GLOBAL - Luxembourg has the highest "pension wealth" for a worker on average earnings of all Organisation of Economic Cooperation and Development (OECD) countries.
The OECD uses pension wealth as a measure of pension promises. It is a lump sum equivalent to all the pension income someone could expect to receive and is calculated as the present value of the future stream of pension payments, taking into account: the level at which pensions are paid, the age people become eligible to receive a pension, life expectancy and how pensions are adjusted after retirement to reflect growth in wages or prices.
“If, instead of paying a regular income, the government gave each pensioner a single payment worth exactly the same, it would have to come up with an average lump sum of US$587,000 at the time of retirement,” the OECD said. “Pension wealth for Luxembourg is nearly treble the average for OECD countries.”
In comparison, Ireland, Mexico, New Zealand, the UK and the US have the lowest pension wealth for a person on average earnings.
In countries with lower life expectancies, such as Hungary, Poland and Turkey, benefits are paid for a shorter retirement period making the pension promise for these workers more affordable, the OECD said.
“The effect is the reverse in Switzerland and the Nordic countries, where life expectancies are high.”
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