The earnings replacement rate of old-age benefits: an international comparison, 1970.

HOW MUCH of the earnings of a worker with fering rest&s, serve to point up the difficulties average wages does the old-age pension replace in involved. foreign count,ries and how does the United States International Labor Organization (ILO) records on the adherence to Conventions compare with other countries iu this respect,? The of that body tend to reflect a very high replacenumber of queries on the subject, have led to this ment rate; six possible methods of calculation are international comparison on a more detailed and used, with the’ individual country authorized to uniform basis than those in previous studies dealsubmit t,he most..fa.vorable, if it so desires.* ing with the replacement rate. The questions have What the replacement rate actually is in one arisen, in part, from the feeling that the social individual country can be i matter of controsecurity system in the United States pays a relaversy. It becomes apparent in reading of the tirely smaller pension than do the systems of most strikes and riots involving social security issues other industrial countries, The present study that’occurred in a number of countries in 1968 finds that the average retired couple in the United nnd 1969 that a lack of mutual understanding States enjoys an intermediate replacement rate between the contending factions was a causal among the 13 countries examined. Five are sigfactor. The planners speak of high percent.ages nificnntly higher, three are about the same, two that will be achieved upon maturity of the system. are slightly lower, and two are significantly The leadership of the trade unions or other public lower. FOP the individual United States benegroups involved use technical terminology. It ficiary the rate equals or is above that, found in may be that t,he bulk of the workers think of the four of the other countries. pension as a percent,age of their earnings just There has been surprisingly little study of this before retirement.. The planned figure may be 60 subject-in part, no doubt, because of the lack of percent for 1990, but the worker may see that his comparable data and the extreme complexities of pension is only 31i or 40 percent of his t,ake-home the differing national systems, most of them in P”Y* process of transition. Popular discussions or political speeches in the individual countries tend to speak in terms of very high replacement. percentages and neglect to mention that, these rates THE AVERAGE WORKER