Who pays what ?

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Ever wonder just how generous your employer is when it comes to contributing to your pension scheme? The answer might depend on where you live.

If you are a Polish worker, then you are probably paying 99% of total contributions, which is the highest in the OECD area. Turkey's workers contribute a little less, with 97% of the total. In Portugal, on the other hand, employee contributions account for 14% of the total, while workers in Norway pay in just 4% to personal pension plans. In recent years, employers' contributions to defined benefit plans-those pension plans that are linked to salaries-have grown, largely in an effort to reduce gaps in funding to cover growing benefit payments in light of population ageing.

Pension fund contributions by employees and employers combined grew substantially in 2007 in those countries with large defined benefit systems, such as Canada, the Netherlands, Switzerland and the UK. Australia, Iceland and Finland recorded the highest ratios of pension fund contributions-to-GDP. All three countries had ratios over 10%.

Contributions may have to grow more as the global financial and economic crisis bites into pension funds and as the baby boom generation starts to retire in large numbers. Whether investors have enough confidence in those funds is another question.

OECD Private Pensions Outlook 2008 is available at www.oecd.org/bookshop

For more on OECD's work on pensions, www.oecd.org/pensions

ISBN 978-92-64-04438-8

©OECD Observer No. 272, April 2009


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