Pensions at a Glance Asia/Pacific 2022

Basic, targeted and minimum pensions

Key results

Basic and minimum pensions along with social assistance are defined as the first layer of protection for the elderly within the pension system. They make up the first tier of the taxonomy of pension systems, which was set out in the previous indicator of the architecture of national pension schemes.

Basic pensions only exist in two non-OECD economies compared to five of the OECD countries listed. Five Asian economies provide a social assistance benefit equivalent to 8.1% of average earnings. Furthermore, five economies provide a minimum pension benefit, most often above the basic or social assistance level. For a full-career worker, the average minimum pension is 24.5% of average earnings.

There are four main ways in which economies might provide retirement incomes to meet a minimum standard of living in old age (Table 1.2). The left-hand part of the table shows the value of benefits provided under these different types of scheme. Values are presented in relative terms – as a percentage of countries’ gross average wages – to facilitate comparisons between countries (see the “Average wage” indicator in Chapter 3). The right-hand part of the table shows the number of total recipients as a share of the population aged 65 and over.

Benefit level

Benefit values are shown for a single person. In some cases – usually with minimum contributory pensions – each partner in a couple receives an individual entitlement. In other cases – especially for targeted schemes – the couple is treated as the unit of assessment and generally receives less than twice the entitlement of a single person.

The analysis of benefit values can be complicated by the existence of multiple programmes in some economies. However, in non-OECD Asian economies this is very rarely the case as only India and Viet Nam have dual systems.

There are four economies that do not have either a basic or minimum pension within their system (China, Malaysia, Singapore and Sri Lanka). Basic pensions exist in only Hong Kong (China), the Philippines and Thailand, with the Philippines also having a minimum pension along with India, Indonesia, Pakistan and Viet Nam.

Coverage

The importance of first-tier benefits varies across Asian economies. The percentage of over‑65s receiving such benefits is shown in the final four columns of Table 1.2. Different approaches of reporting the number of recipients, for example in case of benefits paid to couples or even households, may blur the data comparability across countries to some extent. Naturally, residence‑based basic pensions have on average the highest coverage. However, contribution-based basic pensions also have very high recipient numbers in most countries that have such a scheme. Sometimes recipient numbers exceed 100% of the population aged 65 and older hinting to recipients younger than 65 or living abroad. Targeted schemes in Asian economies show the greatest variation, being claimed by only 7% of those aged 65 or over in Malaysia but by 56% of those in the Philippines and 42% in Hong Kong (China). These higher rates are primarily due to historically low coverage rates in mandatory pension schemes.

Table 1.2. Current level and recipients of first-tier benefits

	Benefit value in 2020 (% of gross AW earnings)				Recipients in 2020 (% of population aged 65 and over)					Benefit value in 2020 (% of gross AW earnings)				Recipients in 2020 (% of population aged 65 and over)
	Residence‑based basic	Targeted	Contribution-based basic	Minimum	Residence‑based basic	Targeted	Contribution-based basic	Minimum		Residence‑based basic	Targeted	Contribution-based basic	Minimum	Residence‑based basic	Targeted	Contribution-based basic	Minimum
East Asia/Pacific									OECD Asia/Pacific
China									Australia		27.0				63
Hong Kong (China)		14.6				42			Canada	12.9	19.2			98	32
Indonesia				12.3					Japan		18.0	15.1			3	92
Malaysia		8.5				7			Korea		7.8	11.9			69	43
Philippines		3.3	2.0	8.4		56	35		New Zealand	39.8				105
Singapore									United States		15.6				2
Thailand	4.1				100
Viet Nam		5.2				21			Other OECD
									France		28.4		20.2		4		38
South Asia									Germany		19.3				1
India				5.6					Italy		19.8		22.7		7
Pakistan				35.4					United Kingdom		21.6	16.7			16	105
Sri Lanka		5.0				19

Note: Data are not available. The benefit level shown is for new pensioners in 2020. The contribution-based basic amounts refer to the benefit level for a full career. People in New Zealand cannot receive a targeted benefit on top of a full residence‑based basic pension.

Source: Information provided by countries and OECD’s Social Recipients database.

Figure 1.2. Non-contributory first-tier benefits

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Figure 1.3. Contributory first-tier benefits

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