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Pension Schemes for the Self-Employed in OECD Countries

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  • Jongkyun Choi

    (OECD)

Abstract

The self-employed workers make up a small but significant minority of the workforce in many OECD countries. Moreover, transitions into and out of self-employment have become much more common for a larger group of workers. It is therefore of critical importance to review and assess the pension schemes available to self-employed workers across OECD countries. Given employment and income patterns commonly observed for this subgroup, it is also important to address the issue of compliance and enforcement towards a formal affiliation of this group to pension schemes on offer. This paper reviews three key aspects of pension schemes available to self-employed workers: coverage, contributions and benefits. In each part, analyses are undertaken not just by describing the rules governing these schemes but also looking into their actual functioning in terms of compliance and enforcement. Key findings include the fact that the self-employed are covered by the same pension schemes as those of employees in the majority of countries. One important difference is that, while employees share the contribution burden with their employers, the self-employed workers in most cases pay the full pension contribution from their own income. The rules for pension entitlements, on the other hand, are usually almost identical to those that apply to employees. One key conclusion emerging from this paper is that the pension provision for the self-employed is a matter of practical implementation of existing schemes rather than overhauling pension rules for these schemes. Low coverage is a common problem for this group in some OECD countries, as they belong to the informal sector and their incomes are hard to identify. Contribution evasion or under-reporting of income by the self-employed is prevalent even in some countries with high per capita income. This has implications as these self-employed workers will have lower levels of pension incomes at retirement. In some cases, low contributions coupled with relatively generous pension rights also raise an issue of equity in the provision of pensions for the self-employed and employees. Dans beaucoup de pays de l’OCDE, les travailleurs indépendants constituent, au sein de la population active, une minorité faible par la taille mais d’importance significative. En outre, pour un nombre accru de travailleurs, le passage au statut d’indépendant et l’abandon de ce statut est un processus bien plus courant aujourd’hui. En conséquence, il est crucial d’examiner et évaluer les régimes de pension qui sont à la disposition des travailleurs indépendants dans les différents pays de l’OCDE. Compte tenu de la structure de l’emploi et de celle du revenu généralement observées au sein de cette population, il importe également de s’intéresser au respect de l’obligation d’affiliation formelle de ces travailleurs aux régimes de pension qui leur sont proposés et aux moyens de les y contraindre. Ce document examine trois aspects clés des régimes de pension auxquels les travailleurs indépendants peuvent s’affilier : couverture, cotisations et prestations. Dans chaque partie, les analyses proposées ne se contentent pas de décrire les règles régissant ces dispositifs, mais portent aussi sur leur fonctionnement concret du point de vue du respect de l’obligation d’affiliation et des instruments de coercition. Les principales observations englobent le fait que, dans la majorité des pays, les travailleurs indépendants sont couverts par les mêmes régimes de retraite que les salariés, à ceci près, et la différence est de taille, que si les salariés partagent le poids des cotisations avec leurs employeurs, les travailleurs indépendants payent dans la plupart des cas les deux parts sur leur propre revenu. Par ailleurs, les règles régissant les droits à pension des indépendants sont généralement presque identiques à celles s’appliquant aux salariés. Une conclusion essentielle se dégage de ce document : en matière de retraite, la question qui se pose pour les travailleurs indépendants concerne l’application pratique des dispositifs existants et non la remise à plat des règles. Dans quelques pays de l’OCDE, les indépendants se heurtent à un même problème, celui du faible niveau de couverture, car cette catégorie de travailleurs relève du secteur informel, et ses revenus sont difficiles à cerner. La fraude fiscale et la sous-déclaration des revenus sont très répandues chez les travailleurs indépendants, même dans des pays où le revenu par habitant est élevé. Ce phénomène n’est pas sans conséquence car au moment de la retraite, le niveau de revenu que procurera à ces travailleurs leur pension sera plus modeste. Dans certains cas, le faible niveau des cotisations conjugué à la générosité des droits à pension soulève aussi un problème d’équité dans le financement des pensions des travailleurs indépendants et des salariés.

Suggested Citation

  • Jongkyun Choi, 2009. "Pension Schemes for the Self-Employed in OECD Countries," OECD Social, Employment and Migration Working Papers 84, OECD Publishing.
  • Handle: RePEc:oec:elsaab:84-en
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    File URL: http://dx.doi.org/10.1787/224535827846
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    Cited by:

    1. Juan Miguel Villa & Danilo Fernandes & Mariano Bosch, 2015. "Nudging the Self-employed into Contributing to Social Security: Evidence from a Nationwide Quasi Experiment in Brazil," IDB Publications (Working Papers) 7313, Inter-American Development Bank.
    2. Juan Miguel Villa & Danilo Fernandes & Mariano Bosch, 2015. "Nudging the Self-employed into Contributing to Social Security: Evidence from a Nationwide Quasi Experiment in Brazil," IDB Publications (Working Papers) 91877, Inter-American Development Bank.
    3. Hershey, D.A. & van Dalen, Harry & Conen, Wieteke & Henkens, Kene, 2017. "Are “voluntary” self-employed better prepared for retirement than “forced” self-employed?," Other publications TiSEM 039ee146-e32b-444a-a5c6-1, Tilburg University, School of Economics and Management.

    More about this item

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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