The Pension Gap
Abstract:There are 18 countries with a mandatory pension scheme giving a replacement rate below the average for the 34 OECD countries. This "pension gap" is over 28% of pay for an average earner in Ireland and for women in Mexico. It also exceeds 25% in the United Kingdom and for men in Mexico. Pension contributions required to fill the pension gap and bring the overall replacement rate up to the OECD average can be up to 7.5% of earnings if contributions are made for the full career. However, most workers do not start paying into a voluntary private pension until well into their careers. As a result, contribution rates of 10‐15% would be required in six countries for workers with 20 years missing from their contribution records.
Document Type: Review Article
Publication date: March 1, 2011