Pensions at a Glance 2021
OECD and G20 Indicators
The 2021 edition of Pensions at a Glance highlights the pension reforms undertaken by OECD countries over the past two years. Moreover, the special chapter focuses on automatic adjustment mechanisms in pensions systems in OECD countries, discusses the usefulness and limitations of these policy instruments, and suggests ways to improve them in order to enhance the capacity of pension systems to fulfil their objectives. This edition also updates information on the key features of pension provision in OECD and G20 countries and provides projections of retirement income for today’s workers. It offers indicators covering the design of pension systems, pension entitlements, the demographic and economic context in which pension systems operate, incomes and poverty of older people, the finances of retirement‑income systems and private pensions.
Also available in: French
Automatic adjustment mechanisms in pension systems
The chapter describes automatic adjustment mechanisms in mandatory pension schemes in OECD countries. About two‑thirds of OECD countries employ such mechanisms, including notional defined contribution (NDC) schemes, links of the statutory retirement age to life expectancy, benefit adjustments to changes in life expectancy, demographic ratios or the wage bill, and balancing mechanisms. The chapter discusses what automatic adjustment mechanisms can and cannot do, as well as possible alternative policies. AAMs can be useful tools to prevent pension schemes from becoming increasingly unsustainable as populations age. Finally, it proposes some guidelines for designing and implementing automatic adjustment mechanisms based on OECD countries’ experiences with revising or overturning such mechanisms. This includes the need for wide political agreement on their introduction and avoiding mechanisms that reduce pension benefits in payment in nominal or real terms.
Also available in: French
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