February 10, 2018

Read e-book online Aging Societies: The Global Dimension PDF

By Gary T. Burtless, Barry Bosworth

ISBN-10: 0585053650

ISBN-13: 9780585053653

ISBN-10: 0815710267

ISBN-13: 9780815710264

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Extra resources for Aging Societies: The Global Dimension

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75 percent of the average wage for each year of contribution. A worker with 40 years of service would receive an earnings-related pension equal to 30 percent of the average lifetime wage. In the computation of the initial benefit, past earnings are adjusted for inflation using an index of the economywide average wage. Pension payments in later years of retirement are adjusted to reflect price inflation. In addition, the second-tier program pays the first-tier national pension for those who retire before age 65 and are not yet eligible for the flat-rate benefit.

The system is intentionally redistributive and heavily favors low-wage workers. The benefit formula provides significantly higher benefits relative to wages for workers with low lifetime earnings than it provides for workers with high average earnings. Benefits are financed with a proportional payroll tax imposed on wages and net self-employment income up to a maximum annual amount ($62,700 in 1996). An American worker who earns the economywide average wage during each year of his career will receive a retirement benefit at age Page 13 65 equal to about 43 percent of his real final wage.

Page 8 TABLE 1-3. Public Sector Financing of Programs for the Elderly in G-5 Countries, Selected Years, 199395, and Projected to 2050 Characteristics France Germany JapanUnited KingdomUnited States 1. 1 2. 0 3. 2 4. 8 5. Present value of net pension liabilities (percent of GDP) 115110105525 Page 9 Characteristics France Germany Japan United Kingdom United States 6. 1 7. 0 8. 5Sources: 1. Roseveare and others (1996) for France and Germany; Tanaka (1996) for Japan; Franco and Munzi (1996) for the United Kingdom; and Board of Trustees (1996) for the United States.

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Aging Societies: The Global Dimension by Gary T. Burtless, Barry Bosworth

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