The future gross replacement rate represents the level of pension benefits in retirement from mandatory public and private pension schemes relative to earnings when working. For workers with average earnings and a full career from age 22, the future gross replacement rate at the normal retirement age averages 52.0% for men and 51.4% for women in OECD countries, with substantial cross-country variation. Future gross replacement rates from mandatory schemes are below 30% at the average wage in Australia, Estonia, Ireland, Lithuania and Poland. Conversely, they are at 70% or more in Austria, Colombia, Denmark, Greece, Italy, Luxembourg, Mexico, the Netherlands, Portugal, Spain and Türkiye.
Pensions at a Glance 2025
OECD and G20 Indicators
For this indicator, the replacement rates are calculated for full-career workers from the age of 22, which means that career lengths differ between countries due to differences in normal retirement ages (Indicator Chapter 3). The replacement rates are expressed as percentage of earnings, which are at the whole national level and not gender specific.
Full-career male workers will have a replacement rate of 52.0% on average across OECD countries, with a high of 80% in Greece and Spain and a low of under 30% in Australia, Estonia, Ireland, Lithuania and Poland.
The average for women is slightly lower, at 51.4%. Gross pension replacement rates differ for women in seven countries, due to a lower future pension eligibility age than for men (Colombia, Costa Rica, Hungary, Israel, Poland and Türkiye), calculation of means-tested benefit entitlement at an earlier age (Chile) and higher life expectancy when sex-specific mortality rates are used to compute annuities (Mexico). Following the recent reform in Mexico only higher earning women are affected by the sex-specific mortality tables as the low and average earners are compensated by the new welfare pension that guarantees a 100% replacement rate from the FDC up to a limit, currently around average earnings. In Chile, although sex-specific annuities are used, the new gender component eliminates the difference for women, for this component, so effectively male annuity tables are being used for all. Women in Costa Rica and Hungary will receive benefits around 5‑7% lower than for men with the biggest gap being found in Poland, with replacement rates for women being 22% lower than for men (i.e. 6.4 percentage points (p.p.)).
Most OECD countries aim to better protect low-income workers (here defined as workers earning half of average earnings), in particular to limit old-age poverty risks. This results in higher replacement rates for them than for average earners (Figure 4.1). Low-income workers would have gross replacement rates averaging 65.5%. Some countries, such as Australia and New Zealand, pay relatively small benefits to average earners, but are closer to the OECD average for low-income workers. Australia, Czechia, Denmark and Mexico record the largest difference between gross replacement rates applying to low-wage and average‑wage workers, of between 30 and 50 (p.p.). However, projected replacement rates in six countries are basically the same for a full career at average and half-average pay: Austria, Costa Rica, Finland, France, Italy and Türkiye.
At the top of the range, based on current legislation, low earners in Denmark and Mexico will receive a future gross replacement rate of 115% and 121% respectively after a full career; retirement benefits are thus higher than the earnings when working. At the other end of the scale, Lithuania and Poland have gross replacement rates of around 30% or lower to low-income earners, thus implying a gross retirement income around 15% of average earnings after a full career.
On average, the gross replacement rate at twice average earnings (here called “high earnings”) is 42.0%. Replacement rates for these high earners equal 70% or more in Greece, Italy, Portugal and Sweden. At the other end of the spectrum, Canada, Estonia, Ireland, Korea, Lithuania and New Zealand offer a replacement rate of 20% or below.
Gross pension replacement rates fall with age from 52% of the average wage at the time of retirement on average across countries to 45% of the projected average wage at age 80, a fall of 13% (Figure 4.2). Given projected real-wage growth, this difference is due to the indexation of pension benefits in payment as they do not follow wages in many countries. With price indexation from a normal retirement age of 65, the fall is equal to 17% based on the OECD model assumptions – as found in Austria, Chile, Costa Rica, Hungary, Korea, Mexico, Poland, Spain and Türkiye. The earlier the normal retirement age the larger the fall with price indexation. Australia actually shows a slight increase in the replacement rate at age 80 compared to at normal retirement age, because the means-tested component increases as the capital remaining in the FDC pension decreases during retirement. Ireland also shows an increase as in addition to the benefit being indexed to wages, thereby maintaining a constant replacement rate, there is also an extra payment for those aged 80 and above.
Definition and measurement
The old-age pension replacement rate measures how effectively a pension system provides a retirement income to replace earnings, the main source of income before retirement. The gross replacement rate is the value of the pension entitlement relative to individual earnings. Under the baseline assumptions, workers earn the same percentage of average‑worker earnings throughout their career. Therefore, final earnings are equal to lifetime average earnings revalued in line with economy-wide earnings growth. Replacement rates expressed as a percentage of final earnings are thus identical to those expressed as a percentage of lifetime earnings.
Note: *Low earners in Colombia, New Zealand and Slovenia are at 64%, 61% and 55% of average earnings, respectively, to account for the minimum wage level.
Source: OECD pension models.
Source: OECD pension models.
Source: OECD pension models.