Pension promises

OECD Observer

Click to enlarge.

Can governments afford the pensions promised to future retirees? After all, higher life expectancy means pensions have to be paid for a longer time. The OECD’s new comprehensive “pension wealth indicator” works out the lump-sum equivalent of all the pension income a worker can expect to receive, taking into account pension level, retirement age and life expectancy in the respective country.

By this count, Luxembourg has the highest pension wealth. It amounts to 18 times those yearly earnings for men on average wages, and nearly 22 times for women, reflecting their longer life expectancy. This means that if the government had to pay upfront now, the lump sum would come to an average of $587,000 for each pensioner on retirement. Pension wealth for Luxembourg is nearly treble the average for OECD countries, which is nonetheless over $200,000 per employee. In Ireland, New Zealand, the UK and the US, where pension levels are modest in relation to economy-wide average incomes (see percentages in the graph), pension wealth is less than six times average earnings.

Pension promises would obviously be more affordable if eligibility ages were higher. The official pension eligibility age in most OECD countries is 65, though it is less than that in the Czech Republic, France, Hungary, Korea, the Slovak Republic and Turkey. For a full list of pension wealth indicators and levels, see Pensions at a Glance, forthcoming.

©OECD Observer No 249, May 2005

Economic data


Stay up-to-date with the latest news from the OECD by signing up for our e-newsletter :

Twitter feed

Suscribe now

<b>Subscribe now!</b>

To receive your exclusive paper editions delivered to you directly

Online edition
Previous editions

Don't miss

  • How do the largest community of British expats living in Spain feel about Brexit? Britons living in Orihuela Costa, Alicante give their views.
  • Brexit is taking up Europe's energy and focus, according to OECD Secretary-General Angel Gurría. Watch video.
  • OECD Chief Economist Catherine Mann and former Bank of England Governor Mervyn King discuss the economic merits of a US border adjustment tax and the outlook for US economic growth.
  • Africa's cities at the forefront of progress: Africa is urbanising at a historically rapid pace coupled with an unprecedented demographic boom. By 2050, about 56% of Africans are expected to live in cities. This poses major policy challenges, but make no mistake: Africa’s cities and towns are engines of progress that, if harnessed correctly, can fuel the entire continent’s sustainable development.
  • OECD Observer i-Sheet Series: OECD Observer i-Sheets are smart contents pages on major issues and events. Use them to find current or recent articles, video, books and working papers. To browse on paper and read on line, or simply download.
  • How sustainable is the ocean as a source of economic development? The Ocean Economy in 2030 examines the risks and uncertainties surrounding the future development of ocean industries, the innovations required in science and technology to support their progress, their potential contribution to green growth and some of the implications for ocean management.
  • The OECD Gender Initiative examines existing barriers to gender equality in education, employment, and entrepreneurship. The gender portal monitors the progress made by governments to promote gender equality in both OECD and non-OECD countries and provides good practices based on analytical tools and reliable data.
  • They are green and local --It’s a new generation of entrepreneurs in Kenya with big dreams of sustainable energy and the drive to see their innovative technologies throughout Africa.
  • Interested in a career in Paris at the OECD? The OECD is a major international organisation, with a mission to build better policies for better lives. With our hub based in one of the world's global cities and offices across continents, find out more at .

Most Popular Articles

OECD Insights Blog

NOTE: All signed articles in the OECD Observer express the opinions of the authors
and do not necessarily represent the official views of OECD member countries.

All rights reserved. OECD 2017