Progressivity of Pension Benefit Formulae

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The progressivity index is designed to summarise the relationship between pension in retirement and earnings when working in a single number. The results show variation from 100 in pure basic schemes (such as Ireland and New Zealand), through zero in Hungary to a negative result in Sweden, indicating that the retirement‐income system overall is regressive. The average index across OECD countries is 37. Regional differences are striking, with the index averaging 80 in the Anglophone countries: public pensions are strongly progressive. In southern European countries, by contrast, it averages just 8, indicating a very strong link between earnings and pension benefits.

Document Type: Review Article

Publication date: March 1, 2011

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