Sweden Finland Austria

The level of public pensions
Two sets of calculations have been performed. One concerns persons with former work
and income, the other concerns people with no former working income. For those with
former work, it is assumed that the former APW (and the former part time working partner
in the APW-couple) receives the maximum possible pension in 1997. In some additional
schemes, e.g. the Danish and the British ones, it is not possible to obtain full pension rights
in 1997. In these cases it is assumed, that the APW (and the part time working partner in
the APW-couple) has been a member for as long time as possible. In Sweden and Finland
it is possible to obtain full pension rights from the additional pension scheme in 1997. For

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Germany it is assumed that pension rights have been obtained for 45 years (including
education).
It is important to emphasize that it is the maximum pension, and not the average pension,
which has been calculated.
For people without former working income the situation is also extreme, they have ob-
tained no pension rights (basic or additional) at all, unless the rights are based upon resi-
dence (DK, S, FIN, NL and CAN).
On these assumptions, the APW-calculations show the pensions received at the formal age
of retirement in the 8 countries in 1997.
Table 2.12.
Net replacement rates at retirement in 8 countries, 1997.
DK
S
FIN
A
D
NL
GB
CAN
With former work, single APW
Net replacement rate
54
64
66
86
76
47
52
55.5
With former work, APW-couple
Net replacement rate
55
65
70
83
71
43
56
59
Without former work, single APW
’Net replacement rate’
48
39
32
51.5
23
47
29
42
1)
1)
1)
1)
The replacement rates for Austria, Germany and Great Britain are based upon social assistance
type benefits for pensioners with no former work record.
Note: For persons without former occupation the net replacement rate is strictly speaking meaningless.
The interpretation is: ’Replacement’ relative to the annual disposable income of the APW.
In the case with former work, the net replacement rate for the single APW is high in
Austria followed by Germany, Finland and Sweden, and relatively low in the Netherlands,
with Canada, Denmark and Great Britain in between. In 1993 the pensions in Sweden
were lowered by approximately 2 per cent, compared to what they would have been in
1993 without reductions. This ’mechanism’ has been continued since, but will stop in
1999. Furthermore, in 1997 pensions in Sweden were only increased by 60 per cent of the
price development.
In the case of the ’APW-couple’ formerly with 1½ income, the net replacement rate is a
little higher than for the single pensioner in Denmark. This is also the case in Sweden. In
Finland (where the former part time working spouse also receives some of the basic

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pension), the net replacement rate is substantially higher for the couple. In Great Britain
the flat rate benefit results in a relatively high replacement rate for the person formerly
with ½ income implying a higher net replacement rate for the couple. This is also the case
in Canada. In Germany the splitting taxation system for couples implies a high disposable
working income resulting in a lower replacement rate than for singles (pensions are not
taxable in the cases presented here, cf. appendix 1 on Germany). In Austria, where the wife
was pensioned 5 years ago (at the age of 60), the indexation of her pension has not fol-
lowed the wage development, implying a lower replacement rate for the couple than for the
single (man). In the Netherlands, the replacement rate is also lower for the couple, here it
is because of the rate structure for couples, cf. appendix 1.
In the case without former work, the pensions in Denmark and the Netherlands are rela-
tively high and somewhat lower in Canada, Sweden and Finland. Among the three coun-
tries with social assistance type minimum pensions Austria has the highest coverage,
which in fact is higher than in any of the countries with residence based minimum pen-
sions, but means tested to a larger extent. Only basic rates have been included in the social
assistance type cases. In Germany, Austria and Great Britain the public pensions are very
much dependent on former participation in the working life, while that is not so much the
case in Finland, Sweden, Canada and Denmark, and not at all the case in the Netherlands.