Title page 1

Contents 7

Foreword 4

Editorial 5

Executive summary 11

1. Recent pension reforms 14

Introduction 15

Population ageing will be fast over the next 25 years 18

Working longer: financial incentives and flexible retirement 28

Recent pension reforms 40

References 55

Annex 1.A. Recent pension reform overview 58

Notes 89

2. Gender pension gap 94

Introduction 95

Key findings and policy implications 95

Gender disparities in pensions 98

Long-term trends in gender labour market inequalities 107

Four normative questions about the role of pension policy in addressing the gender pension gap 116

What countries do: pension rules and gender inequalities 121

Specific issues affecting the gender pension gap in asset-backed pensions 130

Policy discussion 130

References 133

Annex 2.A. Benefits of older people with no or little contributory pension entitlements 139

Notes 140

3. Design of pension systems 145

4. Pension entitlements for the base case 159

5. Pension entitlements for alternative scenarios 176

6. Demographic and economic context 189

7. Incomes and poverty of older people 204

8. Finances of retirement-income systems 215

9. Asset-backed pensions 224

Tables 10

Table 1.1. Fewer obstacles to combining work and pensions after the normal retirement age 34

Table 2.1. Motherhood or childcare-related employment breaks affect normal retirement ages in seven OECD countries 123

Table 3.1. Structure of retirement-income provision through mandatory schemes 147

Table 3.2. Current level and recipients of first-tier benefits 149

Table 3.3. Indexation of first-tier benefits 151

Table 3.4. Future parameters and rules of mandatory earnings-related pensions, latest legislation 153

Table 3.5. Current early and normal retirement ages by type of pension scheme 155

Table 3.6. Future ages, penalties and bonuses for early, normal and late retirement by type of pension scheme 158

Table 4.1. Gross pension replacement rates by earnings, in percentage, mandatory schemes 163

Table 4.2. Gross pension replacement rates from mandatory public, mandatory private and voluntary private pension schemes, full career workers, in percentage 165

Table 4.3. Treatment of pensions and pensioners under personal income tax and mandatory public and private contributions 167

Table 4.4. Net pension replacement rates by earnings, in percentage 169

Table 4.5. Gross and net pension replacement rates from mandatory (public and private) and voluntary pension schemes, in percentage 171

Table 4.6. Gross pension wealth by earnings, multiple of annual earnings 173

Table 4.7. Net pension wealth by earnings 175

Table 5.1. Gross pension entitlements by household composition: singles versus couples, percentage of average earnings 178

Table 5.2. Gross and net pension benefit level by earnings profile 184

Table 5.3. Annual economic assumptions 185

Table 5.4. Gross pension replacement rates by different economic assumptions 186

Table 5.5. Contribution requirements to mandatory and quasi-mandatory pensions for the self-employed 188

Table 6.1. Total fertility rates, 1964-2064 191

Table 6.2. Demographic old-age to working-age ratio: Historical and projected values, 1954-2084 195

Table 7.1. Incomes of older people, 2022 or latest available year 206

Table 7.2. Income poverty rates by age and gender, 2022 or latest available year 208

Table 7.3. Change in relative income poverty rates between 2011 and 2022 by age 210

Table 7.4. Income inequality by age: older vs. total population, 2022 or latest available year 212

Table 7.5. Gross average wage (AW), 2024 214

Table 8.1. Mandatory contribution rates in 2024 217

Table 8.2. Public expenditure on cash old-age and survivor benefits 219

Table 8.3. Private pension-benefit expenditures 221

Table 8.4. Projections of public expenditure on pensions, 2023-60, percentage of GDP 223

Table 9.1. Participation rate in pension plans in the OECD and selected other jurisdictions, latest year available 226

Table 9.2. Assets earmarked for retirement in OECD countries and selected other major economies, at end-2024 or latest year available 230

Table 9.3. Nominal and real geometric average annual investment rates of return of pension providers in 2024 and over the last 5, 10, 15 and 20 years, in percent 234

Table 9.4. Nominal and real geometric average annual investment rates of return of selected public pension reserve funds in 2024 and over the last 5, 10, 15 and 20 years, in percent 234

Table 9.5. Types of pension plans available in the OECD area and selected other major economies according to the OECD taxonomy, 2024 236

Table 9.6. Fee structure and fee cap in selected OECD and other major economies 238

Table 9.7. Annual fees charged to members of defined contribution plans by type of fees, 2024 238

Figures 8

Figure 1.1. Projections have systematically overestimated fertility 19

Figure 1.2. Life expectancy gains have been smaller over the last decade 21

Figure 1.3. Projections of life expectancy at 65 have not been significantly affected by COVID-19 22

Figure 1.4. Projected migration rates are below the average rate between 2000 and 2023 23

Figure 1.5. The old-age to working-age ratio is projected to increase fast until the mid-2050s 24

Figure 1.6. Most countries will age faster over the next than over the previous 25 years 25

Figure 1.7. The importance of fertility and life expectancy in population ageing differs across countries 27

Figure 1.8. Employment rates for older adults continue to lag behind those of prime-age individuals 28

Figure 1.9. Bonuses and penalties compared to the actuarially neutral rate 31

Figure 1.10. Working beyond pension receipt is very common in the Baltic and Nordic countries 33

Figure 1.11. Mandatory retirement ages remain common in OECD countries 38

Figure 1.12. The normal retirement age will be rising in half of OECD countries for men 41

Figure 1.13. Older people are more likely to be in relative income poverty 47

Figure 1.14. Net pension replacement rates for average and low earners 51

Figure 2.1. The gender pension gap has declined steadily across countries 98

Figure 2.2. Gender gaps in disposable income and in pensions are not correlated across OECD countries 100

Figure 2.3. Older women are more likely to be in income poverty than older men 100

Figure 2.4. Women receive first-tier and survivor pensions more often than men but are less covered by earnings-related pensions 102

Figure 2.5. First-tier pensions lower the total gender pension gap 103

Figure 2.6. Survivor pensions lower the gender pension gap substantially in many countries 104

Figure 2.7. Gender gaps in remaining life expectancy at the average labour market exit age 105

Figure 2.8. In a few OECD countries, women start receiving old-age earnings-related pensions at substantially younger ages than men 106

Figure 2.9. The gender gap in the average age of labour market exit widened between 1970 and 2000 but has almost halved since 107

Figure 2.10. Expected career duration differs substantially between men and women 109

Figure 2.11. Large reduction of gender gaps in average career duration across all OECD countries 110

Figure 2.12. Employment rates of women are lower than men's in all age groups 111

Figure 2.13. Gender gaps in average working hours have declined 112

Figure 2.14. The gender gap in hourly wages is very large in some countries 113

Figure 2.15. The gender wage gap has decreased in most OECD countries since 2008 113

Figure 2.16. Women earn one-third less than men over the lifetime on average across OECD countries 115

Figure 2.17. Changes in career length and hourly wages strongly reduced gender gaps 116

Figure 2.18. Measures affecting women's pensions 117

Figure 2.19. Women have lower retirement ages in some countries, reducing their future pensions 122

Figure 2.20. Pensions mitigate the transmission of gender earnings gaps into pension gaps 125

Figure 2.21. Pensions cushion significantly the impact of a five-year break for childcare in many OECD countries 127

Figure 3.1. Taxonomy: Different types of retirement-income provision 147

Figure 3.2. Non-contributory first-tier benefits 149

Figure 3.3. Contributory first-tier benefits 149

Figure 3.4. Number of years required for partial and full contribution-based basic pensions 151

Figure 3.5. Number of years required for partial and full minimum contributory pensions 151

Figure 3.6. Difference in the normal retirement age by gender and by age of career start 155

Figure 3.7. Gender gap in current and future normal retirement ages 156

Figure 3.8. Current and future normal retirement ages for a man with a full career from age 22 157

Figure 3.9. Current and future early retirement ages for a man with an uninterrupted career from age 22 157

Figure 4.1. Gross pension replacement rates in percentage: Low and high earners 163

Figure 4.2. Gross pension replacement rates: Average earners at retirement age and age 80 163

Figure 4.3. Personal income taxes and social security contributions paid by pensioners and workers 167

Figure 4.4. Net and gross pension replacement rates: Average earners, in percentage 169

Figure 4.5. Net pension replacement rates: Low and high earners, in percentage 169

Figure 4.6. Gross pension wealth for lower earners by gender, multiple of annual earnings 173

Figure 4.7. Gross pension wealth for average earners by gender, multiple of annual earnings 173

Figure 4.8. Net pension wealth for lower earners by gender, multiple of annual earnings 175

Figure 4.9. Net pension wealth for average earners by gender, multiple of annual earnings 175

Figure 5.1. Gross total pension entitlements of low and average earners with a 5-year unemployment break versus workers with full careers 180

Figure 5.2. Gross total pension entitlements of low and average earners with a 10-year unemployment break after entering the labour market 5 years later 180

Figure 5.3. Gross total pension entitlements of low and average earners with a 5-year childcare break versus women with two children with an uninterrupted career 182

Figure 5.4. Gross pension entitlements of low and average earners with a 10-year childcare break versus women with two children with an uninterrupted career 182

Figure 5.5. Earnings profile compared to base case for a retirement age of 66 years 184

Figure 5.6. Theoretical relative pensions of the self-employed as a percentage of those of employees 188

Figure 6.1. Uncertainty about total fertility-rate projections 191

Figure 6.2. Current life expectancy at age 65 for men and women, in years, 2024 193

Figure 6.3. Projected remaining life expectancy at age 65, 2065, in years 193

Figure 6.4. Structural breaks in life-expectancy gains 193

Figure 6.5. The working-age population will decline in a large number of OECD countries 195

Figure 6.6. Future demographic old-age to working-age ratio projections differ based on data sources 195

Figure 6.7. Employment rates of workers aged 55-59, 60-64 and 65-69 in 2024 197

Figure 6.8. Gender gap in employment rates by age group, 2024 197

Figure 6.9. Gender gap in pensions in selected OECD countries, latest year available 197

Figure 6.10. Employment rate at ages 60-64 vs. normal retirement age in 2024 198

Figure 6.11. Change in employment rates of older workers and prime-age workers, 2004-24 199

Figure 6.12. Growth of employment rates of older workers by education level 199

Figure 6.13. Average effective age of labour market exit and normal retirement age in 2024 201

Figure 6.14. Average effective age of labour market exit in OECD countries, 1970-2024 201

Figure 6.15. Remaining life expectancy at average labour market exit age, by gender in 2024 203

Figure 6.16. Expected life years after labour market exit, OECD average 1970-2024 203

Figure 7.1. Income sources of older people, 2022 or latest available year 206

Figure 7.2. Income poverty rates by age: older vs. total population, 2022 or latest available year 208

Figure 7.3. Income poverty depth by age: older vs. total population, 2022 or latest available year 209

Figure 7.4. Change in income inequality over time among the older and the total population 212

Figure 7.5. Change in average wage, national currency 214

Figure 8.1. Private pension expenditure as a percentage of total public and private expenditure 221

Figure 8.2. Percentage point change in pension expenditure between 2023-24 and 2050 223

Figure 9.1. Minimum or mandatory contribution rates (for an average earner) in mandatory and auto-enrolment plans, 2024 (or latest year available) 228

Figure 9.2. Average annual contribution per active account or member in selected OECD countries, latest year available 228

Figure 9.3. Asset allocation of pension providers at the end of 2024 or latest year available 232

Figure 9.4. Asset allocation of public pension reserve funds, at end-2024 232

Figure 9.5. Split of pension assets by type of plan, at the end of 2024 or latest year available 236

Figure 9.6. Assets and liabilities of defined benefit plans (in billions of national currency) and their ratio (in percent) in selected jurisdictions, 2014-24 240

Boxes 20

Box 1.1. Adjusting pensions to total contributions or a proxy thereof in order to protect the pension system against declining fertility 20

Box 1.2. Method for decomposing the change in old-age to working-age ratio by driver 26

Box 1.3. Actuarial neutrality and retirement timing 29

Box 2.1. Measuring expected career duration 108

Box 2.2. Gender gap of expected lifetime earnings 115

Infographics 9

Infographic 1. Facts and figures 13

Annex Tables 10

Annex Table 1.A.1. Pension reforms decided between September 2023 and September 2025 58

Annex Figures 9

Annex Figure 2.A.1. Pensions mitigate old-age inequalities for low earners 140