Regulation usually defines a (minimum) contribution rate for mandatory and auto‑enrolment plans. The responsibility to pay the contributions may fall on the employees (e.g. in Chile), on the employers (e.g. in Australia, Korea, Norway, the Slovak Republic) or on both (e.g. in Estonia, Iceland, Israel, Mexico, Switzerland). This obligation may only apply to certain employees or under certain conditions (e.g. employees aged between 22 and the state pension age and earning at least GBP 10 000 a year in the United Kingdom). Contributions may be complemented by state matching contributions (e.g. New Zealand, Türkiye) or subsidies (e.g. social quota in Mexico).
Mandatory contribution rates vary across countries (Figure 9.1). Iceland sets the highest mandatory contribution rate at 15.5% of salary, split between employers (11.5%) and employees (4%). Mandatory contribution rates also represented over 10% of the salary in Australia, Colombia, Denmark (defined in collective agreements), Israel and Switzerland. By contrast, Norway has the lowest mandatory contribution rate (2% paid by the employer). Employers and employees can however agree on whether employees have to contribute on top of employers. Mandatory contribution rates sometimes vary by income (e.g. ITP1 and SAF-LO plans in Sweden) or by type of work (e.g. different contribution rates to the new first pillar pension fund for people in arduous and unhealthy professions in Greece).
On top of the minimum mandatory contributions, individuals or their employers may have the option of making additional voluntary contributions. In New Zealand, the minimum contribution rate for KiwiSaver plans for employees is 3%. Members can however select a higher personal contribution rate of 4%, 6%, 8% or 10% of salary. In Poland, the minimum contribution rate for employee capital plans (PPK) is 2% for employees and 1.5% for employers. Employers and employees have the option of making additional contributions of up to 2.5% (for employers) and 2% (for employees). In Australia, employees have no obligation to contribute to a plan but can make voluntary contributions on top of their employer’s contributions.
In voluntary plans, there may be no required nor minimum amount of contributions defined at the national level. Personal plans may however include a ceiling to benefit from tax advantages. Occupational plans may define specific contribution rates for employees and employers in the plan rules. The contribution rates may vary according to the funding of the plan in the case of defined benefit plans.
The average effective annual contributions per member (relative to average annual wages) vary a lot across countries (Figure 9.2). Some of the largest amounts of contributions per member in 2022 were paid in Australia, Iceland and Switzerland where the participation rate in a pension plan and the mandatory contribution rates are relatively high. Additional voluntary contributions from employees into superannuation schemes may also account for the high ratio in Australia, above the mandatory 10.5% contribution rate. Contributions per member (relative to the average wage) are lower in some other countries, and sometimes lower than the minimum mandatory contribution rates such as in Chile and Mexico, which may be due to some people not making contributions in a plan (even if they have one) when they move from the formal to informal sectors or become unemployed.