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Filling the Pension Gap: Coverage and Value of Voluntary Retirement Savings


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  • Pablo Antolín
  • Edward R. Whitehouse


The current generation of workers can expect lower pension benefits in retirement than the current generation of pensioners. Private, voluntary pension savings will therefore play a greater role in providing for old age. This paper calculates the size of the “pension gap”: the difference between the benefits from mandatory retirement-income provision and a target pension level. It then computes the amount that people would need to save to achieve the target. Data on coverage of private, voluntary pension schemes in a range of OECD countries are then presented. The paper also shows how coverage varies with age and earnings. The results show significant gaps in coverage, particularly among low earners and younger workers. The effect could be a resurgence of old-age poverty when these generations reach retirement. Data on contributions to private pensions show that these are, on average, at a level likely to fill the pension gap. Expanding coverage rather than raising contribution rates should therefore be the policy priority. Five policy options for increasing coverage are assessed: (i) mandating private pensions; (ii) “soft compulsion”, which is automatic enrolment in private pensions but with an opt-out; (iii) facilitating access to the means for saving for retirement; (iv) preferential tax treatment of retirement savings; and (v), improving financial awareness. L’actuelle génération de travailleurs peut s’attendre à toucher des prestations de retraite inférieures à celles que perçoit l’actuelle génération de retraités. Les régimes privés, volontaires, d’épargne-retraite seront donc appelés à jouer un plus grand rôle en tant que source de revenu pour les personnes âgées. Le présent document évalue l’ampleur du déficit d’épargne-retraite : c’est-à-dire de la différence entre les prestations servies par les régimes obligatoires de retraite et l’objectif visé en matière de pension. Il calcule ensuite les sommes que les salariés devraient épargner pour atteindre cet objectif. Le document présente ensuite des données sur la couverture des régimes de retraite volontaires privés dans un certain nombre de pays de l’OCDE. Il montre aussi que cette couverture varie fortement en fonction de l’âge et des gains et qu’elle est particulièrement réduite dans le cas des titulaires de bas salaires et des jeunes travailleurs. La conséquence pourrait être une résurgence de la pauvreté des personnes âgées, lorsque ces générations atteindront l’âge de la retraite. Les données sur les cotisations aux régimes de pensions privés montrent qu’elles se situent, en moyenne, à un niveau qui devrait permettre de combler le déficit d’épargne retraite. L’extension de la couverture plutôt que l’augmentation des taux de cotisation, devrait donc être considérée comme la priorité d’action. Cinq lignes d’action pour étendre cette couverture sont évaluées : (i) l’adhésion obligatoire à des régimes de pension privés ; (ii) la contrainte douce, c’est-à-dire l’inscription automatique à des régimes de pensions privés, avec possibilité de refuser; (iii) un accès facilité aux dispositifs d’épargne-retraite ; (iv) l’application d’un régime fiscal préférentiel aux revenus épargnés en vue de la retraite et (v) le développement de l’éducation financière.

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Bibliographic Info

Paper provided by OECD Publishing in its series OECD Social, Employment and Migration Working Papers with number 69.

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Date of creation: 29 Jan 2009
Date of revision:
Handle: RePEc:oec:elsaab:69-en

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Cited by:
  1. Martin, John P. & Whitehouse, Edward, 2008. "Reforming Retirement-Income Systems: Lessons from the Recent Experiences of OECD Countries," IZA Discussion Papers 3521, Institute for the Study of Labor (IZA).
  2. Singer, Nico, 2011. "A behavioral portfolio analysis of retirement portfolios," Thuenen-Series of Applied Economic Theory 104, University of Rostock, Institute of Economics.


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