This brief publication compares the replacement rates provided by the pension systems to different generations, in all OECD countries. While Pensions at a Glance continually computes future replacement, rates based on current legislation, this is the first time that any similar survey has been conducted between the generations that retired about 15 years ago and the generations currently entering the labor market. The aim is to gauge the impact of past pension reforms and changing economic conditions. The purpose of this Policy Brief is to study the changes in the official retirement age between different generations and the gross replacement rates at the official retirement age for private sector workers with uninterrupted careers.

Some key conclusions:

1. Based on the legislation passed in 2017, official retirement ages have steadily increased by about 3 years on average in the OECD, rising from 63 for men born in 1940 to 66 for those born in the mid-90s. The biggest increases have occurred in countries that started with a very low retirement age and subsequently linked the retirement age to life expectancy, as in Denmark, Italy, the Netherlands, Slovakia and Turkey. The gender gap in official retirement ages for the 1940s generation, in place in 18 countries, is being eliminated, except in Colombia, Israel, Poland and Switzerland.

2. Life expectancy at 65 is projected to increase by 6 years on average in these generations. The difference between the duration of working life and retirement is essentially a political choice. It is crucial to maintain replacement rates, despite increases in life expectancy. Increases in retirement ages introduced through legislation are less than those necessary for maintaining the balance between the duration of working life and retirement. The percentage of time spent in retirement is expected to increase by 10% between the 1940 and 1996 generational cohorts. This means that in order to stabilize this percentage at the level of the 1956 cohort, the official retirement age should be 67.2, on average for the 1996 cohort (compared to 65.8 on average under current legislation). Austria, Belgium Chile, Germany, Luxembourg, Poland and Slovenia have the largest increases in the percentage of time spent in retirement.

3. Gross replacement rates at the official retirement age are expected to drop in 21 OECD countries and increase in 10 of them. Average replacement rates will drop by 6 percentage points, which means that the pensions of full-time workers born in 1996 will be 10% lower than their past wages, compared to workers born in 1940.