Pension entitlements are calculated using the OECD pension models. The theoretical calculations relate to workers entering the labour market in 2020 aged 22 including the full impact of legislated pension reforms. A note on the methodology used and assumptions made precedes the pension indicators.
The indicators begin with the gross pension replacement rate in mandatory pension schemes: the ratio of pensions to individual earnings. The second shows the replacement rates for mandatory and voluntary pension schemes where these schemes have broad coverage. Thereafter follows an analysis of the tax treatment of pensions and pensioners. The fourth and fifth indicators show the net replacement rates, taking account of taxes and contributions. After this follows two indicators of pension wealth: the lifetime discounted value of the flow of retirement benefits. This indicator also takes into account the retirement age, indexation rules, and life expectancy, and is presented in gross and net terms.