy Supple- (1) age (for full pension) (2) unless otherwise indicated) (3) contribution (4) Ment (5) New Zealand 62 10 yrs residence NZ$249.50 a week (single) None All cost Yes (means- (1898*) (7 yrs since 50) NZ$368.66 a week (couple) (gross) test) (42.0%) Norway 67 40 yrs residence Base amount: 42,500 kroner (May 1997) Up to 7.8% of Any deficits (1936*) (150% for aged couple) income (ee) 7.8-10.7% of income (sp) Up to 14.2% of wage (18.6%) (er) Portugal 65 (means-test) 21,000 escudos a month None All cost Yes (means- (1980) (n/a) test) Slovak Republic 60 (M) (means-test) 2,180 Sk (single) None All cost 53-57 (W) 3,850 Sk (couple) (Jul.1997) (n/a) Spain 65 10 yrs residence from 16 to 65, with Decided annually by the Law on the General State None All cost (1991) more than 2yrs continuous residence at the time of application (means- (n/a) test) Sweden 65 40 yrs residence (or 30 yrs pension SEK 34,245 (single) None (ee) About 25% of Yes (means- (1962) points) SEK 28,003 (married) (1998) 6.83% (er) cost test) 6.83% of assessable income (sp) (15.4%) (1998) Switzerland 65 (men) (means-test) Up to SFR 28,488 (for a single person residing in an None All cost 62 (women) institution) Up to SFR 47,760 (for a couple residing in an institution) (43.5%*) Turkey 65 (means-test) TL3,201,000 (1.5 times for those who married) None All cost (The law 2022: 1976) (1998) (n/a) United Kingdom (9) 65 (men) 50 weeks of paid contributions or Up to £62.45 a week 2% -10% (ee) None Yes (means- (1946) 60 (women) equivalent (The amount of base £6.15 a week plus test) earnings varies) some addition (sp) 3%-10% of employee's total (19.9%) earnings (er) (Non-contributory 80 Ineligible for contributory pension 60% of the above rate None All cost Yes (means- retirement pension) Residence in the UK for the last 10 test) (1971) years Table 24. Public flat-rate pension programmes in OECD countries (continued) Country Pensionable Eligibility requirement Amount of benefit (full pension, Rate of State Subsidy Supple- (1) age (for full pension) (2) unless otherwise indicated) (3) contribution (4) ment (5) United States 65 (means-test) Up to $470 (single) None All cost Yes Up to $705 (couple) (means- (21.9%) test) * All of the items are as of 1 January 1997, unless otherwise indicated. * The above schemes are distinguished from minimum benefits by public earning-related schemes that are employed in some countries and described in Table 6.2. * In some coun tries, such as Poland, break-down of the benefit explicitly consists of flat -rate portion ("social part") and earnings-related portion ("individual part"), with the former serving as a similar scheme of flat-rate basic pension scheme. However, that is not included in the above chart because it is not an independent system for income maintenance and is considered to be the same as the lower limit of pension benefit which is decided implicitly in relation to the lower limit of income which is covered and contribution is imposed for. * Some countries such as the UK collect a single rate of contributions which combines flat-rate benefits and earnings-related benefits. (1) The number in the bracket indicates the year when the current scheme was established, or wh en the first scheme was introduced (with asterisk). (2) Other than a certain length of residency in the country or contribution to the scheme, many countries require particular residency status, such as citizenship or permanent residency status. -- This chart classifies reduction of benefit for relatively rich elderly as means test, though some of them are not explicitly referred as such in the country which has the system. (3) Figures in the brackets indicate the percentage of the amount of the benefit (for single when specified) against the average annual wage (1995, local currency - manufacturing. The data with asterisk is calculated with the data in 1994 for the average income.) (4) Basis of contributions is "earnings" in case of insured persons/employee/self-employed persons, "payroll" for employer, unless otherwise indicated. -- (ee):employee / (er): employer / (sp): self-employed persons / (ip): insured persons (5) "Supplement" is provided in case the overall income level of a person is certifiably low (income-test) in some country, or for particular purposes (for house rent, expenses in living in remote areas, etc.) in others. (6) France has a 2 -tier flat-rate scheme (AVTS(AVTNS) for the elderly not eligible for contributory scheme, and a supplementary benefit which covers all the elderly to raise their income level to the basic minimum). (7) This scheme is to be gradually phased out over the next 10 years as a new contribution-related scheme is phased in. (8) Only self-employed persons have to pay the contribution explicitly for the basic pension; in case of other enrolees for other earnings-related schemes such as Employees' Pension, the contribution to the scheme implicitly includes the portion for the basic pension. (9) April 1997. Source: OECD, Retirement Income Systems: Reform process across OECD countries, Working Paper AWP 3.4, May 1998. Table 25. Public earning-related pension programmes in OECD countries Country Coverage of the Pensionable Eligibility Requirements Amount of Benefit (Maximum/ Rate of Contributions Coverage of Program Age Minimum State Subsidy (1) (2) (standard) (3) Benefit) (4) Austria Coverage:(a) 65 (M) At least 180 months of 1.83% of average earnings in Max: 80% of average 10.25% (ip) Any deficits (1956) * Special systems 60 (W) insurance coverage in the last best 15 yrs for each of first 30 covered earnings 12.55% (er) for public employ- 30 years or 180 months of insurance yrs, plus 1.675% for ees, self-employ- contribution each insurance yr from 31-45 ed persons, etc. * Lower earnings * Maximum limit of earnings * Maximum limit of earnings limit for coverage in calculating benefits in calculating contributions of employee Belgium Coverage: (a) 65 (M) 45 years (M) or 41 years (W) of Based on the salary earned Max: 60 % (75 % for 7.5% (ip) Annual subsidies (1967) * Special systems for 61 (W) coverage during the recipient's working couple) of average 8.86% (er) public employees, life and on the length of lifetime earnings self-employed persons, working career etc. Canada Coverage: (b) 65 Having made at least one year of 25% of average covered Max: 3% (ee) None (Canada Pension * Casual employment, contribution earnings C$736.81 a month 6% (se) Plan) (1965) brief agricultural 3% (er) employment, etc. are excluded from * Maximum/minimum limit of * Maximum/minimum limit of coverage. earnings in calculating earnings in calculating * Lower earnings benefits contributions limit for coverage (5) Czech Republic Coverage: (b) 60 (M) At least 25 years (at year of age 65) 920 crowns plus earnings- Min: Basic flat rate 6.5% (ip) Any deficit (1906*) 53-57 (W) of insurance related portion of 1.5% of plus 770 crowns 19.5% (er) * Substantial limitation of work is average indexed earnings for ordinarily needed during the first 2 each yr of insurance after 1985 yrs after the retirement age. * Maximum limit of earnings in calculating benefits Table 25. Public earning-related pension programmes in OECD countries (continued) Country Coverage of the Pensionable Eligibility Requirements Amount of Benefit (Maximum/ Rate of Contributions Coverage of Program Age Minimum State Subsidy (1) (2) (standard) (3) Benefit) (4) Finland Coverage: (a) 65 40 years coverage 1.5% (2.5% for years at age 60 Full pension when 4.5% of taxable income The portion for (TEL) * Special systems * Retirement from covered or older) of average the coverage lasts 40 (ee) self-employed and (1961) for public employees, employment pensionable earnings times years from age 23 9.46% to 25.34% (er) farmers not self-employed persons, years of coverage until age 65 covered by their etc. * Pensionable earnings are own contributions * Lower earnings calculated by modifying * Maximum limit of earnings limit and minimum average earnings with a certain in calculating contributions employment period formula. for coverage of employee France Coverage: (a) 60 At least 150 quarters of 50% of average earnings in 25 Max: 50% of 6.55% of pensionable Variable subsidies (Régime Général) * Special systems coverage highest years (in 2008) maximum earnings earnings + General (1930*) for public employees, * In the meantime, the year is for contribution Social Contribution of self-employed persons, increasing from 11 (`94) to 3.4% of 95% income (ip) etc. 24 (2007). Min:38,524.90 francs 8.2% of covered earnings plus per yr 1.6% of total payroll if have 150 (er) * Maximum limit of earnings quarters of * Maximum limit of earnings in calculating benefits coverage in calculating contributions (ARRCO, Coverage: (b)* 65 (60 when Retirement (Beneficiaries can take (Defined-contribution scheme) Average: 1,316 FF Compulsory portion: 6.875% (The Association des Compulsory for "non- the require- up gainful employment with certain Acquired pension points (monthly: 1994) ratio between employer/employee régimes de retraites cadre" personnel as ments for conditions) (accumulated annually) is 3:2.) complémentaires) well as "cadre" Régime multiplied by current point (1998: will be 7.5% in 1999) personnel, some farm Général value * There are other workers, etc. (minimum compulsory contributions, occupational * Special systems for etc.) are schemes such as public employees, etc. fulfilled) AGIRC. Germany Coverage: (b)* 65 (M) At least 5 yrs coverage Individual "earning points" Target rate: 10.15% (ee) Annual subsidy of (1957) * Special systems for 60 (W) related to average earnings and About 70% of 18.6% (sp) about 20 % of public employees, self- the age at the beginning of the current average net 10.15% (er) total cost of employed persons, etc. pension multiplied by the income when * Maximum limit of earnings pension insurance actual pension value completed 45 in calculating contributions working years Table 25. Public earning-related pension programmes in OECD countries (continued) Country Coverage of the Pensionable Eligibility Requirements Amount of Benefit (Maximum/ Rate of Contributions Coverage of Program Age Minimum State Subsidy (1) (2) (standard) (3) Benefit) (4) Greece Coverage: (b)* 65 (M) At least 15 years of coverage 80% of average earnings of Max: Earnings on 6.67% (ee) Any deficit, plus (IKA) * Special systems for 60 (W) last 5 years for 35 years of which pension 13.33% (er) 10% of earnings of (1934*) public employees, coverage has been (d) those entering the agricultural workers, calculated * Maximum limit of earnings labour market after etc. * Maximum limit of earnings Min: 86,940 in calculating contributions (not 1993 in calculating benefits drachmas a applicable to those entering the month, increased by labour market after 1993) (For those entering the labour dependants' market after 1993, the rate is supplement 60% and the maximum limit of calculation is not applied.) Hungary Coverage: (b) 60 (M) At least 20 years of (For 20 yrs coverage) Min: 6,400 6% of gross earnings (ip) Any deficit (1928*) 56 (W) employment 53% of net earnings during forints a 24.5% (er) best 4 year period in 5 years month preceding retirement. Earnings of the next 15 yrs are differently evaluated for full benefit. * There are other variations according to coverage years and amount of earnings. Iceland Coverage: (b) 67 40 yrs residency Depends on paid contributions 4% (ee) None (1909*) 10% (se) 6% of employee's wages (er) Italy Coverage: (a) (Old system) (Old system) (Old system) Min: 685,400 33 % (for wage workers in public Any overall (Old-age Pension) * Special systems 63 (M) At least 18 years of coverage Coefficient (0.9-2) times lire a month and private sector: includes the deficit and means- (1919*) for industrial 58 (W) salary and years of service portion for family allowances) tested allowance managers, civil 20% (sp) servants, self- (New system) (New system) (New system) 10% (others) employed farmers, 57-65 For retirement before 65, at least 5 Amount of accumulated * Those rates are used to calculate (6) etc. contributory years and earned contributions times the benefit amount. The rate for pension 1.2 times equivalent to the coefficient (4.72 (age 57)- collection is decided differently. social allowance. Otherwise, 40 6.136(age 65)) * Maximum/minimum limit of years of contribution enables the * Maximum limit of earnings in calculating provision regardless of age. earnings in calculating contributions (Maximum benefits (for the new system) limit is for the new system) Table 25. Public earning-related pension programmes in OECD countries (continued) Country Coverage of the Pensionable Eligibility Requirements Amount of Benefit (Maximum/ Rate of Contributions Coverage of Program Age Minimum State Subsidy (1) (2) (standard) (3) Benefit) (4) Japan Coverage: (a) 60 (M) At least 25 years of coverage (1-0.75)% of indexed monthly 8.675% (ip) Cost of (Employees' * Special systems 59 (W) wages times the number of (d) administration Pension Insurance) for public employ- months of coverage 8.675% (er) (8) (9) (1941 ) ees, private school (7) teachers, etc. * Minimum/minimum limit of * Maximum/minimum limit of earnings in calculating earnings in calculating benefits contributions Korea Coverage: (b) 60 At least 20 years of coverage 2.4 times the sum of average 3% from 1998 (ee)6% from Partial cost of (National Pension * Special systems for monthly earnings of all 1998 (er) administration and Scheme) public employees, insured persons in the flat-rate subsidy (1988) private school teachers, preceding year plus some (sp): 3% (1995-2000) (W2,200) for etc. additions for each insured year 6% (2000-2005) farmers in excess of 20 9% (2005-) and fishermen (d) Luxembourg Coverage: (b) 65 At least 120 months of Lump-sum of 9,474 francs per Max: 179,435 8% (ip) 8% of earnings (1987) * Special systems coverage month if insured for 40 years francs per 8% (er) for railway and plus increments equal to month public employees 1.78% of adjusted lifetime covered earnings per yr of Min: 38,758 complete insurance coverage francs per month if * Maximum/minimum limit of insured for 40 earnings in calculating years * Maximum/minimum limit of Benefits earnings in calculating contributions Mexico (10) Coverage: (b)* 65 At least 500 weeks of 35% of average earnings Max: 100% of 2.075% (ip) 0.415% of payroll (RCV) * Special systems contributions during last 250 weeks of earnings if 2,000 5.810% (er) (1943) for petroleum contributions, plus 1.25% of weeks of workers, public earnings per year of contributions or employee, etc. contribution beyond 500 more weeks Min: 100% of * Maximum/minimum limit of * Maximum/minimum limit of minimum salary in earnings in calculating earnings in calculating the Federal District contributions benefits Table 25. Public earning-related pension programmes in OECD countries (continued) Country Coverage of the Pensionable Eligibility Requirements Amount of Benefit (Maximum/ Rate of Contributions Coverage of Program Age Minimum State Subsidy (1) (2) (standard) (3) Benefit) (4) Norway Coverage: (b) 67 20 years of coverage 42% of the current base Full pension with 20 Up to 7.8% of income Any deficit (1936*) * Special systems (increasing to 40 years) amount multiplied by the years of coverage (ee) for railway, public enrolee's average annual 7.8-10.7% of income (sp) employees, etc. number of pension points in 20 Up to 14.1% of wage (er) * Lower earnings years with the most points. limit for coverage * Minimum limit of earnings in calculating benefits Poland Coverage: (b)* 65 (M) At least 25 years (men) or 20 years 24% of average national salary Min: 274.02 zlotys a None (ip) None (General Social * Special systems 60 (W) (women) insurance. with some earnings-related month 45% (er) Insurance Fund) for police, and * Partial retirement necessary. addition which reflects the (1982) independent coverage yrs (1.3% of workers farmers earnings base multiplied by the number of contributory years (0.7% for the periods when contribution is exempted)) * Maximum limit of earnings in calculating benefits Portugal Coverage: (b) 65 (M) At least 15 years of 2% of average annual earnings Max: 80% of 11% (ee) Subsidy for social (General * Special systems (Pensionable contribution (120 days of during highest 10 of last 15 average earnings 25.4% for mandatory pension and health contributory scheme for miners, railway age for contribution at least by year). years times year of insurance. coverage, 32% for care run by IGFSS) workers, etc. women was Min: 30% of voluntary coverage (sp) (1935*) 62 in 1993, average earn- 23.75% (er) and will be ings or 30,100 65 in 1999.) escudos, whichever is higher Slovak Republic Coverage:(b) 60 (M) At least 25 years of employ- 50% of average earnings Max: 5,650 crowns a 5.9% of revalued earnings Any deficit (Pension Fund) 53-57 (W) ment (20 years for women) during highest 5 of last 10 month for all (ee) (1906*) * Substantial retirement years plus 1% of earnings per pensions 26.5% of revalued usually necessary year of employment between earnings (sp) 26 and 42 years Min(with full career): 21.6% (er) 550 crowns a month * Maximum limit of earnings plus amount in calculating benefits necessary to bring total monthly income to 2,507 crowns Table 25. Public Earning-related Pension Programmes in OECD countries (continued) Country Coverage of the Pensionable Eligibility Requirements Amount of Benefit (Maximum/ Rate of Contributions Coverage of Program Age Minimum State Subsidy (1) (2) (standard) (3) Benefit) (4) Spain Coverage: (a) 65 At least 15 years of 60 % of benefit base plus 2% Max: 100% of benefit 4.7% of covered earnings Annual subsidy (general regime) * Special systems contribution, including 2 years per year of contribution over base with 35 years (ip) (1919*) for agricultural in last 8 years. 15 years contribution 23.6% of earnings (er) workers and small * Retirement necessary. Min: 54,825 pesetas a farmers, self- * Maximum limit of earnings month for single * Maximum limit of earnings employed, etc. in calculating benefits in calculating contributions Sweden Coverage: (b) 65 30 years coverage 60% of the current base Full pension for 30 1% of assessable income None (ATP) * Lower earnings amount multiplied by yrs of coverage (ee) (1960) limit for coverage enrolee's average annual 13.0% (er) number of pension points in 15 years of most points. * Maximum limit of earnings * Maximum limit of earnings in calculating benefits in calculating contributions Switzerland Coverage: (b) 65 (M) Contribution during all Flat-rate portion plus Max: 1,990 francs a 4.2% (ee) Annual subsidies (AVS) 62 (W) years from 21 earnings-related portion based month 7.8% (sp) covering about 20% of (1948*) on annual income (2 4.2% (er) the old age benefit different formula according to Min: 995 francs a * Also covers the risk of the income level) month survivorship Turkey Coverage: (a) 55 (M) 1) At least 5000 days of (For persons who fulfilled the Max: 75,209,485 TL 9% (ip) (Wage earners * Special systems 50 (W) contributions eligibility requirements) 60- a month 11% (er) Social contributions scheme by Social for public employ- 2) 15 years of coverage and at 85% of average indexed (4,690,000 TL a month Insurance Institution) ees, self-employed least 3,600 days of earnings during last 10 years Min: 39,726,400 TL a for one pensioner) (1945) people, etc. contributions (1998) month Any deficits 3) 25 (M) or 20 (W) years of * The above beneficiaries * Maximum/minimum limit coverage and at least 5,000 days also receive "social (January 1, 1998) of earnings in calculating of contributions contribution" of 4,690,000 contributions TL a month. (d) * Maximum/minimum limit of earnings in calculating benefits United Kingdom Coverage: (a) 65 (M) Contributions paid as an 25% of average earnings over 2% - 10% (ip) None (State Earnings- * Lower earnings 60 (W) employee on earnings notional working life of best £6.15 a week plus some Related Pension limit for coverage between the lower and upper 20 years addition (sp) Scheme) (11) * "Constact -out" is earnings level in any tax year 3% - 10% of employee's (1975) possible when the from April 1978 total earnings (er) insured person * Maximum/minimum limit belongs to a private of earnings in calculating scheme that fulfills contributions certain requirements (e) Table 25. Public earning-related pension programmes in OECD countries (continued) Country Coverage of the Pensionable Eligibility Requirements Amount of Benefit (Maximum/ Rate of Contributions Coverage of Program Age Minimum State Subsidy (1) (2) (standard) (3) Benefit) (4) United States Coverage: (b) 65 At least 40 quarters of Average earnings are Max: $1,326 a 6.2% (ee) Cost of special (Old Age, * Casual agricultural coverage calculated over a certain month 12.4% (sp) monthly old-age Survivorship, and employment, do- period. They are divided into 6.2% (er) benefit for persons Disability mestic employment, 3 parts according to the aged 72 before Insurance) limited self-employ- amount and multiplied by 1968 (1935*) ment, etc. are different coefficients. excluded from coverage. * Maximum limit of earnings * Maximum limit of earnings in calculating benefits in calculating contributions (e) * Information is as of Jan. 1997, unless otherwise indicated. * Recent trends of changing pensionable age are described more in details in Table 10.. * Those pension programs are often managed by semi -autonomous institutions and funds which are usually self-governing with bipartite or tripartite boards; otherwise, the governmental organs directly manage the program. Notably, ARRCO (and other compulsory occupational pension schemes) in France is included in this table because, in spite of its origin as a private scheme, it has been integrated in the System of National Accounts as a public scheme, with PAYG funding and national-level financial co-ordination. (1) The number in the brackets indicates the year when the current scheme was established of when the first scheme was introduced (with asterisk). Also, the name of the scheme referred to in the table is indicated. (2) Coverage: (a): employees / (b): (a) + self-employed people / "(b)*" means that only the specific portion of the self-employed people are eligible for the program. (3) For full entitlement unless otherwise indicated. (4) Those countries with (d) has a certain amount of surcharges in the contribution rate, as well as certain exceptions for the pensionable age and benefit amount in some cases, for some industries where the work is deemed "arduous" or "unhealthy." Also, there are some cases such as in Slovak Republic and Spain where earlier retirement or other favourable treatments are granted without surcharge. -- In terms of rates of contributions, "ip" is for insured persons, "ee" for employee, "er" for employer, and "sp" for self-employed people. -- Basis of contribution is "earnings" in case of insured person/employee/self-employed persons, "payroll" for employer, unless otherwise indicated. -- Those contributions are usually not collected only for retirement pension; the fund is usually used for disability and survivors' benefits. The countries with (e) includes funds for health services for the elderly (e.g. US) or whole population (e.g. UK) -- Some countries such as the UK collect a single rate of contributions which combines flat-rate benefits and earnings-related benefits. In the same way, the General Social Contribution, imposed in France, funds non- contributory flat-rate pensions and other benefits. (5) Canada Pension Plan (CPP) does not cover the residents in the Province of Quebec; they are covered by Quebec Pension Plan, whose eligibility and benefit rules are basically the same as those of CPP. (6) Italy introduced a new system in 1995, which covers new entrants to labour market from 1996 (fully) and those who had contributed to the old system for less than 18 years at the time of the reform (partially: coverage from 1996 is based on the new scheme). Therefore, "old system" and "new system" are both described in the Table. In addition, about "seniority pension," see OECD, Retirement Income Systems: Reform process across OECD countries , Working Paper AWP 3.4, May 1998, Table 10. (7) In addition to this earnings-related benefit, flat-rate pension is paid out of the same scheme (1,625 yen times (1.875-1.000) times the number of the month of coverage) to its enrolees, as well as additional allowances for those having spouse and children. Those ratios with brackets are decreasing according to the beneficiaries' date of birth. (Note: This special payment continues until the pensioners become eligible to the flat-rate basic pension at their age 65.) (8) On top of the contributions, employees and employers pay 0.5% each from "bonus," or periodical lump -sum payment of wage/salaries. (9) A certain portion of the contributions is used to finance the flat-rate basic pension. (10) Mexico introduced a new mandatory private pension system in July, `97. The old system still remains and the insured people can enrol in either of them. The new scheme imposes different contribution rates (1.125% specifically for old-age benefit (ip) and 2% - 3.15% (er)). (11) April 1997. Source: OECD, Retirement Income Systems: Reform process across OECD countries, Working Paper AWP 3.4, May 1998 Table 26. Selected private pension programmes for employees Country Name of the Establishment Age of eligibility Contribution Benefit Funding Tax treatment Regulation/ Relation with programme (1) for benefits security measures public pension Australia Superannuation Voluntary/ 55 (will be 60 by (SG) DB or DC Private Tax concessions 1999 Supplement largely Compulsory 2025) to receive 6% (employer, 98 % of all the schemes fully Introduction of new to means- (91.5%: 1993) full tax-assisted will be 9% in superannuation funded. superannuation tested pension, will *A basic portion benefits 2002) funds are Some regulations, key replace public is compulsory managed on DC schemes for responsibility of pension for those under the basis. public Insurance and with large Superannuation employees Superannuation payments Guarantee (SG) are PAYG. Commission (A$198bil., 1995) Canada Registered Pension Voluntary Usually 65 Majority: DB or DC Funded Tax concessions "Prudent man" Supplement to Plans (45%, 1993, all (employee) * DB schemes are concept for public pensions employer- 5% (private majority, but DC ($ 272,387 portfolio regulations sponsored sector) schemes are mil. : 1988) pension plans) 7-9% (public increasing rapidly. sector) Denmark Labour Market Compulsory 60 Majority: 12% DC Funded Tax concessions Regulation on Supplement to Pension (based on the (for workers with (20.1% of asset allocation public pensions collective intermediate GDP, 1993) agreements) education) (65% in 1994) * Majority of new schemes (for workers at low education) reaches 9 % in 8 to 12 yrs. Table 26. Selected private pension programmes for employees (continued) Country Name of the Establishment Age of eligibility Contribution Benefit Funding Tax treatment Regulation/ Relation with programme (1) for benefits security measures public pension Germany Regulatory Voluntary 65, in principle Maximum tax DB or DC PAYG Tax concessions Insurance for Supplement to framework: (About 50%, exemption is (More than 90% is payment of benefit public pensions "BetrAVG" without public 8,610 DM for based on DB) was introduced in sector) single person 1974. This (employee) insurance is managed by PAYG scheme. Ireland Occupational and Voluntary Almost 65 (men) Average: DB or DC Funded in Tax concessions Minimum funding Supplement to private pension (46% of 64 (women) 4.43% for most cases standard, disclosure public pensions schemes workforce: 1995) * average figure employee (46% of of information, etc. GDP, 1996) Italy Complementary Voluntary The same as 2% for employers DC or DB (self- Funded Tax concessions L 241/92 Supplement to public Pension statutory schemes 2% for employees employed) (taxable base: L 335/95 pensions DC (employee) 87.5% of total annuity) Japan Corporate pension Voluntary Usually 60 EPFs: DB Funded Tax concessions The Federation of Supplement to Major schemes: 3.2-3.8% (split (Introduction of (EPFs and EPFs ensures public pensions * Employees' between DC is being (44.7% of TQPs) payment of the Pension Funds employers and considered) GDP, 1993) benefits by EPFs to a (EPFs) employees) for certain extent. * Tax Qualified the contracted-out Pensions (TQPs) portion Others: No regulation New Zealand Superannuation Voluntary As a general Majority (1990): DB or DC Funded No tax "Prudent man" Supplement to (23%, 1987) trend, the age is 4.1-5.0% 87% are DC in (In very rare concession concept for public pensions lowering from (employee) 1990 (excluding cases based (From 1987 portfolio regulations 65 to 60. 0.1-5.0% Government on PAYG) Reform) (employer) Superannuation * As for DC Fund and (NZ$ 11,093 schemes, majority personal saving mil. of the employers plans) in 1990) do not pay contributions. Table 26. Selected private pension programmes for employees (continued) Country Name of the Establishment Age of eligibility Contribution Benefit Funding Tax treatment Regulation/ Relation with programme (1) for benefits security measures public pension Sweden Industrins Tilläggs Compulsory 65 5-20% (ITP) DB PAYG Tax concessions Schemes based on Supplement to Pension (ITP) (for (based on the 3.30%:'95 (STP) ("book- "book-reserve" public pensions white-collar) collective * for schemes reserve") or management must agreement) managed by Funded belong the Särskild Tilläggs insurance (over 10% payment insurance Pension (STP) (for of GDP,'90, system. blue-collar) for funded schemes only) United Kingdom Occupational Voluntary Mostly 65 Maximum tax DB or DC Full-funded Tax concessions 1995 Pension Act * Contract-out pension funds (48%, 1991) (60 for women) exemption is (Proportion of DC (supported by guaranteed payment * Supplement to * 50-75 is 17% of salary. is increasing) tax system) to the 90% income, public pensions possible (In 1991, 9.75% in case of fraud or according to the (employer), 5.5% (79.4% of misappropriation) tax regulations. (employee), GDP, 1993) on average) United States Regulatory Voluntary Majority is 65. Maximum DB or DC Full-funded Tax concessions Benefits of DB Supplement to framework: (58.8%, 1988) Most of other amount of tax (DC is promoted (2) schemes are public pensions Employee cases are 62 exemption varies by favourable tax ($59.1% of ensured by the Retirement Income and 60. among treatments) GDP, 1993) Pension Benefit Security Act plans. Guaranty (ERISA) of 1974 Corporation. (1) The number in the bracket indicates the proportion of coverage against the total population of employed persons. (2) Employee contributions are exempted from taxes when the scheme matches several requirements under the Internal Revenue Code and the Tax Reform Act (401(k) plan). Source: OECD, Retirement Income Systems: Reform process across OECD countries, Working Paper AWP 3.4, May 1998 Table 27. Tax concessions for pension benefits and other income/savings Concessions for Pensioners of Public Schemes Other Concessions for Aged People Australia Income Tax Income Tax * Benefits of Age Pension (funded by general taxation) are taxable. * Tax-rebate for low-income self-funded retiree phased in to provide same tax * Pensioner Tax Rebate concession as for pensioners (ensuring that a pensioner does not pay tax until private income * Superannuation contributions with tax concessions (though there will be a tax exceeds the value of the pension and the income test free area) surcharge of up to 15% on contributions by the wealthy) * Savings rebate (from July 1998) will apply to (undeducted) superannuation contributions, or net income receipt from savings and investment, or a combination of both, up to an annual cap of A$3,000. The full rebate will be A$450 a year in 1999-2000 income year. Capital Gains Tax * Concessions from Capital Gains Tax on the income received from selling the small enterprise for the reason of retirement Austria Income Tax Income Tax * Contributions to the scheme are tax deductible (for both employee * Tax credit for extraordinary costs entailed by physical/mental disability (The and employer, including additional voluntary contributions), though elderly people are major beneficiaries of the credit. This credit is not available when benefits are taxed as earned income. the applicant receives such benefits as long-term care benefit (Pflegegeld), though * Pensioners Tax Credit of ATS 5,500 per annum special, partially lump-sum amounts for expenses for some chronic diseases or for f the pension secured by additional voluntary some specific devices (such as wheelchairs) can still be claimed.) contributions is taxed. Contributions to Social Security Programmes * Retirees only have to pay social security contributions to the health insurance scheme. Moreover, the rates are smaller than those for younger persons. Belgium Income Tax * Contributions to the scheme are tax deductible (for both employee and employer), though benefits are taxed as replacement income. * Pensioners are awarded of tax deduction, based on the number of dependants and the level of income. Contributions to Social Security Pro grammes * Other than "solidarity contributions"(imposed on pension benefits above certain amount), pensioners do not have to pay contributions to the social insurance schemes. Table 27. Tax concessions for pension benefits and other income/savings (continued) Concessions for Pensioners of Public Schemes Other Concessions for Aged People Canada Income Tax Income Tax * Benefit of Old Age Security basic pension (funded by general * Age Credit (deduction of "old age" amount from federal tax payable) taxation) is taxable. -- The amount in full is C$3,482 in 1995. * Guaranteed Income Supplement and Spouses Allowances are not -- There is an income limit for the credit (C$25,921). The excess amount will taxable. (Old Age Security basic pension and Guaranteed Income also be a base for the claim of the credit reduced at a rate of 15%. The credit, or a Supplement are going to be merged, along with the Age and portion of the credit, may be transferred from one spouse to the other in cases Pension Income Tax Credits, into non-taxable Senior Benefit from where one spouse does not require the full credit to reduce his/her tax to zero. January 2001.) * Pension Income Credit (Taxfilers with pension income from employer-sponsored * Employer cont ributions to Canada Pension Plan (CPP) are tax pension or Registered Retirement Savings Plan annuity may claim a credit deductible. Employee contributions are not directly deductible, but depending on the amount of the income. C$1,000 maximum.) subject to a tax credit. Benefit of CPP is taxable. * In case of annuities purchased with no tax-assisted savings, only the portion of * Some provincial income-tested supplements to pensioners are also investment earnings is taxable. non-taxable. Czech Republic Income Tax * Contributions are tax deductible, and benefits are tax free. Denmark Income Tax Property Tax * Contributions to the ATP scheme are tax deductible (for both * Tax related to owner-occupier housing is reduced by 50% for persons from age 67 employee and employer). Benefits of the old-age pension (folkepension. funded by general taxation) and ATP pension are taxed as earned income. Supplementary benefits to pensioners are not taxable. Table 27. Tax concessions for pension benefits and other income/savings (continued) Concessions for Pensioners of Public Schemes Other Concessions for Aged People Finland Income Tax Income Tax * Contributions to the scheme are tax deductible (for both * Tax allowance for the disabled (A rather large part of pensioners are entitled to this employee and employer), though benefits are taxed as earned allowance.) income with the exceptions of supplements (for a child or spouse, etc.) to the basic pension benefits. [Concession from tax on specific income deriving from pension benefit] * Pension benefit, when below the average amount, is subject to less taxation compared to other source of income of the same size. When above the average, it is subject to more taxation than other source of income of the same size. [Concession from tax on income in general for the reason of being pensioners] * Pension income deduction, in municipal and state taxation, which ensures that no income tax is paid from the pension benefit in case the pensioner has no other taxabl e income. France Income Tax Income Tax * Contributions to the scheme are tax deductible (for both employer * Pension benefits from individual plans are normally partially taxed on a fixed scale, and employee), though benefits are taxed after deduction of based on the pensioner's age. allowances similar to those applied to salary. Germany Income Tax Income Tax * Contributions to the scheme are tax deductible (for both employee * Income from sources other than pensions is fully subject to income tax except for (up to a certain amount) and employer). base amount reduction ranging from 40% of such income to 3,720DM per calendar * Statutory pension benefits are only taxable for the portion which year. corresponds to the notional interest for the pension saving. * Civil servants' pensions are fully subject to income tax except for base amount reduction ranging from 40% of the benefits to 6,000DM per calendar year. Table 27. Tax concessions for pension benefits and other income/savings (continued) Concessions for Pensioners of Public Schemes Other Concessions for Aged People Greece Income Tax Income Tax * Contributions to the scheme are tax deductible (for both employee * Contributions to private saving schemes are tax-deductible. Maximum tax and employer), though benefits are taxed as income. allowance: 200,000 drs/year or 15% of premium expenditure (whichever lower) * Presumptive taxation provisions do not apply to professionals over the age of 65 who have been practising for at least 10 years. Hungary Income Tax * Pension benefit is tax-free, because contributions to the scheme are taxed. Iceland Income Tax * Pension benefits (including supplementary benefits) are taxable income. Ireland Income Tax Income Tax * Employer contributions to the social security scheme are in general * Income Tax Age Allowance (£Ir400 for single/widowed persons and £Ir 800 for tax deductible, but employee contributions are not. Benefits are married couple) usually taxed as earned income. * Exemption limits for rent allowances become higher at the age of 55, 65, and 75. Contributions to Social Security Programmes * Employer and employee contributions to occupational and private * Those aged 66 or over do not have to pay contributions to the pension scheme, even pension schemes and income from the investment of the if they are in employment/self-employment. contributions are tax deductible up to certain limits. Benefits are taxed, but part of the supplementary pension can be received as a tax free lump-sum payment up to 1.5 times of final salary. * Other social security benefits from public authorities may be exempt from taxes. Italy Income Tax * Contributions to the scheme are tax deductible (for both employee and employer). * Benefits are usually taxed, except for disability benefits. Contributions to Social Security Programmes * Pensioners do not have to pay contributions to the Health Care Services out of their pensions. Table 27. Tax concessions for pension benefits and other income/savings (continued) Concessions for Pensioners of Public Schemes Other Concessions for Aged People Japan Income Tax Contributions to Social Security Programmes * Contributions to the scheme are tax deductible (for both employee * Contribution rules for National Health Insurance (for self-employed people, etc.) and employer), though benefits are taxed as miscellaneous income. are favourable to the elderly * There are several deductions for pensioners, thus making the majority of pensioners not having to pay taxes. Korea Income Tax Income Tax * Public pension benefit is tax-free (though the contribution to the * Contributions to private pension schemes are exempted from income tax base. scheme is not exempted from income tax base). Luxembourg Income Tax * Contributions to the scheme are tax deductible (for both employee and employer), though benefits are taxed as income. Mexico Income Tax Income Tax * Employer contributions to the scheme are tax deductible, but * Maximum tax free benefits are established in some cases such as savings funds and employee contributions are not. Benefits are usually not taxed. social welfare Netherlands Income Tax * Contributions to the scheme are tax deductible (for both employee and employer), though benefits are taxed as income. New Zealand Income Tax * Benefits of NZ Superannuation (funded by general taxation) are subject to personal income tax. * Tax base increase test (surcharge) for those receiving NZ Superannuation: removed from April 1998 Norway Income Tax Income Tax * Employer contributions to the scheme are tax deductible, but * General tax relief rule (income-tested, includes generally the elderly and some employee contributions are not. Benefits are taxed as earned income. other groups) Supplementary benefits to pensioners are not taxable. * Special deduction in taxes due to age Contributions to Social Security Programmes * Old-age pensioners only have to pay contributions to the Health Insurance Scheme. Table 27. Tax concessions for pension benefits and other income/savings (continued) Concessions for Pensioners of Public Schemes Other Concessions for Aged People Poland Income Tax * Employer contributions to the scheme are tax deductible. (Note: no employee contributions in the current scheme) Benefits are subject to income tax. Portugal Income Tax * Contributions to the scheme are tax deductible (for both employee and employer), though benefits are taxed income. * Retirement pension income follows a different tax processing from that of income tax in general (more advantageous deduction than other category of income). In terms of tax benefits, they are provided when the debtor is disabled. * The social security general system pensions are exempted from the Individual Tax up to a certain amount. (There are further favourable concessions to invalidity pension.) Slovak Republic Income Tax * Contributions are tax deductible, and benefits are tax free. Spain Income Tax * Contributions to the scheme are tax deductible (for both employee and employer), though benefits are usually taxed as earned income. * Disability pensions are tax exempt. Sweden Income Tax * Contributions to the scheme are tax deductible (for both employee and employer), though benefits are taxed as income. * Special basic deduction for those whose basic pension exceeds SEK 6,000 a year Maximum amount of deduction is equal to the sum of basic pension and pension supplement, reduced if there are other sources of income such as ATP, employment pensions, etc. * Supplementary benefits to pensioners are not taxable, such as means-tested housing supplement. Table 27. Tax concessions for pension benefits and other income/savings (continued Concessions for Pensioners of Public Schemes Other Concessions for Aged People Switzerland Income Tax Income Tax * Contributions to the public scheme (AVS, 1st pillar) are tax * A person who have made a saving under the linked individual provident fund (3rd deductible (for both employee and employer), though benefits are pillar) benefits form preferential tax treatment (reduced rate at the time of the taxed. This is the same as the private compulsory scheme payment from the funds when the insurance risk occured, and (occupational provident fund, 2nd pillar). contributions deductible from income). * In some cantons, if retirees are in need * Supplementary AVS (old-age and survivors' insurance) and AI of care, they may deduct associated (disability insurance) benefits are non-taxable. expenses from their taxable income (though there are some restrictions). Turkey Income Tax Property Tax * Contributions to the scheme are tax deductible (for both employee * Estate duty (tax) on retirees is exempted when they have only one house. and employer), and benefits are tax free. United Kingdom Income Tax Income Tax * Employer contributions to the scheme are tax deductible, but * Higher personal allowance in income tax for the elderly (£5,220 -5,440 against employee contributions are not. Benefits are usually taxed as earned £4,045 as a standard), as well as higher married couples allowance (£3,185 -3,225 income. against £1,830 as a standard) * Benefits that are more likely to be received by pensioners are -related allowances can be tapered away at the rate of 50% when subject to different treatment in the tax system (e.g. Some of the income rises above £15,600. disability benefits are not taxable). Contributions to Social Security Programmes * Elderly do not have to pay the National Insurance Contributions after the state pension age. United States Income Tax Income Tax * Employer contributions to the scheme are tax deductible, but * Larger standard deduction for the elderly employee contributions are not. Benefits are taxed after some -- $1,000 for unmarried person, and additional $800 per person aged 65 or older favourable adjustment. in case of married couple * Some social security benefits are non-taxable. (They are not limited -- However, people rather select itemised specific deductions on various grounds to the elderly, though they are the majority.) such as home mortgage interest payments and charitable contributions. * There is a relatively small program of special tax credit for very low-income elderly and disabled people (most beneficiaries are under age 65). Property Tax * In many States and local governments, property tax is favourably applied to elderly homeowners. Source: OECD, Retirement Income Systems: Reform process across OECD countries, Working Paper AWP 3.4, May 1998 Table 28. Directions of recent pension reforms in OECD countries pensionable Promoting Changed benefit required contribution convergence greater reliance on promoting private Others age longer rate contribution rate of schemes funded schemes employment period schemes Australia Yes (W) 1997 1997 1992 * Equalising Deferred Pension rate * Establishment of compulsory private pension with the age Pension Bonus now linked to (Superannuation Guarantee) for men (1) Plan community DC, full-funded, tax con cession. Voluntary schemes still living standards remain, generally with higher benefits. 1996 * Improved supervision, regulation of private funds 1997 * Retirement Saving Accounts or other supplementary measures Austria Reduced access Harmonisation of to early scheme for public retirement employees with option system for other workers Belgium Yes (W) 1997 1996 * Equalising Required no. Revaluation with the age of working yrs coefficient for for men for early the benefit retirement Canada 1987 1997 1997 1996 1997 Tax concessions, 1997 Flexible Reduction of To 9.9% in New basic funded portion available within More aggressive retirement age some benefits 2003 and held pension with (2 yrs 5 yrs) limits investment policy to 70 related to steady (2) (3) means test, with pension disability by 2001 reserves to generate higher earnings Czech Republic Yes (M,W) Price indexa - Considering Convergence of System of voluntary supplementary * Difference tion of increase payment rates pension provision, based on employer between men payments, available through contribution, no tax relief. and women capacity for different schemes is shortened. adjustment in line with living standards Denmark Yes Compulsory occupational pension (second-tier) is managed by DC 1994 schemes. Coverage rate of that program increased from about 1/3 Pensioners taxed in (1987) to about 4/5 (1993). the same way as (3) other taxpayers Table 28. Directions of recent pension reforms in OECD countries (continued) pensionable Promoting Changed benefit required contribution convergence greater reliance on promoting private Others age longer rate contribution rate of schemes funded schemes employment period schemes Finland Retirement age 1997 1993-1996 Gradual raise Gradual 1997 raised from 63 Raising the Reduced of the implementation of Financing and to 65 lower age limit benefit, changed contribution private sector solvency reform to for early indexation rate until pension scheme strengthen solvency retirement arrangements, 2030s of funds and allow benefit (from 55 basic pension (3) new investment to 58 yrs). means-tested. strategies Lower level of early retirement benefit. France 1994 1994 Base period for 37.5 yrs benefit 40 yrs by calculation from 2003 10 25 years (by 2008/2013) Germany Yes (W) 1992 * Corporate schemes are promoted Attempted to share * Equalising Net-income with legislation, dating back to 1974 the burden of ageing with the age indexation (4) and recent reforms. equally between for men 1997 * Wanting to further expand private pensions and * Other excep- target repla- schemes contributors tions are also cement rate amended. (70% 64% ) (3) ( in 30 yrs) Greece Yes (W) Benefits more 1992 1990 * Major 1996 * Equalising proportional to Elimination of 13.5 yrs 15 increase in income-tested with the age contributions the special years 1992 * Pensionable age pension supplement for men treatment on the * State of special schemes (5) bonus salary contributions is eqalised with Farmers scheme to equal to 10% of IKA (2001 (W) provide contri- earnings (5) and 2007(M)) bution-related * calculation * Uniform contri- benefits in place of rate: 80% butions and current flat-rate non- 60% (5) replacement rates contributoy pensions (5) (a) Table 28. Directions of recent pension reforms in OECD countries (continued) pensionable Promoting longer Changed benefit required contribution convergence greater reliance on promoting private Others age employment rate contributio rate of schemes funded schemes n period schemes Hungary Yes (M,W) Raising the 1998 1998 Want to keep PAYG * Equalising lower age limit Higher benefits A new mixed public-private system. scheme deficit to below the ages of and minimum available to 3/4 of the system is based on traditional PAYG system, with 1/4 is based on the 1% of GDP men and no. of long contri- newly established funded portion managed by private sector. women contribution butors and Tax allowances encourage voluntary savings in supplementary pension funds. 1998 yrs for early high earners The new system is mandatory for new labour market entrants; existing workforce Pensions became retirement 2001 can elect to switch to the new system. taxable income. 1997 Less generous Replace Labour indexation Market Fund arrangement with less 2013 generous scheme Pensions calculated on the basis of gross earnings Ireland Pension rate Majority of January 1991 increased to National New regulatory system more than Pensions for occupational adjust for prices Board in pensions introduced to in periods of Final Report safeguard pension rights economic (1993) growth recommended against second tier PAYG pensions. Italy Yes (M,W) Reduction of For Yes 1995 1995 Yes Surviviors pension now * 5 yr Yes benefits seniority Greater Complementary means tested difference (6) pension and equity funded scheme, 1995 remains old-age for workers in DC scheme Harmonisation of between men pension different regulations governing and women (3) industries different pension * New system systems (6) Japan Yes (M,W) 1994 1994 Private pension is promoted, including discussion for (a) * Partial Net-income Introduction of introduction of DC schemes, etc. pension is indexation (4) contribution also introduced. imposed on bonuses (3) Table 28. Directions of recent pension reforms in OECD countries (continued) pensionable Promoting longer Changed benefit required contribution convergence greater reliance on promoting private Others age employment rate contributio rate of schemes funded schemes n period schemes Korea Yes (M,W) Replacement 15 years to Gradual raise by 1995 rate: 70% 10 years 2025 Individual private 60% on the pension introduced basis of 40 yrs' 1998 contributions Firms can have an (3) option to take pension scheme or severance payment . Luxembourg Pursuing convergence between general scheme, special public sector scheme and railway scheme Mexico 1997 A new mandatory private pension system (DC, funded) * The old (public) system still remains and the insured persons can enrol either of them. * Voluntary deposits can be made to the individual account of the workers. Netherlands * Promotion of private pension * Introduction of the * Wishes to raise the coverage rate of private schemes OAP Savings Fund * Transition from PAYG to funded schemes supported by * Wants to encourage government the workers to * Making the scheme more affordable by changing final- voluntary contribute to (3) salary pension to average salary pension building up the pension right during "care- leave" New Zealand Yes (M, W) 1990 Promotion of private provision * To 65 Link to 80% (by public education. no tax concession introduced.) average wage Introduction of compulsory private pension was (for couple) proposed, but denied in the referendum (Sept. 97) was abolished. Relative value now below 70% Table 28. Directions of recent pension reforms in OECD countries (continued) pensionable Promoting Changed benefit required contribution convergence greater reliance on promoting private Others age longer rate contribution rate of schemes funded schemes employment period schemes Norway 1997 1992 Under discussion * Increased public Reduced level Reduced benefit revenues from of deduction rate, petroleum industry is from pension reduced rate allocated to the payable due to of accumula- State Petroleum income from tion of pension Fund. work (67-70) entitlements for each yr of work Poland Yes (W) Raising the 1999 1991 * Equalising lower age limit 1st pillar PAYG, DC (state subsidy for subsistence) Method of with the age for early 2nd pillar: funded, universal coverage calculation was for men retirement 3rd pillar: private pension schemes changed to count in (planned) only half of the portion the period of temporary withdrawal from labour force for the purpose such as of parental leave, sick leave, etc. Portugal Yes (W) 1994 1994 Possible but not so * Equalising Reduced 10 15yrs prevalent now with the age pension contribution for men accumulation to establish rate by 10% pension rights (3) Slovak Republic Related legislation 1995 (3) was passed in DB scheme 1996. introduced with new tax system Table 28. Directions of recent pension reforms in OECD countries (continued) pensionable Promoting Changed benefit required contribution convergence greater reliance promoting private Others age longer rate contribution rate of schemes on funded schemes employment period schemes Spain Phasing out 1997 previous Automatic price scheme with indexation of lower benefits retirement age Stronger linkage of benefit rates to contributory yrs. Sweden 1999 1993 1990 1999 1999 1990 phase-out Abolish upper benefit Payroll tax for Introduction 2.5% out of survivors' pension limit for amount employers of DC scheme 18,5% contri- deferred Reduced 1995 bution will be Individual financial retirement, indexation 1% contribu- allocated to funds in reformed actuarial arrangements tion for funded system. scheme will grow as pension increase 1999 employee buffer fund declines. Transfer from a (3) benefit-defined system to a contribution- (b) defined system ("life-income' principle) Switzerland Yes (W) 1997 1997 * Difference of Abolish some * Those caring for the age special benefits children and close between men family relatives and women is receive notional shortened. income at the time of calculating pensions. * The rate of state subsidy has been adjusted in recent years. Turkey Raising the Raising the Remove Raising the Considering Considering pensionable age minimum no. amnesty for contribution universal scheme encouraging greater of contribution unpaid rate private pensions yrs for early contributions (considered) retirement State (considered) contributions (a) Table 28. Directions of recent pension reforms in OECD countries (continued) pensionable Promoting Changed benefit required contribution convergence greater reliance on promoting private Others age longer rate contribution rate of schemes funded schemes employment period schemes United Kingdom Yes (W) 1986 1986 * Permitting * Tax concessions * Equalising Flexible Reduction of "contract-out" of * Introduction of with the age retirement age value of public state schemes with Personal Pensions for men (from to 70 earnings-related private schemes * The 1995 Act also 2010) ("Personal scheme enhanced the Pension") (calculation regulation of basis: 20 yrs private schemes all the working yrs; replacement rate: 25% 20%) United States Yes (M,W) Legislative DC scheme is Tax concessions Pension trust fund * To 67 requirement tax-favoured now in surplus, (ERISA) that all for corporate revenues lower than pension pension payments from 2011 coverage should and into debt in be non- 2030. discriminatory within a workplace where it is provided * Year of the reform indicates that of the implementation unless otherwise indicated. * Breakdown of "others" : (a) reform for more efficient management, such as introduction of "Basic Pension Number" in Japan (1997) (b) closer linkage between work and benefit, such as introduction of wage indexation in Sweden (1999) * "M": men, "W": women, "DC": defined-contribution, "PAYG": pay-as-you-go, (1) Australia's recently established Superannuation Guarantee (compulsory private pension) also envisions increase of the age of eligibility from 55 to 60. (2) The original plan was to increase to 14.2% by 2030. (3) Some countries raised the contribution rate from 1995 to 1997. (4) Germany and Japan have introduced a scheme of "net-income indexation." The base of this adjustment is a disposable income, the remain after subtracting taxes and social security contributions from gross income. (5) Those measures are only applied to those workers entering the labour market after 1993. (6) A new system in Italy (introduced in 1995) has a flexible retirement age (57 -65) and does not have an early-retirement arrangement. For more details on pensionable age, see OECD, Retirement Income Systems: Reform process across OECD countries, Working Paper AWP 3.4, May 1998, Table 10. Source: OECD, Retirement Income Systems: Reform process across OECD countries, Working Paper AWP 3.4, May 1998