Pensioners’ Income Level Internationally
International comparison of pension recipients’ income
Pension recipients’ income is compared internationally in many ways. One common way is to review pension adequacy through theoretical replacement rates (TRR).
The calculations assume a working life of equivalent length between all countries. In addition to the baseline scenario, the comparison includes alternative scenarios, for example, how breaks from work due to having children affect pensions in different countries.
Through calculations of this type, it is possible to compare the generosity of a pension system at both a gross and net level. The rules of the pension system are assumed to remain unchanged in the future. Data on replacement rates are produced by both the European Commission and the OECD.
Another common way to compare the income of pension recipients is to review the poverty rate. It depicts pension recipients’ real income level at a given time. In this case, information on income and household structure that is as comprehensive and comparable as possible is collected in order to compare the income of pension recipients or over-65-year-olds in various countries.
It is difficult to produce completely comparable data since the structures of both the pension systems and the households differ from each other in the various countries. The at-risk-of-poverty threshold is an important indicator in this context. In the EU, the at-risk-of-poverty threshold is 60 per cent of the median income of the total population.
In the EU, Eurostat produces international comparative data on the poverty rate.