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The Multiple Pillar terminology used to describe the structure of the Pension Systems of each one of the countries described in this section, follows the internationally accepted taxonomic guidelines which are commonly used. This classification is as follows:
First Pillar: Non-contributory or social pensions pillar, financed with the public budget (general or specific taxes). There are countries that have universal non-contributory pensions, without means testing; other countries focus this type of pension on lower income people, through means testing.
Second Pillar: The mandatory contributory pillar of the pensions system, comprising mainly two types of components: (i) a state-managed PAYGO program, and/or (ii) an individually funded program, managed by private agencies.
Third Pillar: Voluntary contributory pillar of the pension system, with tax incentives to stimulate complementary pension savings (in addition to the mandatory Second Pillar savings). Depending on the country, this Pillar is managed by private entities, banks and other institutions.
Below you can find the basic operation of the pension systems that have mandatory or quasi-mandatory individual savings programs.
Law: Employees Provident Fund (EPF) Act 1951 This Law was amended over time, the most recent amendments being in 1991 [EPF Act 1991, see here]
Date Passed: 1951
Type of System: Multipillar, comprising:
Note: The EPF provides two types of individual accounts for members under 55: Account 1, which finances the old-age pension, and Account 2 that can be accessed before retirement for educational purposes, certain critical illnesses, purchasing a dwelling, and other types of expenses. Fund members with sufficient savings may choose to invest a portion of their Account 1 balance with an external fund manager. When an EPF member turns 55, Accounts 1 and 2 are consolidated into a single account (Akaun 55) and a separate account (Akaun Emas) is created for contributions after age 55.
Startup Date: 1951
Managing Agencies: The EPF is managed by the State.
Supervising Agency: The Ministry of Finance (http://www.treasury.gov.my) provides general supervision of the pension fund program (provident funds). The Workers Provident Fund (http://www.kwsp.gov.my), managed by a tripartite Board of Directors, manages contributions and benefits and is responsible for investing members’ funds. The Ministry of Human Resources (http://www.mohr.gov.my) provides general oversight of the social insurance program. The Social Security Organization (SOCSO) (https://www.perkeso.gov.my), managed by a tripartite Board of Directors, manages the social security program and collects contributions.
Enrollment:
Enrollment in the EPF is mandatory for all private sector employees, and public sector employees not covered by the independent public sector pension system. It is voluntary for some other types of workers.
Contributions/Assignments:
In the social security (PAYGO) system, workers contribute 0.5% of their salary, and employers 1.25%, thus totaling 1.75%.
In the EPF, workers under 60 contribute 11% of their salary. The employer contributes 13% on salaries less than or equal to RM 5,000, or 12% on salaries above RM5,000. In other words, the total EPF contribution rate for those under 60 years of age could be 23% (on salaries greater than RM5,000) or 24% (on salaries less than or equal to RM5,000).
In the EPF, Malaysian nationals aged 60 or older contribute 0% (permanently resident foreign nationals contribute 5.5%), at any salary level. Employers, in turn, contribute 4% on the salaries of Malaysian nationals (6% for permanently resident foreign workers with wages above RM 5,000; and 6.5% for permanently resident foreign workers with wages equal to or less than RM 5,000). I.e., the total EPF contribution rate for Malaysian nationals aged 60 or more could be 4%; for foreign workers with permanent residence and a salary of more than 5,000 ringgits, 11.5%; or 12% for foreign workers with permanent residence and a salary less than or equal to 5,000 ringgits). (see details here).
Pensions/Benefits:
Account 1: 70% of monthly contributions go to this account for financing old-age pensions. The account balance can only be withdrawn when the account holder turns 55, becomes disabled, or leaves the country. In these cases, the entire account balance can be withdrawn. Withdrawals can be postponed by continuing contributions or by withdrawing the dividend from savings annually.
Account 2: The remaining 30% of the monthly contributions are allocated to this second account. Assets accumulated in Account 2 can be used for: Medical expenses; Home loans; paying off the balance of a mortgage loan; financing of education; or for any other purpose after the member turns 50. Withdrawal of savings from Account 2 is subject to certain eligibility requirements, such as stipulating that the member is at least 50 years of age, as well as restrictions on the amount that can be withdrawn. The frequency of withdrawals depends on the intended purpose. Savings for financing education can be withdrawn each semester or academic year; savings to pay off housing loans can be made once a year, but withdrawals for purchasing a dwelling can only be made for the first dwelling.
On turning 55, fund members can make a total or partial withdrawal via: an overall payment (employee and employer contributions, plus compound interest, minus previous withdrawals); a monthly payment of at least 250 ringgits for at least one year, up to age 75; a payment at any time of at least 2,000 ringgits per month; a combination of the latter two options; or a payment of only the annual dividend, keeping the principal in Account 1.
Members of the EPF are not required to retire at age 55, and can withdraw all or part of their funds (Accounts 1 and 2) and continue working until age 100. Fund members who are still working and do not withdraw their funds at age 55 must carry on contributing to the EPF (Akaun Emas account). Fund members who withdraw all of their funds at age 55 can choose to rejoin and contribute to the EPF if they are still employed or working a new job.
State Guarantee: The government pays a non-contributory welfare pension, subject to means-testing, for all members aged 60 or more, with no financial support from other family members.
(Last updated: December 2024)
The Indian pension system consists of three main pillars:
2.1 For Public Sector Employees (before January 1, 2004)
2.2 For Public Sector Employees (after January 1, 2004): Unified Pension Scheme (UPS)
2.3 For Organized and Unorganized Private Sector Employees
Administering Entities:
Supervisory Entity: The PFRDA regulates the NPS, APY, and other pension schemes.
(Last updated: December 2024)
Law: Central Provident Fund (CPF) Act 1953, [see here]
Date Passed: 1953
Type of System: Singapore’s pension system is one of the oldest and most developed national systems in Asia. The system is primarily based on a single pillar: the Central Provident Fund (CPF), which covers most social security functions. There is no pooling or redistribution of social risk and no comprehensive social security system. People depend exclusively on the defined contribution funds that accumulate in their individual CPF accounts. There is also a non-contributory PAYGO pension plan, known as the Government Pension Scheme, for some categories of civil servants, as well as a Savings and Employees plan for certain categories of armed forces personnel. The Supplementary Retirement Scheme, a voluntary private pension plan without employer participation, and with tax advantages, completes the country’s pension landscape.
Note: The CPF provides four types of individual accounts for each member: an Ordinary Account (OA) for financing home purchases, approved investments, life and mortgage insurance, and education; a Special Account (SA), mainly for retirement (one can invest in financial products related to retirement); a MediSave (MA) account for certain medical and hospital expenses; and a Retirement Account (RA) opened at age 55, to fund monthly payments on retirement.
Start-up Date: 1955
Managing Agencies: The CPF is managed by a tripartite board of representatives of the government, workers, employers and industry, appointed by the ministers. The CPF is responsible for the custody of the funds and for managing the program. However, it has no investment responsibilities. The Singapore Government Investment Corporation (GIC) is the body responsible for investing the plan’s assets.
Supervisory Agency: The Ministry of Human Resources (https://www.mom.gov.sg) provides policy oversight through its Income Security Policy Division. The Board of Directors of the Central Provident Fund (https://www.cpf.gov.sg), comprising a tripartite board and a Chairman, manages the programs, including the custody of the fund, the collection of contributions and the payment of benefits.
Membership:
Membership in the CPF system is mandatory for employed individuals, including most categories of public sector employees, as well as the self-employed with annual net incomes above S$ 6,000 (MediSave account only).
Contributions/Assignments:
In the CPF, workers contribute 20% of their monthly salary of at least SGD 750 , if they are under 56 years of age, 13% if they are between 56 and 60 years of age, 7.5% if they are between 61 and 65 years of age, or 5 % if they are 66 or older.
Employers contribute 17% of the salary of at least 750 Singapore dollars for workers under 56 years of age, 13% for workers between 56 and 60 years of age, 9% for workers between 61 and 65 years of age, or 7.5 % for workers aged 66 or more.
Insured individuals who earn at least S$ 500, but less than SGD 750 per month, pay a fixed monthly amount based on age and income. Contribution rates for pensioners are reduced.
1% to 23% of the combined worker/employer contributions of insured individuals with a monthly income of at least SGD 750 are assigned to the Ordinary Account, 1% to 11.5% to the Special Account, and 8% to 10.5% to the MediSave Account, depending on age. The MediSave Account covers the cost of hospitalization and medical expenses. A certain maximum amount of the Ordinary and Special Account funds is transferred to the Retirement Account at age 55.
Summary
| Worker’s age | CPF contribution rates (monthly salary> = SGD 750) | ||
| Employer
(% of salary) |
Worker
(% of salary) |
Total
(% of salary) |
|
| Under 56 | 17 | 20 | 37 |
| Between 56 and 60 | 13 | 13 | 26 |
| Between 61 and 65 | 9 | 7.5 | 16.5 |
| 66 and over | 7.5 | 5 | 12.5 |
Source: https://www.cpf.gov.sg/employer/employer-obligations/how-much-cpf-contributions-to-pay
Pensions/Benefits:
Retirement account funds are primarily used to purchase an annuity under the CPF LIFE (Lifelong Income for the Elderly) scheme, which provides monthly payments for life starting at retirement age (usually 65). Alternatively, members could, in the past, purchase annuities from approved private insurers, but since 2018, CPF LIFE has become the standard and mandatory scheme for most.
CPF LIFE is mandatory for those who reach age 55 from 2013 onwards and have at least the Basic Retirement Sum (BRS) in their retirement account upon reaching the pay-in age (65 or older, depending on the plan chosen). Those with less than the BRS can participate in CPF LIFE with an adjusted plan or receive smaller monthly payments directly from their retirement account, but they are not excluded from the scheme.
Withdrawals: They can withdraw any amount exceeding the Full Retirement Sum (FRS) or SGD 5,000 (whichever is greater). Additionally, at age 55, members can withdraw up to the Basic Retirement Sum (BRS) if they pledge their housing to guarantee future payments.
State Guarantee: The government provides a means-tested non-contributory pension (Silver Support Scheme) for all 65-year-olds with total CPF contributions up to an indicative threshold of money regulated by secondary law (at age 55) and a monthly per capita household income of up to certain level determined by regulation. Self-employed individuals must have an average annual net trading income up to a certain threshold defined by regulation, between ages 45 and 54. They must live in public housing with up to five bedrooms and must not own or be married to someone who owns a property with more than five bedrooms.
(Last updated: December 2024)
Law: The law that created the Labor Market Supplementary Pension Fund (Arbejdsmarkedets Tillægspension, ATP)
Date enacted: 1964 (ATP)
Type of System: Multipillar system, comprising:
The folkepension is a PAYGO system funded by the general budget (via general taxes) and the central government reimburses the municipalities, which pay pensions.
The official retirement age is currently 65 for men and women, but it will progressively increase to 67, by six months per year, from 2024 to 2027.
Danish residents qualify with a minimum of three years of residence, from age 15 to 65/67, and non-Danish citizens with a minimum of 10 years (including the last five years prior to retirement).
Started operating: 1964 (ATP)
Managing agencies: The ATP is government-managed.
Supervising agency: The Ministry of Labor (http://bm.dk/) provides general oversight and manages the universal program throughout the country. The Danish Financial Supervisory Agency (https://www.finanstilsynet.dk) supervises the universal program. The Labor Market Supplementary Pensions Institute (https://www.atp.dk), and independent institution governed by a bipartite board of directors, manages and collect contributions for the Social Security program.
Enrolment:
The ATP is open to all employees between 16 and 67 years of age, as long as they work more than 9 hours a week. Enrolment in this system is voluntary for self-employed workers.
Contributions/Assignments: The ATP is funded by lump sum contributions (negotiated between the relevant Social Security players as part of collective agreements) paid by employers (2/3 of the total) and employees (1/3).
The right to a pension in this ATP is based on “what you pay is what you obtain.” Basically, a generation finances its own rights and the system does not consider intergenerational transfers. Pension rights are nominal rights guaranteed for life and paid after the official retirement age.
Contributions depend on the number of hours worked. Thus, for example, the annual contribution for a full-time employee working 37 hours per week in 2017 was DKK 3.408 (less than 1% of the average national salary). In this case, the employer finances up to DKK 2.272 (2/3) per employee per year, and the employee finances the remaining DKK 1.136 (1/3). The annual contribution of self-employed workers is also DKK 3.408.
Pensions/Benefits: The ATP has the same age requirements as the Folkepension, so members can access a pension at age 65 (67 as of 2027), and there is no minimum qualifying period.
Pension benefits depend on how many years of contributions were paid and are a maximum of 41% of the basic state pension. The pension is paid as a lump sum if the balance is less than an established amount, or via a life annuity, subject to taxation.
If a person defers the ATP pension, the pension amount increases by 5% per year of deferment between ages 65 and 75. Another important point is that ATP pensions are adjusted in accordance with the financial resources of the system.
As of 2010, employers had to pay the ATP contributions of employees, even if the beneficiary postponed retirement or is already receiving a pension. Prior to 2010, contributions were not mandatory after the official retirement age.
Deferment guarantees a much higher ATP pension, since the estimated increase percentages range from 8% for a deferment of 1 year, to 130% for a deferment of 10 years.
The ATP plays an important social role, which is not covered by private occupational schemes, due to its labor-related nature. In fact, the contributions of individuals on maternity leave or the beneficiaries of unemployment insurance, to the second occupational pillar, are suspended. To compensate for this, the ATP contribution during maternity leave or unemployment insurance is doubled.
Maternity and paternity benefits are granted for up to a total of 52 weeks. During that time, beneficiaries pay 1/3 of the contribution, and 2/3 is paid by the municipality. Unemployed individuals taking care of children after the maternity period usually switch to another system that also requires an ATP contribution.
While an individual is unemployed, an unemployment insurance fund (or the municipality, if the recipient has no insurance) pays the ATP contribution. The government pays 2/3 of contributions when the unemployment insurance is exhausted and the individual is still unemployed.
State Guarantee: All Danish residents are entitled to receive a general pension (social or folkepension) on turning 65 (see point 1 of this description).
(Last updated: December 2024)
Law:
Decree Law 3,500
Note that Law No. 21,735 of March 2025 (see details here: https://www.bcn.cl/leychile/navegar?idNorma=1212060) reformed the pension system, largely changing its structure. The implementation and entry into force of this law is gradual. The description of the Chilean system in this section refers to the system in force prior to the implementation of this reform.
Approval Date:
November 4, 1980
System Type:
Multi-pillar system consisting of a non-contributory public system (first pillar/solidarity pillar) and a mandatory contributory private system based on savings and individual capitalization (second pillar), which completely replaced the public pay-as-you-go system. Individuals can also make voluntary contributions (third pillar/voluntary pillar).
Start of Operations:
May 1981
Administrative Entities:
Pension Fund Administrators (AFPs) are responsible for collecting and managing funds corresponding to pension contributions.
Supervisory Entity:
AFPs are supervised by the Superintendency of Pensions; the Superintendency is a specialized technical entity dependent on the Ministry of Labor and Social Security. This entity is also responsible for interpreting the law and defining complementary regulations (www.spensiones.cl).
Enrollment:
All new dependent workers who entered the labor market for the first time on or after January 1, 1983, are required to join the system. For self-employed workers who issue fee receipts, the 2008 Pension Reform established a gradual increase in the contribution percentage, in order to equalize rights and obligations between dependent and self-employed workers. According to the current law for self-employed workers, all those who issue fee receipts or who receive receipts for services from third parties must join the system through a gradual process that began in January 2012 and ended in January 2018 (with mandatory contributions beginning in 2018, which will materialize with the 2019 Income Tax Operation). This process will integrate all these workers into the system. Since April 2019 (Law 21,133), self-employed workers who issue honoraria slips are required to contribute to the social security system (*), with a percentage of the withholding allocated to pension contributions (this percentage increases gradually; it will not be until 2028 that contributions will be 10%, considering a taxable income equivalent to 80% of total gross income).
Please note that social security contributions for self-employed workers are based on priority, with the last remaining contribution for the old-age pension. Thus, the Disability and Survivors’ Insurance (SIS) premium is paid first, followed by the following:
– Social security against occupational accidents
– Child support insurance
– Health contributions (7% for state “FONASA”; or private entity “ISAPRE”)
– Pension contributions (10%) (*)
In addition, workers enrolled in the pay-as-you-go system were given the option to switch to the new system. Finally, since 2009, new members must join the AFP that wins a bid and remain there for a maximum of 24 months (old members can freely transfer to another administrator).
Contributions:
Contributions correspond to a percentage of the member’s salary or income, with a taxable limit that is updated annually. The total contribution rate is 12.73% (of this percentage, 10 points go to the individual capitalization account, plus an additional contribution based on the salary determined by each administrator, used to fund it, including the SIS premium). Employers must finance the portion of the additional contribution used to fund the insurance, and workers must finance the commission on their salaries charged by the AFPs. (**)
Pension Options:
This system provides pension benefits for old age (at legal or early retirement age), disability, and survivors. The legal retirement age is 60 for women and 65 for men. There are four pension options: Programmed Retirement; Life Annuity; Temporary Income with Deferred Life Annuity; and Programmed Retirement with Immediate Life Annuity. Members can freely choose between them, but the RV must be equal to or greater than the basic old-age solidarity pension. Furthermore, the deferred RV cannot be less than 50% of the first Temporary Income payment, nor greater than 100%. Under the various options, it is possible to freely withdraw surpluses after retirement, for the portion that exceeds the balance necessary to fund a reference pension.
State Guarantee:
The State guarantees a minimum pension (PMGE) to those with 20 years of contributions and to those who cannot fund the minimum pension with the amount accumulated in their individual capitalization account. Members who opted to join the new system at the time are entitled to receive the Recognition Bonus, a monetary instrument issued by the State, representing the contribution periods recorded under the old pay-as-you-go pension system. To qualify for this bonus, the affiliate must have contributed to the old pension system for at least 12 months between November 1975 and October 1980.
The State also provides a solidarity or non-contributory pension (the Universal Guaranteed Pension, PGU, which replaced the old Solidarity Pillar benefits in 2008) for those aged 65 or older, who are part of the 90% most vulnerable population (according to the Social Household Registry), and who have resided in Chile for 20 years. (**)
Note (*): The total contribution rate to the pension system will gradually increase from 2025 until 2033, when it will be 18.5% of the worker’s taxable income (plus the AFP management fee), pursuant to Law No. 21,735 of 2025. The increase in the contribution rate will be fully financed by the employer. More details here: https://www.chileatiende.gob.cl/fichas/130987-aportes-del-empleador-al-sistema-de-pensiones
Note (**): The solidarity pension system replaced the State Guaranteed Minimum Pension; individuals who, as of July 1, 2008, received the PMGE for old-age or disability benefits will continue to receive this guaranteed pension. However, they may opt for the solidarity pension system at any time, in accordance with the applicable regulations. This option may be exercised only once.
(Last updated: December 2024)
Law:
Occupational Pension Fund / Pension Guarantee Act [Superannuation Guarantee (Administration) Act, 1992].
Date Passed:
January 1992.
Type of System:
Multipillar system comprising a first noncontributory pillar that offers a basic universal pension denominated “Age Pension” (funded with general taxes; for low-income individuals over 65); a second mandatory, contributory occupational pillar (Superannuation Guarantee, SG), in which employers make contributions on behalf of their employees; and a third voluntary pension savings pillar (Retirement Saving Accounts, RSA, established in 1997, offered by banks and life insurance companies).
Startup Date:
July 1, 1992
Managing Agencies:
The law requires second-pillar pension funds contracted with life insurance companies and banks [Private sector business funds; Small APRA Funds (SAFs); Retail pension funds (Retail Funds)], to be managed by trusts. The exception to the above are the public sector corporate funds. Both individuals and bodies corporate can act as trustees, and there must be a Board of Trustees. The trustees are responsible for the prudent management, transactions and investments of the pension fund.
Supervising Agency:
Unified oversight by the Australian Prudential Regulation Authority (APRA, www.apra.gov.au).
Membership:
Enrollment in the second occupational pillar is mandatory for all dependent workers.
Contributions/Assignments:
In the second mandatory pillar, companies must contribute 11.5% of their employees’ wages (this contribution was gradually increasing by 0.5 percentage points per year since 2021, and will reach 12% by July 1, 2026), and they may also make voluntary contributions.
Pensions/Benefits:
Workers can access their accumulated funds through a lump sum withdrawal or through a Life Annuity after they turn 60.
State guarantee
Low-income individuals over the age of 65 are guaranteed a universal non-contributory pension (“Age Pension”).
(Last updated: December 2024)
Law:
Decree Law 25,897. On September 24, 2024, the pension reform (Law No. 32123) was approved and later regulated on September 5, 2025 (Supreme Decree No. 189-2025-EF), pending operational procedures by the regulator. The objective is to largely change the structure of the system, with gradual implementation and entry into force. The description of the Peruvian system in this section refers to the current changes in effect.
Approval Date: December 6, 1992.
System Type:
Multi-pillar scheme consisting of a non-contributory public system (first pillar, Pensión 65, not universal); a mandatory mixed contributory system (second pillar) in which the Pay-As-You-Go Regime (public) competes with the Individual Savings and Capitalization Regime (private). Individuals may also make voluntary contributions (third pillar).
Start of Operations:
June 1993.
Managing Entities:
In the private system, Pension Funds are managed by AFPs.
The pay-as-you-go regime is managed by the Office of Pension Standardization (ONP).
Supervisory Entity:
Private System: Superintendency of Banking, Insurance and AFP (www.sbs.gob.pe).
Affiliation:
Affiliation to a Pension System is mandatory for all dependent workers, who must choose between the private or public system.
Contributions / Payments:
The average contribution of workers in the private system under the “Remuneration-Based Commission” scheme, as of September 31, 2025, is 12.95% of their taxable income, of which 10% goes to the individual capitalization account and the rest is distributed between the Insurance Company (disability and survivorship insurance financing) (1.37%) and the AFP (1.58%).
The average contribution of workers under the “Mixed or Balance-Based Commission” scheme, which includes 82.0% of affiliates, is 11.37%, of which 10% goes to the individual capitalization account and the rest to the Insurance Company (1.37%).
The contribution to the pay-as-you-go regime is 13%.
Contributions made to the pension systems are not deductible for income tax purposes.
Benefits / Pensions:
The private system provides retirement, disability, and survivorship pensions. There are seven pension modalities:
(i) Programmed Withdrawal (PW);
(ii) Family Life Annuity (FLA);
(iii) Adjusted Stepwise Life Annuity (ASLA);
(iv) Temporary Income with Deferred Life Annuity (TIDLA);
(v) Mixed Annuity;
(vi) Bi-Currency Annuity; and
(vii) Combined Annuity.
In PW, the retiree assumes the risks of profitability and longevity but retains ownership of the funds. In LA, the retiree transfers profitability and longevity risks to the insurance company but loses ownership of the funds. In FLA, the retiree contracts with an AFP a life annuity until death, transferring the balance of their account. In ASLA, the retiree acquires a FLA with two pension periods in soles or dollars, with annual adjustment at a fixed rate, where the second period may be equivalent to 50% or 75% of the first. TIDLA is a combination of LA and PW. The DLA may not be less than 50% of the first monthly payment of the TI nor greater than 100%. Retirees may receive benefits in indexed soles, in dollars, or in both currencies under FLA. Under the Combined Annuity, two pensions are contracted simultaneously: one LA in soles and one PW (only available if the LA is equal to the minimum pension guaranteed by the State). Under the Mixed Annuity, two simultaneous pensions are contracted: an LA in dollars with an insurance company and a PW in soles (only available if the LA is equal to the minimum pension guaranteed by the State). Under the Bi-Currency Annuity, two life annuities are contracted simultaneously, one in soles and the other in dollars.
Note: On June 29, 2016, a law was enacted specifying that, at any point during affiliation, members may use up to 25% of their accumulated funds to: (a) pay the down payment for the purchase of a first home, provided the mortgage loan is granted by a financial institution; or (b) amortize a mortgage loan used to purchase a first home, granted by a financial institution. Additionally, the law states that:
(i) starting at age 65, members may choose between receiving their pension under any withdrawal modality or requesting the AFP to deliver up to 95.5% of the total fund in their individual account (in installments determined by the member);
(ii) members who exercise the withdrawal option will not be entitled to any state guarantee benefits;
(iii) the remaining 4.5% of the Individual Account must be withheld and transferred directly by the AFP to EsSalud (for healthcare coverage);
(iv) the above applies to members under the Special Early Retirement Regime and to retirees under Programmed Withdrawal.
State Guarantee:
Since 2002, the State has guaranteed a minimum pension for affiliates who migrated from the public to the private system. Regarding the Recognition Bond, it has an allocated budget in the Republic’s Budget. Additionally, the State pays a non-contributory pension (the “Pensión 65” program) of PEN 175 per month (approx. USD 50), starting at age 65, to those in extreme poverty who do not receive a pension from any pension system.
(Last update: September 2025)
Law: Law 100 of 1993 (amended by Law 797 of 2003, published on January 29, 2003). Law 2381 of 2024, enacted on July 16, 2024, introduces a four-pillar system (Solidarity, Semi-contributory, Contributory, and Voluntary), but its implementation, largely scheduled for July 1, 2025, is suspended by the Constitutional Court due to procedural irregularities in its legislative process. The Congress had the opportunity to address these irregularities, and the Court is currently evaluating whether they were properly resolved. It is also reviewing substantive issues, which could lead to its reversal or adjustment. Until the Court’s ruling, the system operates under Law 100 of 1993, as amended by Law 797 of 2003. Articles 12 and 76 of Law 2381 have been in effect since July 16, 2024.
Approval Date: December 23, 1993 (Law 100). Amended by Law 797 of 2003 (January 29, 2003). Law 2381 of 2024 approved on July 16, 2024, pending constitutional review.
System Type: Current multi-pillar scheme, consisting of:
Note: Law 2381 of 2024 proposes a four-pillar system, but its implementation is under evaluation pending the Constitutional Court’s decision.
Start of Operations: 1994, with the entry into force of Law 100 of 1993. AFPs initiated the RAIS, while the RPM continued under the Social Security Institute (ISS), replaced by Colpensiones in 2012.
Administrative Entities:
Note: Since July 16, 2024, new affiliates not covered by the transitional regime must contribute to Colpensiones up to 2.3 SMMLV (Law 2381, Article 12). AFPs (under the new name ACCAI) would manage the Complementary Individual Savings Component for higher contributions if the law proceeds.
Supervisory Entity: Financial Superintendence of Colombia (www.superfinanciera.gov.co), with complementary oversight by the Pension and Parafiscal Management Unit (UGPP).
Affiliation: Workers choose between RPM (Colpensiones) or RAIS (AFP), with the option to switch every 5 years, except if less than 10 years remain until pension age (57 for women, 62 for men). Since July 16, 2024, new affiliates not covered by the transitional regime must contribute to Colpensiones up to 2.3 SMMLV (Law 2381, Article 12). Affiliates with 750 weeks (women) or 900 weeks (men) as of July 16, 2024, may transfer until July 15, 2026 (Law 2381, Article 76).
Contributions:
Note: Since July 16, 2024, new affiliates contribute to Colpensiones up to 2.3 SMMLV (Law 2381, Article 12). FSP contributions are also increased.
Benefits:
Note: Law 2381 of 2024 proposes a solidarity basic income (COP 225,000) and lifetime annuities for 300-1,000 weeks, effective from July 1, 2025, if approved by the Court.
State Guarantee:
Note: Law 2381 of 2024 strengthens the solidarity pillar with a basic income of COP 225,000, pending of judicial approval.
(Last updated: July 2025)
Law: Law 16.713 (Promulgation: 03/09/1995, Publication: 11/09/1995).
Relevant amendments:
System Type: Multi-pillar system, composed of:
Note (*): The Common Pension System (SPC) was introduced by Law 20,130 and is mandatory for new employees starting December 1, 2023, those who were employed as of December 1, 2023, and those who meet the retirement requirements starting January 1, 2043. It combines pay-as-you-go and individual savings pillars with convergence rules until December 31, 2042. From Law 20,130 onward, all pension entities (state and para-state) are included: Banco de Previsión Social (BPS), Pension Fund for University Professionals, Banking Pension Fund, Notarial Social Security Fund, National Directorate of Police Assistance and Social Security, and the Armed Forces Retirement and Pension Service.
Start of Operations: April 1, 1996.
Administrative Entities:
Supervisory Entity: The AFAP Control Division of the Central Bank of Uruguay (BCU; https://www.bcu.gub.uy/) oversees the individual savings system (second and third pillars). The Social Security Regulatory Agency, created by Law 20,130, will assume oversight functions, but until it is fully operational, the BCU retains this responsibility.
AFAP Affiliation: Affiliation is mandatory for:
Workers freely choose their AFAP; if they do not, the BPS automatically assigns one.
Revocation options (Law 19.162):
Contributions: The contribution rate for workers is 15% of computable earnings (**), distributed between pay-as-you-go and capitalization according to three salary levels (level 1, 2 and 3) and the option established in Article 8. The distribution of contributions is as follows (according to Law 20.130, applicable to the SPC; or according to Law 16.713, applicable to the mixed system):
10% of the computable earnings up to the taxable limit for level 2 are allocated to the pay-as-you-go system, while 5% is allocated to the individual capitalization system. Above the previous limit of the level 2 and up to the taxable limit for level 3, 15% of the computable earnings are allocated to the individual capitalization system. This includes workers who entered the labor market as of December 1, 2023 in one of the pension entities.
7.5% of the computable earnings up to the taxable limit for level 1 are allocated to the pay-as-you-go system, while 7.5% is allocated to the individual capitalization system. Above the previous limit for level 1 and up to the taxable limit for level 2, they contribute 15% to the pay-as-you-go system. Above this income level and up to the global taxable maximum (taxable limit for level 3), 15% of the computable earnings are allocated to the individual capitalization system.
iii) Affiliates under Law 16,713 – no option Article 8
Workers must contribute 15% of their computable earnings up to the taxable limit for level 1 to the pay-as-you-go system, and for the remaining income and up to the taxable limit for level 3, they contribute 15% to the individual capitalization system.
Please consider the following:
Note (**) Computable earnings: This is the amount of nominal salary that is actually taken into account to calculate pension contributions to the BPS and the AFAPs. It does not include certain items of nominal salary that, according to regulations, are exempt from pension contributions, such as non-remunerative items (e.g., travel expenses, expense reimbursements, certain in-kind benefits).
Benefits:
Individual Savings System:
Pay-as-you-go system: Defined benefits based on years of contribution and base salary, adjusted according to the Average Wage Index.
Common Pension System (SPC): Unifies benefit calculations for new members, with replacement rates ranging from 45% (BPS) to 50% (parastatal funds) of base salary, depending on the subsystem.
Survivor’s pension: Regulated by Law 20,130, granted by insurers for deaths while employed or during partial disability benefits, with amounts based on the basic pension salary (minimum equivalent to total disability pension).
Guaranteed retirement minimums:
Individual savings system: There is no guaranteed minimum; the benefit depends on the accumulated balance, age, and sex of the worker at the time of retirement.
Pay-as-you-go system: The BPS guarantees benefits according to legal parameters.
Non-contributory pensions (Pillar 1): The State guarantees an old-age and disability pension for people over 70 years of age or with absolute disability who lack sufficient resources.
Collective insurance: The State guarantees the minimum benefits of survivor’s pensions under the individual savings pillar, covering shortfalls through insurance policies purchased by the AFAPs.
(Last updated: December 2024)
Law: Pension Law No. 065 (December 10, 2010), which replaced Law No. 1,732 of 1996, creating the Comprehensive Pension System (SIP).
Date of Approval: Law No. 1,732 was approved in November 1996. Law No. 065 was approved in December 2010.
Type of System: Multi-pillar system composed of:
Start of Operations: 1997 (start of the individual capitalization system under Law No. 1,732). The Comprehensive Pension System (SIP) began its gradual implementation following the approval of Law No. 065 in 2010, with the full transition to state administration completed in May 2023.
Administrative Entities: As of May 12, 2023, the Public Manager of Long-Term Social Security (GSS), under the Ministry of Economy and Public Finance, assumed full administration of the pension funds, after completing the migration of contribution information recorded in the private Pension Fund Administrators (AFPs). The AFPs ceased operations on May 12, 2023, and all new contributors are enrolled in the state system managed by the GSS.
Supervisory Entity: Pension and Insurance Supervision and Control Authority (APS) (www.aps.gob.bo).
Affiliation:
Contributions:
Dependent workers: Total contribution of 12.71% of salary, broken down as follows:
Self-employed workers: Total contribution of 14.42% of salary, broken down as follows:
Benefits: The retirement pension is calculated based on the accumulated individual fund, which is used to purchase:
State Guarantee: There is no minimum pension guaranteed by the State. However, the Renta Dignidad (Universal Old Age Income) is granted:
(Last updated: December 2024)
Law: Urban Pension System Law (1996). Supplemented by subsequent regulations, such as those establishing the Rural and Urban Residents’ Social Pension in 2009 and the Enterprise Annuities in 2004, as well as the framework for the third pillar voluntary private pension program in 2022.
Date of Enactment: 1996 (Urban Pension System Law). The third pillar was announced in April 2022 and launched nationwide on November 25, 2022, following a pilot program initiated in September 2021.
System Type: Multi-pillar scheme composed of:
Start of Operations:
Managing Entities:
Supervisory Body: National Financial Regulatory Administration (https://www.nfra.gov.cn), which replaced the former China Banking and Insurance Regulatory Commission (CBIRC) in May 2023.
Affiliation:
Contributions:
Second pillar:
Third Pillar:
Benefits:
First Pillar: Basic social pension (Rural and Urban Residents’ Social Pension) for residents.
Second Pillar: Workers can access accumulated funds through:
Third Pillar:
State Guarantee:
The state guarantees a universal non-contributory pension (Rural and Urban Residents’ Social Pension) of at least CNY 55 (USD 7.6) per month for rural and urban residents not enrolled in the contributory system. This amount may increase with age in some regions.
(Last updated: December 2024)
Laws:
Approval Dates:
System Type: Multi-pillar scheme consisting of:
Start of Operations:
Managing Entities:
Supervisory Entity: National Commission for the Retirement Savings System (CONSAR) (https://www.gob.mx/consar), which regulates AFORES and ensures compliance with pension system laws.
Affiliation:
Contributions:
Example for 2024: For a worker with a salary of 5.41 times the UMA, the total contribution is:
The disability and survivorship insurance (2.5%) is managed by IMSS, with contributions of:
Total pension system contributions for a worker with a salary of 5.41 times the UMA (2024, with progressive employer increase):
Benefits:
(i) Lifetime Annuity: A lifelong pension purchased from an insurance company.
(ii) Programmed Withdrawal: Periodic withdrawals calculated based on life expectancy and expected returns, managed by the AFORE.
State Guarantee:
(Last updated: December 2024)
Laws:
System Type: Multi-pillar system consisting of a universal non-contributory pension (pillar 0), a minimum pension guarantee (first pillar), and a mandatory private contributory system based on savings and individual capitalization (second pillar). Individuals can also make voluntary contributions (third pillar).
Start of Operations: 1998
Administrative Entities: Pension Fund Management Institutions (AFP)
Supervisory Entity: Superintendency of the Financial System (http://www.ssf.gob.sv).
Enrollment:
Enrollment is mandatory for all workers entering the workforce for the first time and for all workers under 36 years of age who were enrolled in the Public Pension System at the start of operations (April 1998). Workers who, on that same date, were over 36 years of age, but under 50 for women and 55 for men, had the option of enrolling in the system or remaining in the public pension system.
Contributions:
Contributions to this system are 16% of the worker’s salary, of which 7.25% is the responsibility of the worker and 8.75% is the responsibility of the employer. The worker’s contribution goes entirely to the worker’s Individual Pension Savings Account (CIAP). Of the 8.75% contributed by the employer, part of the contribution is used to pay the AFP commission (1%). Another portion (6%) goes to the so-called Solidarity Guarantee Account (CGS); and a final portion (1.75%) goes to the worker’s CIAP (Spanish acronym). Thus, the total contribution to the CIAP is: 7.25% (worker) + 1.75% (employer) = 9.00%.
Benefits: The benefits granted to the system correspond to old-age, common disability, and survivor’s pensions for common risks. There are three pension options: Programmed Withdrawal; Life Annuity; and Programmed Withdrawal with Deferred Life Annuity.
State Guarantee:
The Solidarity Guarantee Account (CGS) guarantees a minimum pension to all members who meet the requirements established by law. It also guarantees the financing of the pensions of members who receive pensions above the minimum, in the event that their individual accounts are exhausted. The CGS also finances Transfer Certificates, which recognize the rights acquired by members in the Public Pension System, prior to their transfer to the Individual Savings System.
In addition, the State pays a Universal Basic Pension (non-contributory pension) of USD 50 per month for adults over 70 years of age residing in the 100 municipalities with the highest poverty rates in the country. This benefit is funded with fiscal resources.
(Last updated: December 2024)
Law:
Mandatory Pensions and Pension Funds Law, pursuant to the LXXXII agreement that regulates the establishment of mandatory private pension fund systems.
Date Passed:
July 1997
Type of System:
Multipillar system comprising a first state-managed PAYGO pillar; a second privately managed, mandatory, fully financed defined-contribution pillar, with no minimum pension guarantees, and a third privately managed, voluntary, fully financed defined-contribution pillar, with no minimum pension guarantees.
Startup Date:
January 1998
Managing Agencies:
Private Pension Fund Managers
Supervising Agency:
Hungarian Central Bank (https://www.mnb.hu/web/en)
Enrollment:
Enrollment in the second individual accounts pillar has been voluntary since 2009. A law passed in 2010 reassigned the second pillar contributions to the first pillar, and automatically transferred the balances of the individual accounts to the PAYGO program (only if the member opted out of the individually funded second pillar). The balances of the individuals who decided to remain in the first individually funded pillar, and those individuals entering the labor market who voluntary decide to enroll in that pillar, are currently managed in individual accounts.
Contributions/Assignments:
The overall contribution rate to the pension system is currently 35.5%, of which the employer contributes 17.5% to the first pillar Pension Fund, while the worker contributes 18.5% (10% for pension, 7% for health insurance and 1.5% for unemployment insurance).
Pensions/Benefits:
The second individually funded pillar allows members of the pension funds who have contributed for less than 15 years to withdraw their funds in a lump sum at retirement age (early retirement is not allowed). Members can purchase a life annuity if they contributed for more than 15 years.
(Last updated: December 2022)
Law: Law on Pensions in Kazakhstan
Date of Approval: June 1997
Type of System: Kazakhstan has a multi-pillar pension system consisting of:
The “zero” and “first” pillars are financed from the state budget and operated by the Ministry of Labor and Social Security of Population of the Republic of Kazakhstan. The “second” and “third” pillars represent private savings of members and are administrated by “Unified Accumulative Pension Fund” JSC (UAPF). UAPF is the only pension fund in the country and covers 100% of the entire working population.
Start of Operations: The multi-pillar system began operating in January 1998.
Administrative Entities: In June 2013, the 11 existing pension funds (10 private funds and the state-owned Pension Fund) were merged into the state-run Unified Accumulation Pension Fund (UAPF), which manages all individual accounts of members.
Supervisory Entity: The fully-funded pension system is supervised by the National Bank of Kazakhstan (www.nationalbank.kz) and the Agency of the Republic of Kazakhstan for Regulation and Development of the Financial Market (https://www.gov.kz/memleket/entities/ardfm?lang=en), which regulate and supervise the operation of the pension system within their respective areas of competence.
Enrollment: Enrollment in the individually fully-funded pension system is mandatory for all workers who entered the labor market on or after January 1, 1998. Individuals who had at least six months of contributions under the old pay-as-you-go (contributory solidarity) system retain the right to receive benefits from that previous system.
Contributions:
Benefits:
Second pillar benefits (individual capitalization) are provided primarily through a life annuity in the event of retirement, disability, or death, allowing beneficiaries to choose their life insurance company. For those who contributed for at least six months before 1998, there is a solidarity pension proportional to the years of contributions under the previous system.
State Guarantee:
(Last Updated: December 2024)
Laws:
System Type: Tajikistan has a multi-pillar system composed of:
Coverage: Mandatory for all legally resident employees and self-employed workers, including foreign residents. Social assistance covers only needy Tajik citizens.
Contributions:
Managing Entity: State Agency for Social Protection and Pensions (http://nafaka.tj/).
Supervisory Entity: Ministry of Labor, Migration, and Employment of the Population (http://www.mehnat.tj/).
Benefits:
Additional Benefits:
(Last updated: December 2024)
Law: Pensions Act
Date of Approval: June 1998
Type of System: Multi-pillar scheme consisting of:
Start of Operations: January 1999
Administrating Entities:
Supervisory Entity:
Affiliation:
Contributions:
Thus, total contributions to the pension system are 18.5% of gross salary.
Benefits: Benefits (full or partial) from the notional account and PPM schemes can be claimed from age 62 (minimum age adjusted from 2023) (***). In the case of the PPM, spouses can opt for a joint annuity, and participants can purchase a survivor benefit during the accumulation phase. Additionally, workers can combine partial retirement with work, allowing for a gradual transition to retirement.
State Guarantee: A minimum pension is guaranteed for those over 65 who do not reach a minimum income level with their contributions. The state covers the difference to ensure a basic income, financed through taxes.
(*) PPM investment funds are subject to strict regulations to ensure sustainability and minimize risks, with regular audits by the Swedish National Financial Supervisory Authority.
(**) The Swedish Pensions Agency has implemented improvements in information transparency for members, including digital tools for pension projections (updated 2024).
(***) Beginning in 2023, the minimum retirement age was gradually increased from 61 to 62, with future adjustments projected based on life expectancy.
(Last updated: December 31, 2024)
The Panamanian pension system, primarily managed by the Social Security Fund (CSS) and regulated by Law 51 of 2005, with reforms introduced by Law 462 of March 2025, adopts a multi-pillar structure combining contributory and non-contributory components. It includes the Public Servants’ Pension Savings and Capitalization System (SIACAP), established by Law 8 of 1997, and the Unified Capitalization System with Solidarity Guarantee (SUCGS), created as the new contributory system under the 2025 reform.
Below is a stylized profile of the Panamanian pension system, highlighting its fundamental pillars:
Last Updated: December 2024
Law: Law 7,983 or Worker Protection Law (LPT)
Approval Date: February 2000
System Type: Multi-pillar system consisting of:
Managing Entities: The Disability, Old Age, and Death System is administered by the Costa Rican Social Security Fund (CCSS). The funds for the Mandatory Complementary Pension System, savings, and individual capitalization, are managed by the Complementary Pension Operators (OPC).
Supervisory Entity: Superintendency of Pensions (www.supen.fi.cr), an autonomous body attached to the Central Bank of Costa Rica.
Enrollment: Enrollment to the second pillar is mandatory for all dependent workers (public and private sectors). Upon beginning employment, the worker must choose a OPC to manage their pension fund (ROP) and labor capitalization fund (FCL). If the account is not managed, the account is managed by the operator of the Banco Popular y de Desarrollo Comunal (People’s and Community Development Bank), and the Capitalization Fund by the operator of the Costa Rican Social Security Fund (CSSS). If the worker is affiliated with the National Teachers’ Pension System, both accounts will be managed by the Teachers’ Pension System operator.
Every worker has the right to change their OPC at no cost, but to exercise this right, at least one month must have passed since the last time they changed from one operator to another. They can also change operators, even if they have not completed one month of service, when there is an increase in the commission charged by the operator or if a merger or acquisition occurs between the operator and another authorized entity.
Contributions: The contribution rate for the Mandatory System for complementary, savings, and individual capitalization pensions is 4.25% (the percentage that goes entirely to the affiliate’s account) of the worker’s taxable salary. Of this percentage, 1% is contributed by the employee and 3.25% by the employer (through a burden redistribution system implemented in 2000). Furthermore, as of January 2011, a regulatory change established a new fee-charging scheme based on the balance (% of the managed fund), with a cap of 0.35% of the fund as of 2020.
Additionally, the CCSS Disability, Old Age, and Death Regime (PAYG regime) is funded with 5.42% of the salary from the employer, 4.17% from the employee, and 1.57% from the State, totaling 11.16%.
Benefits: Benefits can be received as a life annuity from an insurance company, or through a permanent annuity or scheduled withdrawal (or both). With a permanent annuity, the pensioner periodically receives the interest generated by the fund, and the principal remains with the entity, which distributes it to the designated beneficiaries upon the pensioner’s death. With a scheduled withdrawal, a periodic sum is received from the individual account, over a period consistent with life expectancy at retirement. If the right to a pension is acquired during the first 10 years of the Worker Protection Law, members may withdraw the entire fund if they wish.
State Guarantee: The OPCs must be responsible for the full contributions of workers and contributors with their assets. If these are insufficient to cover the loss, the State compensates the missing contributions and proceeds to liquidate the operator. The State is also responsible for administering the affiliation and transfer system through the CCSS, and for regulating and supervising the system through the National Social Security Council, the National Council for the Supervision of the Financial System, the Superintendency of Pensions, and the CCSS. A Non-Contributory Pension System has also existed since 1974 for people in need of immediate financial support who do not qualify for any of the existing contributory systems. This system is administered by the CCSS.
(Last updated: December 2024)
Law: Mandatory Provident Fund Schemes Ordinance (MPF)
Date of Enactment: 1995
Type of System: Multi-pillar system, composed of:
Start of Operations: December 2000
Administrating Entities: MPF schemes are administered by approved trustees, which include banks, insurance companies, and asset managers. These entities must be registered with the Mandatory Provident Fund Schemes Authority (MPFA).
Supervisory Entity: Mandatory Provident Fund Authority (MPFA; www.mpfa.org.hk). The MPFA operates in collaboration with the Hong Kong Monetary Authority, the Securities and Futures Commission, and the Insurance Authority to supervise private pension system intermediaries. Affiliation: It is mandatory for workers aged 18 to 65, including full-time and part-time employees (hired for more than 60 days). Workers in the food industry or construction, hired daily for less than 60 days, must also enroll in an MPF scheme. The exceptions are workers with monthly incomes below HKD 7,100 (approx. USD 911) who are not required to contribute, but may choose to do so [this minimum income threshold may be adjusted periodically by the regulator based on legislative and economic reviews (last adjusted in June 2014)].
Contributions:
Benefits: As a defined-contribution system, the MPF benefits consist of the accumulated sum of the worker and employer contributions, plus investment returns. Benefits are paid as a lump sum at retirement, with no requirement to convert them into a temporary or life annuity. In the event of disability before retirement age, the total amount accumulated up to that point is paid. The retirement age is 65 for men and women; early retirement is possible from age 60.
State Guarantee: State guarantees provide coverage for benefits for normal old age (65-69 years), advanced old age (70 years or older), and disability, provided through the means-tested assistance scheme for people with financial need. (Comprehensive Social Assistance, CSSA), such as the Social Security Allowance (SSA). The SSA includes the Old Age Allowance for those over 70 and the Disability Allowance, both of which are universal or subject to minimum requirements defined by law.
(Last updated: December 2024)
Law: State Funded Pension Law.
Date of Approval: February 2000.
Type of System: Multi-pillar scheme composed of:
Start of Operations: July 2001.
Administrative Entities: Authorized private pension funds.
Supervisory Entity: State Social Insurance Agency (VSAA, https://www.vsaa.gov.lv/en).
Enrollment:
Contributions:
Benefits: At statutory retirement age, members may:
State Guarantee: There is a guaranteed minimum pension for those who reach retirement age (63 for men and women, progressively adjusted according to current legislation) and have an insufficient contribution history for an adequate contributory pension.
(Last Updated: December 2024).
Law: Mandatory and Supplementary Pension Insurance Act
Date of Approval: Year 2000
Type of System: The Bulgarian pension system is a multi-pillar scheme that includes:
Start of Operations: Year 2002 (specifically for Pillar II, which includes the Universal Pension Funds (UPF) and Occupational Pension Funds (OPF)).
Administering Entities:
Supervisory Authority: Financial Supervision Commission (FSC, www.fsc.bg).
Enrollment:
• Universal Pension Fund (UPF, Pillar II): Mandatory for workers born after December 31, 1959. New labor market entrants must contribute to Pillar I unless they opt for a private fund (UPF) within the first year of employment. If they do not choose, their contributions remain in Pillar I, and they cannot participate in Pillar II later. UPF contributors can opt, within a specific period (generally 5 years before retirement), to transfer their accumulated funds to the NSSI’s pay-as-you-go fund, with the possibility of reversing this decision and returning management to a PPC.
Contributions:
Benefits:
• Universal Pension Fund (UPF, Pillar II): Provides a lifetime retirement pension, one-time or deferred payments for permanent disability (degree above 50%), and payments to heirs (spouse, ascendants, descendants) of a deceased insured person, as a lump sum or deferred amounts.
State Guarantees:
Both guarantees are financed by the state budget and the NSSI’s stability fund.
(Last Update: December 2024)
Law: Law on Compulsory and Voluntary Pension Funds, enacted in 1999 and amended in subsequent years.
System Type: Multi-pillar scheme consisting of:
Start of Operations: The second pillar, based on individual capitalization accounts, began operating in January 2002, complementing the public contributory pay-as-you-go system.
Administrative Entities: Pension Fund Administrators (AFPs), known in Croatia as “Pension Insurance Companies” (PICs).
Supervisory Entity: Croatian Financial Services Supervisory Agency (HANFA) (www.hanfa.hr), responsible for overseeing pension funds and financial services.
Affiliation:
Contributions:
Note: Initially, 10% of contributions went to individual accounts, but this was reduced to 5% due to fiscal constraints.
Benefits:
State Guarantee: The state guarantees minimum and maximum pensions, as well as a non-contributory pension.
(Last updated: December 2024)
Law: Pension Insurance Act, enacted in 1998 for the voluntary third pillar and in 2002 for the mandatory second pillar of individual accounts.
System Type: Multi-pillar scheme consisting of:
Start of Operations: The second pillar of individual accounts began operating in 2002.
Administrative Entities: Specialized Pension Management Companies.
Supervisory Entity: Estonian Financial Supervision Authority (Finantsinspektsioon, www.fi.ee).
Affiliation:
Contributions: In the second pillar (mixed contributory system):
Benefits: Benefits from the second pillar (individual savings portion) are paid as lifelong annuities purchased with the capital accumulated in the individual account.
State Guarantee: In the first pillar, the non-contributory pension is granted to Estonian residents who have reached the retirement age (64 years in 2019, increasing by 3 months per year until reaching 65 years in 2026) and have resided in the country for at least 5 consecutive years before the application but do not meet the 15-year contribution requirement. The full old-age pension is paid with at least 15 years of contributions.
(Last updated: December 2024)
Law: Pension Funds of Kosovo (Law No. 04/L-101), amending UNMIK Regulation 2001/35 and Regulation 2005/20.
Approval Date: December 2001 (UNMIK Regulation 2001/35); amended by Law No. 04/L-101 in 2012.
System Type: Multi-pillar structure consisting of:
Operational Start: Year 2002.
Administrative Entities:
Supervisory Entity: Central Bank of Kosovo (CBK), responsible for unified supervision of the pension system, including licensing and oversight of pension funds. The CBK ensures compliance with investment regulations and monitors financial stability.
Affiliation: Mandatory for all salaried employees and self-employed individuals, including farmers, born after January 1946, who must contribute to the Pillar II mandatory savings scheme. Coverage began in August 2002 for public sector employees, socially and publicly owned enterprises, and large companies, and extended to small and medium enterprises and self-employed individuals in August 2003.
Contributions: Pillar 2 Contribution Rates are: Employees: 5% of gross salary (mandatory); Employers: 5% of gross salary (mandatory). Workers may voluntarily contribute up to an additional 15% of their annual salary, with tax benefits.
Note: KPST is funded through fees on assets under management, consistent with defined-contribution pension funds.
Benefits:
Note: A 2020 amendment allowed a one-time withdrawal of up to 10% of pension savings due to COVID-19, with state reimbursement for withdrawals up to €999.
State Guarantee: The state guarantees a non-contributory pension for all residents aged 65 and older to prevent old-age poverty.
(Last updated: December 2024)
Law: Law 87-01, enacted on May 9, 2001, which establishes the Dominican Social Security System (SDSS), covering three types of insurance: Old Age, Disability, and Survivorship Insurance (pensions), Family Health Insurance, and Occupational Risk Insurance.
Approval Date: May 9, 2001
Start of Operations: 2003
System Type: Multi-pillar scheme primarily consisting of:
(*) Note: The contributory pay-as-you-go system was replaced with the enactment of Law 87-01 in 2001, which created the SDSS. This law marked a significant shift in the pension system, moving from a pay-as-you-go model to one based on individual capitalization accounts (CCI) managed by AFPs. Before Law 87-01, the pension system operated under a contributory pay-as-you-go model, primarily managed by the IDSS, established in 1948. With Law 87-01, the pay-as-you-go system stopped accepting new affiliates and was maintained only for workers who chose to remain in it and for pensioners already receiving benefits under the IDSS. Over time, the pay-as-you-go system became residual, as most workers transitioned to the individual capitalization system, and new labor market entrants were mandatorily enrolled with AFPs.
Administrative Entities: Pension Fund Administrators (AFPs), responsible for managing individual accounts in the contributory regime.
Supervisory Entity: Superintendency of Pensions (SIPEN, www.sipen.gob.do), an autonomous state entity tasked with overseeing compliance with Law 87-01, protecting affiliates’ interests, ensuring the financial solvency of AFPs, and strengthening the SDSS. Additionally, the General Directorate of Retirement and Pensions (DGJP) manages state pensions (contributory and non-contributory).
Affiliation: Mandatory, unique, and permanent:
Contributions: Pension contributions amount to 9.97% of the worker’s gross salary, distributed as follows:
Benefits: The Contributory Regime provides the following benefits:
State Guarantee:
On one hand, a minimum pension guarantee ensures a basic income (equivalent to the lowest private non-sectorized minimum wage) for affiliates of the individual capitalization or transitional pay-as-you-go system who are 65 or older with at least 300 months of contributions (25 years) but whose CCI funds are insufficient to finance the pension. Access is automatic upon applying for the pension through the AFP, without additional procedures. The Social Solidarity Fund (FSS), primarily funded by 0.4% of the worker’s taxable salary (paid by employers), covers the difference to reach the minimum pension. However, Law 87-01 stipulates that the State must provide resources from the Public Treasury if the FSS is insufficient, though in practice, the FSS has been sufficient for the individual capitalization system, while the State contributes more significantly to the transitional pay-as-you-go system.
On the other hand, for affiliates of the subsidized regime, the law establishes a non-contributory pension equivalent to 60% of the public sector minimum wage (Article 65, Law 87-01). However, this subsidized regime has not yet been implemented nationwide. The state-subsidized non-contributory scheme has only partially begun for certain groups (e.g., see 2025 decree: https://wp.conadis.gob.do/wp-content/uploads/2025/04/NUMERO-132-25.pdf).
(Last Update: December 2024)
The Russian pension system consists of three main pillars:
(Last Updated: December 2024)
Law: Social Security Law (1944); Pension Funds (1999); Individually funded accounts (2002).
Date Passed: December 2002
Type of System: Multipillar Scheme comprising a first non-contributory pillar (social assistance); a second contributory pillar in which a PAYGO system and a private individual accounts saving system (voluntary election) are complemented; and a third pillar corresponding to a private voluntary complementary system.
Start-up Date: January 2004 (private individual accounts savings system)
Managing Agencies: The second pillar is managed by Pension Fund Managers or Life Insurance Companies.
The third pillar is managed by the Pension Fund Managers.
Supervisory Agency: Unified supervision by the Central Bank of Lithuania (www.lb.lt).
Membership:
All employees are free to participate in the individually funded system and start saving in private funds, or remain in the PAYGO system (State Social Security Fund). Once workers choose to enroll in the individual accounts program, they cannot opt out.
Contributions:
The workers’ contribution rate to social security (Since January 2021) is 19.5% (8.72% to pensions; 6.98% to health insurance; 1.9% to health insurance and 1.81% to maternity insurance) with an additional voluntary transfer to the individually funded pension funds of 3% (Source: https://www.oecd.org/en/publications/taxing-wages-2025_b3a95829-en/full-report.html and https://leinonen.eu/lt-en/news/salary-taxation-changes-from-2020).
Pensions/Benefits: On retirement, pension fund members must use their accumulated assets to purchase a life annuity provided by a pension fund manager. Both lump sum and programmed withdrawals are possible, only if the amount remaining in the member’s account is sufficient to purchase an annuity equivalent to the basic state-guaranteed pension.
State guarantee:
There is a non-contributory basic pension that is paid subject to means testing, to all those who have turned 64 and 8 months (men; increasing to 65 as of 2026) and 64 years and 4 months (women, increasing to 65 as of 2026). (Source: https://www.etk.fi/en/international-affairs/international-comparisons/retirement-ages/)
(Last updated: December 2024)
Law: Pension Reform Law No. 2 (2014), which replaces Pension Reform Law No. 1 (2004).
Date Passed: June 2004.
Type of System: Contributory system with individual pension savings accounts. Workers can make additional contributions to those made by their employer.
Start-up Date: December 2005.
Managing Agencies: Pension Fund Managers.
Supervising Agency: National Pensions Commission – PENCOM (www.pencom.gov.ng).
Membership: Enrollment in the Pension System is mandatory for civil servants and all private sector employers with 15 or more workers (workers can freely choose a Fund Manager to manage their funds). Exclusions: Judges, diplomats, self-employed workers, military, non-citizens covered by an equivalent program in another country, clergy, private sector employees working in companies with 3 to 14 workers. Workers who were three years from retirement in 2004 were exempt from the enrollment in the new contributory scheme.
Contributions: The new law (2014) has set contribution rates at 10% for employers and 8% for workers (there are no income ceilings for contributing). The Government contributes 1% of the gross wages of public sector workers.
Pensions/Benefits: The private pension system offers the Life Annuity and Programmed Withdrawal pension modes.
State Guarantee: Only two Nigerian states have social pensions. A non-contributory pension of NGN 5,000 (approx. USD 25 per month) was introduced in the State of Ekiti in 2011. A social program was also implemented in the state of Osun in 2012, providing a pension of approximately NGN 10,000 (approx. USD 50) per month, for those who cannot finance a pension.
(Last updated: December 2024)
Law: New Labor Pension Act (2004), whereby employers must contribute 6% of workers’ salaries into individual pension accounts managed by the Labor Insurance Office.
Date Passed: 2004
Type of System: Multipillar system comprising a first public pillar that includes the National Pension Program for those who are not covered by any other program, and the Labor Insurance Program; a second pillar including the Labor Pension Fund, of mandatory individual accounts; and a third voluntary contributions pillar, with tax benefits (Source: https://www.bli.gov.tw/en/0010366.html)
Start-up date: 2005
Managing Agency: Labor Insurance Office (www.blf.gov.tw).
Supervising Agency: Labor Funds Supervisory Committee (https://english.mol.gov.tw/6386/6418/6422/6507/)
Membership: The new system (individual accounts) is mandatory for all new members entering the workforce and workers who changed employers after July 1, 2005. It is voluntary for workers who entered the workforce before 2005. Those who did not opt for any system before 2010, remain in the old system.
Contributions: Employers contribute 6% of workers’ monthly salaries; workers can contribute up to 6% of their salaries on top of that, with tax benefits.
Pensions/Benefits: Workers can opt for a monthly payment or a lump sum if their length of service is equal to or greater than 15 years. They can only opt for a lump sum if their length of service is less than 15 years.
The system grants old-age and survival pension benefits. The pension is calculated as: Accumulated principal + accrued dividends from the pension account.
State Guarantee: The National Pension Program pays a monthly pension that is 0.65% of the monthly insured amount multiplied by the number of years of coverage, plus NT$ 4,049 (135.33 USD), or 1.3% of the monthly insured amount multiplied by the number of years of coverage, whichever is greater.
(Last updated: December 2024)
Law: Old-Age Pension Savings Act
Date Passed: January 2004
Type of System: Multipillar, comprising a non-contributory public system (first pillar); a mandatory mixed contributory system (second pillar) in which the public PAYGO system is complemented with the Individually Funded Savings System (private); and a voluntary private complementary system managed by the pension funds, or life insurance companies (third pillar).
Startup Date: January 2006
Managing Agencies: Contributions to individually funded accounts are managed by Pension Asset Management Companies (PAMCs).
Supervising Agency: Unified supervision by the National Bank of Slovakia (NBS, www.nbs.sk).
Enrollment: In May 2023, mandatory affiliation for new contributors was reinstated. They may choose to opt-out within a two-year period and rejoin later, up to the age of 40. (Source: https://economy-finance.ec.europa.eu/publications/2024-ageing-report-economic-and-budgetary-projections-eu-member-states-2023-2070_en).
Contributions: The employers’ contribution to the old-age insurance is 14% of the gross salaries of workers. If the worker is contributing to the individually funded program, 6 percentage points of this rate (financed by the employer) go to the worker’s individual account and 8 points go to the public PAYGO system. If the worker does not enroll in the individual accounts program, the entire 14% goes to the PAYGO program. Furthermore, workers’ contributions to the old-age insurance are 4% of salary, which goes entirely to the PAYGO program. These contributions are collected by the Social Security Agency (SIA).
Pensions/Benefits: The individually funded savings system has several pension modes, ranging from early pensions to survival and programmed retirement pensions. The PAYGO system also grants pensions “in favor of the spouse,” for married women who are totally disabled, or who have turned 65, in the event of divorce or the death of their husbands. In also grants total and partial disability and widowhood pensions.
State Guarantee: The government grants a minimum pension after a minimum period of employment of 30 years, with partial pensions being provided for shorter periods of employment.
(Last updated: December 2024)
Law: Mandatory Individually-Funded Pension Insurance Law.
Date Passed: 2002:
Type of System: Multipillar system comprising a first public PAYGO pillar, corresponding to the mandatory pensions and disability insurance (Pensions and Disability Insurance Fund of Macedonia – PDIF); a second mandatory individually funded accounts pillar and a third voluntary pension savings pillar.
Startup Date: January 2006
Managing Agencies: Pension Fund Managers.
Supervisory Agency: Specialized supervision by the Agency for the Supervision of Fully Funded Pension Insurance (MAPAS, www.mapas.gov.mk).
Membership: Mandatory for all those entering the labor market for the first time as of January 1, 2003 (who must enroll and contribute to a pension fund of their choice), and voluntary for those who were already enrolled in the mandatory pensions and disability insurance (pure PAYGO system) before January 1, 2003. The period in which these workers could enroll in a private pension fund with an individual account ended on December 31, 2005.
Contributions: The total contribution rate to the pension system is 28% of gross salary. This rate is broken down into 18.8% for old-age and disability insurance and 8.6% for other items. Of the 18.8%, 6 points go to the mandatory individually funded savings system and 12.8 points to the PAYGO system. The PAYGO system grants old-age, disability and survival pensions and a minimum pension guarantee; the individually funded program only grants old-age pensions. (Source: https://ww1.issa.int/node/195545?country=907)
Pensions/Benefits:
Members who are eligible to receive a public pension can choose between purchasing a Life Annuity or opting for the Programmed Withdrawal mode. Members who are not eligible to receive a public pension can only buy a life annuity, the value of which must be at least 40% of the minimum pension. If the accumulated assets are insufficient for purchasing a Life Annuity of that amount, members receive a lump-sum payment of the total amount of the accumulated funds.
State guarantee:
The pension system in Macedonia has established a kind of so-called minimum pension, which is a percentage of the average wage in the country, calculated on the basis of the length of the working life of the beneficiary.
(Last updated: December 2024)
Law governing the quasi-mandatory scheme (automatic enrollment):
KiwiSaver Act, 2006
Date on which the quasi-mandatory (automatic enrolment) scheme was passed:
September 6, 2006
Type of system:
Multi-pillar scheme comprising a non-contributory PAYGO system (NZS: New Zealand Superannuation) [first pillar] and an individually funded occupational savings system with automatic enrollment (Kiwisaver) [second pillar]. Individuals can also make voluntary contributions to the third voluntary pillar.
Date on which the quasi-mandatory (automatic enrollment) scheme was passed:
July 1, 2007
Managed by:
New Zealand Inland Revenue acts as a central manager and transfers contributions to the pension provider of the employee’s choice. If the employee does not choose a provider, contributions are paid to one of the 9 providers by default.
Supervisory Agency:
The Financial Markets Authority (FMA) regulates the system.
Enrollment:
Dependent workers between the ages of 18 and 65 are automatically enrolled in a KiwiSaver plan at their workplace and can opt out between the second to the eighth week of employment.
Self-employed workers, on the other hand, can voluntarily choose to open a KiwiSaver account through any provider (private fund managers). Once workers have enrolled, they will not be able to opt out.
Mandatory and Voluntary Contributions:
The minimum contribution rate to the Kiwisaver plan is 6% of income, shared equally between workers and employers. Workers can opt for an additional higher personal contribution rate of 4%, 6%, 8% or 10%. To incentivize savings, the government provides a subsidy to savers who meet certain criteria, capped at NZ $521 per year (approx. $319) As part of the subsidy, new participants in Kiwisaver received an additional contribution from the government of NZD 1,000 (approx. USD 612) until May 2015,
Pension Options:
The official retirement age is 65 for both women and men. On reaching this age, individuals are entitled to receive all of their funds in a lump sum, instead of a pension.
State guarantee:
The State guarantees a universal old-age pension from New Zealand’s Superannuation program, requiring a minimum of 10 years of permanent residence in the country from the age of 20, including at least 5 years after turning 50, and residence in the country on the date of the application.
The State also runs a solidarity pension system, providing old-age benefits, disability pensions, caregiver’s allowances, disability benefits, spouse’s pensions, survivor’s pensions, orphan’s pensions, funeral allowances, and survivor benefits.
References: link1, link2, link3, link4
(Last updated: December 2024)
Law: Law of 2004 that created the individually funded system as a complement to the public PAYGO system.
Approval Date: 2004
Type of System: Uzbekistan’s pension system comprises a first non-contributory social assistance pillar and a second pillar in which a public PAYGO system is complemented with another individually funded system.
Start-up Date: 2007 (individually funded program)
Managing Agencies: The People’s Bank manages individual accounts.
Supervising Agency: The Ministry of Finance (https://www.mf.uz) provides overall supervision and coordination. The Extra-budgetary Pension Fund, dependent on the Ministry of Finance, manages the programs. The tax authority collects the contributions.
Enrollment: Enrollment in the individually funded system is mandatory for dependent workers, and voluntary for self-employed and other categories of workers.
Contributions: In the public PAYGO system, workers contribute 8% of salary and the employer 25% (15% for small and micro companies). In the individually funded system, workers mandatorily contribute 2% of salary (the employer does not make contributions to this system). Workers can voluntarily make additional contributions to the individual accounts system.
Pensions/Benefits: The pensions derived from the individual accounts [payable at retirement age (60 for men, 55 for women)], are based on the total contributions of workers plus the accrued interest, and can be paid in monthly instalments, or in a lump sum. The interest rate is determined by the Banco Popular in coordination with the Central Bank and the Ministry of Finance, and must not exceed the inflation rate. If a worker dies before retirement, the survivor receives the funds in the account in a lump sum. Workers are not allowed to withdraw their funds for any purpose other than retirement.
State Guarantee: The government pays a non-contributory welfare pension, subject to means testing, to all men aged 65 or more with less than 25 years of employment, and women aged 60 or more, with less than 20 years of employment.
(Last updated: December 2024)
Law: The legal framework for occupational pensions comprises the Pensions Law (2007), the 2000 Mandatory Enrollment in an Industry-Wide Fund Law (Bpf 2000), the Mandatory Pension Law for Professional Groups (WVB) and the Law governing Equal Pension Rights in the Event of Divorce (WVPS) (http://www.iopsweb.org/resources/48238337.pdf)
Type of System:
Managing Agencies: Private pension funds (at industry, corporate or independent professional level) or insurance companies.
Supervisory Agency: There are two organizations that supervise pension funds and insurers: the Nederlandsche Bank (DNB) and the Dutch Financial Markets Authority (AFM). Each agency has its own oversight area.
De Nederlandsche Bank NV (DNB): Pension providers require a license from the DNB. Requirements include sufficient financial assets and a suitable board of trustees. Under the Pensions and Financial Supervision Laws, the DNB Exercises strict oversight over the financial transactions and management of pension providers.
The Dutch Financial Markets Authority (AFM): By law, pension providers are obligated to provide certain information to interested parties. This obligation involves strict topicality, understandability and content requirements. The AFM ensures that pension providers meet these requirements. The AFM also supervises compliance with the duty of diligence. The purpose is to advise members on investment options, where appropriate.
Enrollment: Occupational plans cover public and private sector employees, including civil servants. Mandatory industry-level pension schemes cover all employees in the respective industry, whether public or private workers. In the other schemes, coverage is regulated by the applicable scheme regulations. The Minister of Social Affairs and Employment may make enrollment in a pension plan mandatory for the entire profession.
Contributions: The contribution rate in the public PAYGO system is 18% of taxable income.
The contribution to the second occupational pensions pillar is a fixed percentage of income (approximately 16 percent of gross income). This is a defined contribution pillar.
Pensions/Benefits: Occupational pension plans can include three elements: old age, survival and disability pensions. Not all occupational pension schemes include these three elements. Trade unions and employers’ organizations jointly decide on the inclusion of these elements.
State Guarantee: The AOW provides public pensions, in which rights to 2% of the full pension are acquired per year worked in the country. Members who live alone receive € 1,527.63 (net, without tax credit, 2025) (USD 1,770); those who are married or live with a partner receive € 1045.91 (net, without tax credit, 2025) (USD 1,212). These amounts correspond to the full pension (50 years of contribution). (Source: https://www.pensioenfondsstaples.nl/en/about-pensions/pensioen-ontvangen/dutch-state-pension-aow)
(Last updated: December 2024)
Automatic Enrollment System Act:
Law 296/2006
Date of Approval of the automatic enrollment system:
January 1, 2007
Type of system
Italy’s pension system comprises three main pillars:
2.1 Automatic Enrollment Plan (AE): Italy introduced an AE plan in this second pillar in January 2007, becoming the first EU member to date to do so. In this plan, mandatory for all private sector employees at the time of its introduction, and subsequently mandatory for all new private sector employees, the flow of contributions to the so-called “Trattamento di Fine Rapporto (TFR)” (“treatment at the end of the employment relationship”) is paid into an occupational pension plan by default. The employee has six months to opt out. The TFR is a severance pay provision that has been mandatory for private sector companies since 1982. Contributions are 6.91% of an employee’s salary. Prior to the introduction of the EA plan, and thereafter for employers with fewer than 50 employees, contributions that the employee does not choose to allocate to pension savings are held within the company by the employer as book reserves. Since the introduction of the EA plan, in companies with 50 or more employees, if the employee decides not to allocate contributions to pension savings, they are paid into a fund of the National Social Security Institute (INPS), which manages the notional public PAYGO system. At the end of the employee’s employment relationship, the employee can opt to settle the compensation or use it for retirement savings.
(*) Note: On 01/01/2012, a progressive change from the former defined benefit PAYGO system to a PAYGO system based on notional accounts was introduced through the Fornero reform. Workers who started contributing in January 1996 are fully covered by the new notional accounts system. Workers with 18 or more years of contributions on 12-31-1995 remained in the format defined benefit system until December 2011, and switched their contributions to the notional accounts system as of 1 January 2012. Workers with less than 18 years of contribution on 12-31-1995 remained in a dual pro rata system based on the number of years of contributions before and after 31-12-1995: i.e., the former system was applicable for the former contribution period until December 1995, and the notional accounts system was applied for contributions from that date.
The Fund Managers:
There are two types of pension funds in the second occupational pillar in Italy:
All pension funds have to sign an agreement with an external investment manager, which can only be an insurance company, a bank or a registered asset management company (‘Societa Gestione Risparmio’ or SGR). All pension funds are currently defined contribution (CD), as this is the only type of pension plan allowed. Defined benefit (DB) plans are restricted to pre-existing funds (**).
(**) Note: Prior to 1993, there was no coordinated legislation regulating pension provision and the only private pensions available were the pre-existing funds, which did not have clear structures or legal processes. Hence, employers who established pension plans were able to structure the benefits they offered and the means to fund them, almost at will. Pension funds established before November 15, 1992 (pre-existing funds) may retain their former tax treatment, provided they were closed to new participants prior to April 28, 1993.
Supervisory Agency:
General oversight is provided by the Ministry of Labor and Social Policy (http://www.lavoro.gov.it/) and the Ministry of Economy and Finance (http://www.tesoro.it/).
The National Social Security Institute (https://www.inps.it/) collects contributions and manages the national notional PAYGO accounts program, through its branches, as well as a number of special programs for certain categories of insured workers.
COVIP (Commissione di Vigilanza sui Fondi Pensione), is the national authority responsible for the oversight of Italian private occupational pension funds, as well as information on their competencies, tasks and internal organization.
Affiliation:
PAYGO system with notional accounts: Membership is mandatory for private sector employees, including domestic and self-employed workers (coverage is voluntary for contract and professional workers).
Contractual Occupational Funds: Workers may join the plan only if they meet specific requirements set forth in the fund’s laws that identify them as members of an “aggregation.” The fund’s bylaws initially set a target enrollment rate to be achieved within a time frame defined by the supervisor. When this threshold is reached, the supervisor authorizes the fund to start operating. Thereafter, the fund can start collecting contributions from members. However, contributions are not invested until the pooled fund reaches a minimum amount and a financial intermediary is appointed to manage the fund’s resources.
Open Occupational Funds: There are no individual membership requirements. Collective membership requires employment by the employer who signed the agreement. Due to the specific nature of the fund, the sponsoring institution’s sales force is primarily responsible for enrolling members. Collective membership is proposed by specialists at the corporate level, whereas the retail sales force throughout the territory is responsible for individual membership.
Mandatory and Voluntary Contributions:
PAYGO system with notional accounts: contributions are paid to the National Social Security Institute (INPS). Contributions are 33% of salary, of which approximately one third is paid by the employee (9.19%) and 2/3 by the employer (23.81%).
Contractual Occupational Funds: All pension funds are currently defined as contribution plans. The contribution amount is set out in the fund’s bylaws. Typically, funds are funded through contributions from both the employee and the employer, and through the TFR (for subordinate employees). Supplementary contributions are also allowed.
Open Occupational Funds: Collective membership is funded by contributions from the employer, employees, and the TFR. To receive the TFR from workers who do not make a decision (tacit consent), the fund must have a specially created guaranteed sub-fund. Individual membership is voluntary.
Pension Options:
PAYGO system with notional accounts: the accumulated “notional capital” is converted into a pension (income), considering the life expectancy of the generation to which the pension applicant belongs at the time of retirement. The old-age pension is calculated as the contributions accumulated throughout the working life, to which a reassessment of the percentage of GDP increase is applied. Finally, a coefficient or rate of conversion of accumulated capital to income is applied, depending on the age of the applicant. This latter coefficient is based on the probability of death of the applicant (life expectancy of his generation), the probability of leaving a widowed spouse in the event of death, and the estimated number of years that the “potential” widower would receive the pension. Hence, the pension amount is fully linked to the retirement age: the earlier the retirement age, the lower the pension amount.
Contractual and/or Open-Ended Occupational Funds: Contributions and investment returns allow members to accumulate an amount of money that will be available on retirement, or even earlier, if certain conditions are met. Members who were enrolled at least 8 years previously may obtain an advance of up to a maximum of 75% of their individual account balance for the purchase or remodeling of their first home, or that of their children. In addition, up to 30% of the account may be requested for any type of necessity. Furthermore, enrollees may at any time request an amount of money of up to 75% of their balance for extraordinary family-related medical expenses. Members may use one or more of these advance payments within statutory limits. For example, they can use the 30% limit to meet any of the requirements, but they cannot receive more than 45% (30+45=75%) for the purchase of a home. Participants can then refund the money, thus regaining their prior status. Members must meet the minimum age and seniority requirements of the public old age pension scheme on retirement, provided that they have been enrolled in the system for at least five years. It it is worth mentioning that enrollment does not necessarily involve payment of contributions: plan membership qualifies enrolled members for benefits even when no money is paid (for example, if the plan member is unemployed but still meets membership requirements). Fund members have the following alternatives on retirement:
State guarantee:
The new “citizen income” legislation (“Pensione di cittadinanza”) introduced in 2019 has increased non-contributory retirement pension amounts. This consists of a safety net that provides benefits whose right to collection is not based on the prior payment of contributions, but on the personal situation of the recipient (level of income).
References:
https://www.iopsweb.org/resources/48238257.pdf
https://www.ssa.gov/policy/docs/progdesc/ssptw/2018-2019/europe/italy.html
https://www.pensionfundsonline.co.uk/content/country-profiles/italy
(Last updated: December 2024)
Law: Law No. 411/2004 governing mandatory pension funds.
Date Passed: 2004, with amendments in 2007
Type of system Multipillar with a first public PAYGO pillar (social security); a second defined contribution pillar that complements the PAYGO program, and a third private, voluntary complementary savings pillar.
Startup Date: January 2008.
Managing Agencies: The second pillar is managed by private pension fund managers.
Supervisory Agency: Unified supervision by the Financial Supervision Authority (ASF; http://asfromania.ro).
Membership: Enrollment in the individually funded second pillar is mandatory for all dependent and self-employed workers under 36 years of age as of January 1, 2008. Enrollment is voluntary for all workers between 36 and 45 years of age as of January 1, 2008.
Contributions: 4.75% of the gross salary of workers mandatorily enrolled in the individually funded second pillar on December 31, 2024, is paid into the individually funded account, and 20.25% goes to the public PAYGO system, comprising a total contribution rate of 25%. Those not enrolled in the second individual accounts pillar only contribute 25% of gross salary to the public PAYGO program. Employers also contribute 4 or 8% on behalf of the worker, for dangerous and special working conditions, respectively.
Pensions/Benefits: Pension fund members must use their accumulated assets to purchase a life annuity provided by a pension fund manager, on retirement. If the calculated monthly life annuity is less than a certain minimum amount, a lump sum withdrawal of the funds is permitted, or a pension is paid for up to 5 years.
(Last updated: December 2024)
Laws:
1953 (national insurance), implemented in 1954; 1955 (survivors’ pensions); 1957 (old-age pensions); 1974 (disability pensions); 1980 (income support); 1982 (income support benefits); 1988 (long-term care benefits); 2008 (Mandatory Pension Act establishing a mandatory defined contribution occupational program).
Type of System:
Multipillar scheme comprising a first non-contributory pillar (complementary means-tested income support program); a second contributory pillar in which a universal social insurance (PAYGO) program and a mandatory occupational program coexist; and a third pillar of voluntary personal savings.
Startup:
January 2008 (mandatory occupational defined contribution program)
Managing Agencies:
Pension Fund Management companies and insurance companies may establish supplementary pension schemes and offer them to employers.
Employers are obligated to enroll all their salaried workers in a pension scheme and contributions are mandatory for income up to the average salary. Employers can increase their contributions, on a voluntary basis, and enroll some or all of their employees in such plan. Membership and the promise of contributions in excess of mandatory contributions may be based on agreements between employers and individual workers, or on collective agreements between the company or industry and trade unions.
Workers choose the pension fund management or insurance companies in which they will enroll. Depending on plan rules, employees have considerable options regarding the pensions package that provides different replacement rates for disability, survivors’ and old-age pensions.
More details at: https://ww1.issa.int/node/195545?country=883
Supervisory Agencies:
The Ministry of Social Affairs (https://www.molsa.gov.il) provides general oversight.
The National Insurance Institute (https://www.btl.gov.il) manages the PAYGO program, collects contributions and pays pensions through its branches.
The Capital Market, Insurance and Savings Authority (CMISA; https://www.gov.il/en/departments/units/department_cma) supervises financial services in the private occupational and third pillar, insurance and pension markets. CMISA receives and verifies reports submitted by supervised agencies and may conduct on-site inspections at any time.
Membership:
There are no legal ‘s and regulations governing discrimination in coverage. As of January 1, 2008, the “Pension for Every Worker” laid the foundations for every salaried worker in the economy to be entitled to receive pension contributions from the worker himself and his employer.
As of 2017, the self-employed have had to enroll in a plan in a personal capacity (for the rest – as of 2008).
Mandatory and Voluntary Contributions:
Pensions / Benefits:
– Mandatory occupational contributory pillar: In the case of defined contribution plans, the old-age pension is the product of the accrued amount accumulated by the member at retirement and a factor calculated on the age of the member at retirement, sex and date of birth, annual returns, mortality tables, etc. Early retirement benefits are actuarially reduced.
Benefits must be paid as pensions, but retirees whose pension is less than the minimum pension regulated in the plan’s rules receive the cash value of their accrued entitlements or accumulated capital as a lump sum.
25% of a maximum of five years’ pension may be paid as a lump sum, provided that the reduced pension is not less than the minimum pension defined in the plan’s rules.
If, at the time of retirement, members do not have a spouse or children under the age of 21, they may no longer be covered by the risk of death and receive an increased old-age pension.
– Contributory PAYGO pillar: The basic amount of the old-age pension (at 67 for men male and 62 for women), is ILS 9,015 (approx. USD 2,677) per month. [as of 2023, Source: https://www.oecd.org/content/dam/oecd/en/publications/support-materials/2023/12/pensions-at-a-glance-2023_4757bf20/PaG2023-country-profiles.pdf]
The maximum income for contribution purposes is five times the basic amount of the old-age pension. The basic pension for the elderly is indexed to prices.
Residents who are not covered by old-age insurance will receive a special means-tested pension equivalent to the basic pension for the elderly.
– Non-contributory pillar: The income supplement is paid if the income, including the old age pension of the PAYGO system, is below the minimum subsistence level. The pension amount depends on the person’s age, marital status, and household size. In 2020, the pensions provided by this supplement ranged between 36,77% and 75,4% of the basic old age pension amount per month, depending on age, marital status and number of children.
(Last updated: December 2024)
Law: Law of 2008 that creates the individually funded system (Cumulative Pension Fund, CPF) as a complement to the public PAYGO system.
Date Passed: 2008
Type of System: The Kyrgyzstan pension system comprises a first non-contributory social assistance pillar and a second pillar in which a public notional defined contribution system (PAYGO) is complemented with an individually funded system.
Start-up: 2008 (individually funded program)
Managing Agencies: The system as a whole is managed by the State.
Supervisory Agency: The Ministry of Labor and Social Development (http://mlsp.gov.kg ) provides general coordination and oversight. The provincial and county offices of the Ministry of Labor and Social Development manage the programs. The Social Fund (http://socfond.kg ) collects contributions and pays social security benefits.
Membership: Enrollment in the individually funded system is mandatory for dependent, self-employed workers and members of cooperatives and state and collective farms.
Contributions/: In the public PAYGO system, workers contribute 8% of salary (mandatory pension contributions), and the employer 17.25% (15% corresponds to mandatory pension contributions; 0.25% to employees’ health fund contributions; and 2% to mandatory health insurance contributions). In the individually funded system (CPF) the worker mandatorily contributes 2% of salary (the employer does not make contributions to this system).
Women born before January 1, 1969, and men born before January 1, 1964, are exempt from contributions to the CPF and only contribute 10% to the public PAYGO system.
Pensions/Benefits: The pensions provided by the system [payable on turning 63, with at least 25 years of employment (men) or on turning 58, with at least 20 years of employment (women)], comprise several components: a basic lump sum benefit, a social security component, a notional accounts component, and a mandatory individual account benefit.
The basic lump sum benefit is 1,780 som, or 12% of the national average monthly salary in the last year, whichever is higher.
The social security component is calculated as the insured’s average monthly earnings for 60 consecutive working months multiplied by 1% for each full year of insured employment prior to 1996.
The notional accounts component is calculated as the accumulated contributions (of at least one year) since 1996, divided by 12 months and multiplied by a coefficient based on the life expectancy of the insured’s cohort at retirement age.
The individual account benefit is based on the account balance at retirement.
State Guarantee: The government establishes the payment of a non-contributory welfare pension (not subject to means testing), for all men aged 65 or more and women aged 60 or more, who do not qualify for a means tested old-age pension.
(Last updated: December 2024)
Law: 2008 Law that created the mandatory individually funded occupational system (National Pensions Act 2008, see here)
Date Passed: 2008
Type of System: Ghana’s pension system comprises a first PAYGO pillar complemented by a second mandatory individually funded occupational pillar.
Startup Date: 2010
Managing Agencies: Private Trustees approved by the National Pension Regulatory Authority, with the assistance of fund managers and custodians of registered pension funds, manage the mandatory occupational pension program and collect contributions.
Supervising Agency: The National Pension Regulatory Authority (http://www.npra.gov.gh) provides overall supervision. The Social Security and National Insurance Trust (https://www.ssnit.org.gh) manages the PAYGO social insurance program via a tripartite board of directors, and collects contributions.
Enrollment: Enrollment in the occupational pension system is mandatory for all workers employed in the formal sector, including public sector employees not covered by any special system.
Contributions: The total mandatory contribution is 18.5% of the worker’s base salary. The employer contributes 13% of salary and the worker 5.5%. 13.5% of the total 18.5% mandatory contribution rate is paid into Public Pension Scheme (PAYGO system). Of the 13.5% paid into the Public Pension Scheme, 2.5% is transferred to the National Health Insurance System, 11% remains in the Public Pension System, and the remaining 5% is transferred to the mandatory occupational pension system.
Pensions/Benefits:
Old-age pension (social security): 37.5% of the insured’s average annual income in the three highest years of income is paid, plus 0.09375% of the average annual income for each month of contribution that exceeds 180 months.
Early pension: 60% of the old-age pension is paid at age 55, and 90% at age 59.
Pension Adjustments Pensions are reviewed annually and may be adjusted based on the average increase in the salaries of the contributors to the program.
Old-age allowance (social security): A lump sum comprising the total contributions of employees is paid, plus accrued interest. The interest rate is set at 75% of the 91-day Treasury bill rate.
Old-age pension (mandatory occupational pension): a lump sum comprising the total contributions of the employee and the employer is paid, plus the accrued interest.
Early pension: Calculated in the same way as the old-age pension.
(Last updated: December 2024)
Law: Old Age and Disability Pension Act 1955 (amended in 1984); Employee Trust Fund Act of 1992 (TAP); Supplementary Contribution Pension Act of 2009, enacted in 2010); Skim Persaraan Kebangsaan (SPK, implemented in 2023).
Approval Date: 2009 (SCP), 2023 (SPK).
Type of System: Multipillar system comprising a first non-contributory pillar offering a universal, basic old-age pension, financed with general taxes, for people aged 60 and older; a second mandatory contributory pillar in which two programs are complemented: (a) the workers’ trust program (TAP), in which workers and employers contribute 5% of the gross monthly salary each (total contribution rate of 10%); (b) the individually funded program (SCP), in which workers and employers contribute 3.5% of the monthly salary each (total contribution rate of 7%); and a third voluntary pension savings pillar, with any additional contributions that workers wish to make to the trust fund and the individually funded program. Note: The SCP program was created to complement the pensions of the TAP program; enrollment in the SCP is therefore voluntary for workers. Once a worker decides to enroll in the SCP, the decision is irreversible and employers must make a matching contribution of 3.5% of the worker’s salary to the individual account.
In July 2023, a new national pension system was approved. Those who choose to switch to the new scheme will have new accounts: (i) the SPK Member Account, which consolidates all the members’ contributions to TAP and SCP, and (ii) the SPK Retirement Account, which consolidates the employer’s contributions to TAP and SCP. The employee’s contribution rate to the SPK is 8.5%, and the employer’s contribution rate to the SPK Retirement Account is based on prescribed rates that depend on the employee’s salary group.
Startup Date: January 2010 (SCP), July 2023 (SPK)
Managing Agencies: The legislation requires the second pillar pension funds to be managed by the Employees Trust Fund Department of the Ministry of Finance, under the supervision of the Board of Directors of the Workers’ Trust Fund.
Supervising Agency: Specialized supervision by the Board of Directors of the Employees’ Trust Fund, of the Ministry of Finance.
Enrollment: Enrollment in the TAP program is mandatory for all dependent employees between 18 and 60 years of age, as of January 1, 1993 (public servants employed before that date are covered by the State Pension System). Enrolment in the SCP has been voluntary for workers since January 1, 2010. Enrollment in the SCP and TAP is voluntary for self-employed workers.
Since July 2023, employees who are citizens and permanent residents of Brunei and are under 60 years of age must be enrolled in the SPK program.
Contributions: In the TAP, workers and employers each contribute 5% of their gross monthly salary. In the SCP, workers and employers each contribute 3.5% of their monthly salary.
Pensions/Benefits:
TAP: funds are available for withdrawal after age 50; early withdrawal of up to 25% of the accumulated funds is allowed at age 50; workers up to 55 years of age, with at least 40,000 BND (approx. USD 28,640) in their individual accounts, or who have been members of the provident fund for at least 10 years, may withdraw up to 45% of their funds for the purchase of a home for personal residence; If the person permanently emigrates from the country, the payment of all the accumulated funds in a lump sum is allowed.
SCP: the pension can be accessed from the age of 60 (monthly pension of at least BND 150, approx. USD 107), for up to 20 years, assuming that the retiree has at least 35 years of continuous contributions. Those who do not meet this requirement on reaching retirement age, are paid their funds in a lump sum (there is no possibility of early retirement).
For their part, the funds in the SPK can be withdrawn before the retirement age (60), whereas the funds in the SPK Retirement form a pension in the form of an annuity starting from the retirement age.
State Guarantee: The State guarantees a universal non-contributory pension to all workers aged 60 or more (those born in the country must have been resident for at least 10 years prior to requesting the pension; those living outside the country must have been resident for at least 30 years prior to applying for the pension).
(Last updated: December 2024)
Law:
Pension Act No. 6
Date Passed:
April 1, 2011
Type of system:
The National Pension Plan (NPS), established in the 2011 Act, comprises two occupational pension programs, one mandatory and one voluntary, both of them with individually funded pension savings accounts. The mandatory occupational pension program comprises a government-managed defined contribution National Pension Fund (NPF) and privately managed, government-licensed pension funds, which may be fully funded defined contribution, defined benefit, or hybrid plans. To meet the mandatory coverage requirement, employees and their employers may contribute to the NPF or one of the licensed private funds.
Note: Civil servants over 35 on June 1, 2017, remain in the Civil Service Pension Scheme (CSPS), a non-contributory defined benefit PAYGO system. Civil servants aged 35 or less on June 1, 2017, were automatically migrated to the NPS.
Managed by:
The mandatory occupational pension program comprises a government-managed defined-contribution National Pension Fund (NPF) and privately managed, government-licensed pension funds.
Supervisory Agency:
The Reserve Bank of Malawi is responsible for the licensing and financial oversight of pension management companies.
Enrollment:
Employers must ensure that all employees are members of the NPF or any other government-licensed private pension fund. I.e., all private sector employees, regardless of where they are employed, must unroll in the occupational pension program. (Previously, only those who worked for employers with more than five employees were mandatorily covered). Civil servants born in 1982 or later, or who were employed in the public sector on or after July 1, 2017, are also mandatorily covered by the program. (Civil servants who were born before 1982 and were employed in the public sector prior to July 1, 2017, are covered by a special pension program). Enrollment in the program is optional for the self-employed.
Mandatory and Voluntary Contributions:
The minimum contribution rate to the NPS mandatory occupational program is 15% of the worker’s gross monthly income. 5 percentage points are contributed by the worker, and the remaining 10 percentage points by the employer. Enrolled self-employed individuals must contribute at least 15% of their covered monthly income.
Pension Options:
Individuals may retire if they meet any of the following conditions: they are 50 years of age, have contributed for at least 20 years, or have a disability certified by a doctor, that prevents them from working. This system provides old age, early retirement, permanent migration, disability and survival pensions.
The regulations currently in force allow up to 50% of the balance of old age occupational pension accounts to be withdrawn as a lump sum on retirement. The remaining portion of the balance must be used to purchase a life annuity, opt for programmed withdrawals, or a combination of these two options. Under certain conditions, members with small account balances may withdraw their entire account balance as a lump sum on retirement.
In permanent migrant pensions, the total balance of employee and employer contributions is paid as a lump sum. The disability pension can be received either as a full withdrawal, or as a life annuity, depending on the account balance. Survival pensions are paid to designated survivors as a lump sum or a life annuity when the enrolled member dies.
State guarantee:
Not applicable
References:
https://www.ssa.gov/policy/docs/progdesc/intl_update/2023-04/index.html#malawi
https://www.iopsweb.org/resources/Malawi-IOPSWebsite-Country-Profile-2022.pdf
(Last updated: December 2024)
Law: Pension Act 2008, which introduces automatic enrollment in personal accounts
Date Passed: 2008:
Type of System: Multipillar System with a first non-contributory pillar that grants the so-called “Pension credit” to low-income members over 65 years of age; a second pillar in which two main systems coexist: (a) single-tier defined benefit state pension system, STP); (b) a private defined contribution and defined benefit occupational pension system; and a third complementary voluntary savings pillar.
Note 1: in October 2012, automatic enrollment began operating nationwide for all workers not covered by a private occupational pension plan (in the second pillar, private occupational system), for which the government created the National Employment Savings Trust (NEST). Thus, as of that date, workers who do not have an occupational pension plan must choose whether to enroll in a qualified pension scheme provided by their employer, or in the NEST system.
Note 2: there are a variety of schemes in the private occupational pension system, such as: (a) self-managed pension plans, which require the appointment of an investment manager and a custodian; (b) insurance schemes, provided directly by insurance companies (benefits are protected by one or more insurance policies or life annuity contracts); (c) personal pension plans, which the worker can negotiate individually with an external provider; (d) “Stakeholder” pension plans, which employers must mandatorily offer their workers (if the company has 5 or more workers and they have not established an occupational or personal pension plan) (this is a group contracting system with individual accounts that can be offered by different financial institutions, such as life insurance companies, savings funds, banks, real estate investment companies, etc.); and (e) Unfunded schemes, financed on a PAYGO basis from corporate funds.
Startup Date: October 2012
Managing Agencies: In the private occupational pension system, pension plans can be offered and managed by different agencies, such as life insurance companies, credit unions, banks and real estate investment companies.
The NEST automatic enrollment system is directly managed by the NEST Corporation (www.nestpensions.org.uk), which was established by law as a non-departmental public body.
Supervising Agency: Specialized supervision by the Pensions Regulator (www.thepensionsregulator.gov.uk).
Enrollment: Automatic enrollment is mandatory nationwide for all workers not covered by a private occupational pension plan; workers who do not have an occupational pension plan must choose between enrolling in a qualified pension system provided by their employer, or in the NEST system.
Contributions/: as of April 2019, the minimum contribution rate is 8% (3% employer; 4% worker; 1% State) (Source: http://www.pensionsadvisoryservice.org.uk/about-pensions/pensions-basics/automatic-enrolment/how-much-do-i-and-my-employer-have-to-pay)
Pensions/Benefits: Pension fund members have different options for using their accumulated funds on retirement: (i) Withdraw 25% of the fund in a lump sum, tax-free, and use the rest of the fund to purchase a life annuity; (ii) Withdraw 25% of the fund in a lump sum, tax-free, and reinvest the rest in funds designed to provide a regular income (lifetime income is not guaranteed, as in the case of the life annuity); (iii) Withdraw small amounts of the fund when required (for each withdrawal, 25% is tax-free and the rest is subject to tax); (iv) Withdraw the entire fund as a lump sum.
State Guarantee: The State pays a non-contributory pension called “Pension credit” of GBP 695 per month (approx. USD 847.49 per month), to low-income individuals over 66 years of age (information as of 2020)
(Last updated: December 2024)
Law: Social Security Framework Law (LMPS), Decree 56-2015 (declared unconstitutional), RAP Law, Legislative Decree No. 107‑2023.
Date Passed: 2013
The LMPS was declared unconstitutional in 2022. The contribution structure remains in place, but under more specific laws, the Private Contributions Regime (RAP, a non‑profit private institution that manages labor benefit and pension funds) has gained greater control over capitalization funds.
Type of System: The LMPS establishes a legal framework comprising a Social Security system with a multi-pillar structure, providing coverage for contingencies arising from major risks. The law establishes two pension system regimes:
Regime Financing: Through a solidarity and Social Security fund. Most noteworthy: (a) 20% of all rates of new concessions granted by the State after promulgation of the law; (b) 15% of the returns of non-financial investments under concession by the State to social security agencies; (c) there are additional contributions in the general budget of the Republic that are less than 20% of the total amount of the sales tax (ISV) collected in the previous year; (d) All monies will be deposited in a trust fund in the Central Bank of Honduras.
Financing: (a) Collective funding: minimum contribution of 6.5% (3.5% employer, 2.5% worker 2.5%, 0.5% State, based on a ceiling of one minimum wage;) (b) Complementary individual accounts: 1,5% employer and 1,5% employee.
Start-up: 2013
Managing Agencies: The Pension Fund Managers (AFPs) manage the CCI pillar. The Honduran Social Security Institute (IHSS) manages the collective funding of the system (PAYGO).
Supervising Agency: The Ministry of Labor and Social Security (http://www.trabajo.gob.hn/) provides overall supervision. The National Banking and Insurance Commission (CNBS) (http://www.cnbs.gob.hn/) provides financial supervision.
Enrollment: Enrollment in the individual accounts program (CCI) is mandatory for salaried workers of public and private sector companies, civil servants, forestry workers, most agricultural workers and apprentices. Enrollment is voluntary for individuals with monthly incomes of up to a certain amount.
Pension Modes: In the individual accounts program, the total balance can be paid as programmed withdrawal or as a lump sum.
There is an early retirement option: up to the full account balance, minus an early retirement fee, can be paid as programmed withdrawal or as a lump sum.
State Guarantee: See Regime 1 (Basic Social Security).
(Last updated: December 2024)
Laws:
1964 (social insurance), implemented in 1965; 1971 (self-employed); 1983 (Social Insurance for Agricultural Employees), implemented in 1984; 2006 (social security institution); 2006 (Social Security and General Health Insurance), implemented in 2007 and 2008; 2008 (social security); and 2016 (automatic enrollment program, OKS).
Type of System:
The pension system comprises a first non-contributory pillar focused on the lower income sectors; a second mandatory contributory pillar in which a PAYGO and an occupational scheme coexist; and a third private voluntary savings pillar with personal voluntary savings plans and an automatic enrollment program (OKS, for its acronym in Turkish).
Startup:
January 2017 (automatic enrollment program, OKS)
Managing Agencies:
Pension funds are managed by portfolio management companies licensed by the Turkish Capital Markets Board. Pension Funds pay a commission to portfolio management companies for their management services.
The regulations set specific limits to avoid the concentration of pension fund investments. Pension funds are also classified in accordance with the assets they invest in. Each fund category has different limits set by the Turkish Capital Markets Board. Participants are completely free to choose the fund in which they are going to invest and are entitled to switch funds 6 times a year.
In employer-sponsored group pension contracts, employers determine the pension funds through which contributions are invested until the end of the acquisition period. However, if defined in the pension contracts, employers can transfer the use of fund switching rights to employees.
There are different types of pension funds classified according to the financial instruments they are invested in. Pension funds are managed by portfolio management companies in accordance with the rules and regulations governing the pension funds.
Supervisory Agencies:
The Ministry of Labor and Social Security (https://www.csgb.gov.tr/) provides general oversight of the pension system
The Social Security Institution (http://www.sgk.gov.tr/) collects contributions and manages the PAYGO program.
The institutional framework of the OKS program is as follows:
– Undersecretary of Finance: Enforces regulations and efforts to improve the system; oversees pension fund transactions.
– The Turkish Capital Markets Board (SPK; www.spk.gov.tr): Regulates pension funds, portfolio management companies and contracts with these companies and custodians.
– Pension Monitoring Center (EGM, www.spk.gov.tr): Control mechanism and monitoring tool authorized by the Undersecretary of Finance for performing all functions related to system oversight.
– Settlement and Custody Bank ISE (Takasbank, www.takasbank.com.tr): Keeps pension assets safe. Takasbank’s main functions are: To provide a suitable environment for clearing and settling asset buying and selling operations for the fund; keep records of participants’ shares in funds; ensure the management of the fund’s portfolio in accordance with the rules established by the SPK, among others.
Membership:
– PAYGO Program: Mandatorily covers employed individuals, including civil servants, the self-employed, and full-time domestic workers. Exclusions: Part-time domestic workers.
– OKS Program: This program requires all public and private sector employers to enroll their employees in private pension plans. This was done gradually according to company size: it started in January 2017 for companies with more than 1000 workers; in April 2017 for companies with between 250 and 999 workers, and so on until including the smallest companies as of January 2019.
Only employees under the age of 45 were eligible for OKS until 2021. However, as of 2022, employees aged 45 and over can now choose to enroll in the OKS by notifying their respective employers.
Younger workers are automatically enrolled by their employers when they start working but may choose not to participate in the program within 2 months of enrollment.
Mandatory and Voluntary Contributions:
– PAYGO program: workers contribute 9% of gross salary; employers 11% (total: 20%). The maximum monthly income used for the calculation of contributions is 7.5 times the gross official monthly minimum wage.
– OKS Program: In this program, employers select pension plans and collect contributions on behalf of their employees, who must contribute at least 3% of their gross salary (employers’ contributions are entirely voluntary). The State also makes a matching contribution equivalent to 30% of the annual contributions of participants. Participants lose between 40% and 100% of state contributions (depending on the number of years of contributions) if they opt out of the program for reasons other than retirement, disability, or death. Finally, the State contributes 1,000 lire (approx. USD 72) for OKS participants after 2 months of participation and 5% of the account balance upon retirement (if the balance is sufficient, it is used to purchase a life annuity for at least 10 years).
Pensions / Benefits:
– PAYGO program:
To access the old-age pension, men must be 60 years old (and progressively up to 65 from 2036 to 2044) and women 58 (progressively until the age of 65 from 2036 to 2048) with at least 7,200 days of contributions (9,000 days for civil servants and the self-employed); men must be 63 (progressively until the age of 65, from 2036 to 2044) and women 61(progressively until the age of 65 from 2036 to 2048) with at least 5,400 days of paid contributions.
The old-age pension is the average monthly income of the insured person multiplied by the rate of accumulation or accrual. Average monthly income is the total income of the insured divided by the total number of days of contributions paid, multiplied by 30.
The accrual rate is 2% for 360 days of contribution (reduced proportionally for periods less than 360 days), up to 90%. A special calculation applies if one was insured for the first time before October 1, 2008.
– OKS Program:
Participants are entitled to retirement if both of the following conditions are met: reaching the age of 56; and having been in the pension system for at least 10 years.
The OKS is a defined contribution program. Pensions can be received as a lump sum, in programmed withdrawals, or pensioners can buy a life annuity. One can also choose a combination of these options.
(Last updated: December 2024)
Law: Funded Pensions Law of the Republic of Armenia.
Date Passed: 2014
Type of System: Multipillar system comprising a first noncontributory pillar that offers a social old-age pension called ‘Old Age Social Pension” (funded with General taxes, for low-income individuals over 65); a second contributory pillar in which two programs complement each other: (a) a public PAYGO program; (b) an individually-funded program; and a third voluntary pension savings pillar.
Start-up: July 1, 2018.
Managing Agencies: The individually funded program is managed by pension fund managers.
Supervising Agency: Unified supervision by the Central Bank of Armenia (CBA, www.cba.am).
Membership: As of January 1, 2014, enrollment in the individually funded program has been mandatory for workers born after January 1, 1974. As of July 1, 2018, membership is mandatory for all workers, regardless of their date of birth.
Contributions/: Workers contribute 5% of their salary to their individual account, up to a monthly salary of AMD 500,000 (USD 1,311), and 10% of the monthly gross salary minus AMD 25,000 (USD 66) if the monthly gross salary exceeds AMD 500,000 (USD 1,311) (capped at AMD 87,500 [USD 229]). The state contributes an additional 5% if the worker’s salary is less than 500,000 and 25,000 otherwise. The social insurance scheme (pay-as-you-go program) is financed through a portion of personal income taxes.
Pensions/Benefits: Workers can access their accumulated funds through a lump sum withdrawal, a Life Annuity or Programmed Withdrawal.
An “Old Age Social Pension” is guaranteed to low-income individuals over 65.
(Last updated: December 2024)
On September 1, 2018, Georgia’s government approved the Accumulated Pension System (APS). The government created the new mandatory individual accounts program to complement the existing fixed-rate universal old-age state pension, promote capital market development and stimulate economic growth. Currently, there are no qualified retirement schemes or tax incentives for retirement savings in Georgia, and the state pension provides only a subsistence-level benefit (as of 2024, 315 lari (USD 117) for those under 70 and 415 lari (USD 154) for those over 70).
Other key features of the APS include:
– Coverage: The APS covers citizens and non-citizens who work in the public or private sector, or are self-employed. It is mandatory for workers under 40. All workers under the age of 60 are automatically enrolled in the new program. Employees who were 40 years of age or more on September 1 can opt out of APS within 5 months of the program’s implementation date. All self-employed individuals can also opt out.
– Funding: To fund individual accounts, employees and employers each contribute 2% of gross monthly wages up to 60,000 tlari (USD 23,000), and the government contributes 2% of gross monthly wages up to 24,000 tlari (USD 9,200) plus 1% of gross wages between 24,000 and 60,000 tlari. The total contribution rate for most wage earners is 6% of gross monthly wages. Self-employed individuals must pay employee and employer contributions.
– Benefits: members who reach the official retirement age of 65, for men, or 60, for women, can withdraw the entire balance from their accounts as a lump sum or convert it to a monthly annuity. Withdrawals from the account balance are also allowed when members are assessed with a permanent disability or die, leaving the balance to designated heirs.
– Investments: members can choose between three types of funds with different levels of risk (low, medium and high). Members who do not choose a fund will be placed in a predetermined fund based on age: members under the age of 40 will be placed in a high-risk fund, those between 40 and 50 in a medium risk fund, and those over 50 in a low-risk fund.
– Administration: The newly established Georgia Pensions Agency (PA) is responsible for the overall administration of the APS. An Investment Board within the PA conducts risk assessments, oversees the mix of contributions received, and issues regulations governing investments and the selection of companies that manage APS accounts. The National Bank of Georgia and a Supervisory Board provide additional oversight to APS.
Source: https://www.ssa.gov/policy/docs/progdesc/intl_update/2018-10/index.html#georgia
(Last updated: December 2024)
Law governing the quasi-mandatory scheme (automatic enrollment):
PPK Act of 2019
Year in which the quasi-mandatory (automatic enrollment) scheme started operating:
2019
Type of system:
The pension system comprises 3 pillars:
(a) First pillar: Public PAYGO notional accounts (NA) system. Minimum pensions require an “insurance period” of a certain number of years, which can be verified with contributions, years of study in higher education and periods of illness or rehabilitation.
(b) Second pillar:
(c) Third Pillar: Employer-funded Voluntary Collective Occupational Savings Plans (EPPs) and Individual Savings Plans with Tax Benefits: IKE (allow tax-exempt capital gains) and IKZE (allow amounts deposited during the year to be deducted from the taxable base income).
Supervisory Agency:
The Polish Financial Supervision Authority and the Ministry of Family, Labor and Social Policy, which provides more general supervision, are responsible for all oversight.
Context and brief description of reforms over time:
There was a defined-benefit PAYGO system in Poland until 1998. The social security system’s finances have been seriously affected by the population aging observed since the mid-1990s. As a result of the so-called “great pension reform,” the DB system was replaced by a DC system in 1999. The first pillar at the time was a notional accounts (NDC) system managed by the Social Security Institute (ZUS). The second pillar was a mandatory individually funded savings system, in which contributions were transferred through the ZUS to the privately managed open pension funds (OFE). Under this new system, 12.22% of contributions went to the first pillar, and 7.3% to the second pillar. However, after a series of contribution rate changes, the contribution rate to the OFEs was 2.92% in 2014. This was followed by several fundamental changes that would end up altering the functioning of the system: people were forced to transfer a large part of their funds from the OFEs to the ZUS and voluntary participation in the OFEs was incorporated. It was agreed that 10 years before reaching retirement age, the funds in the OFE would be gradually transferred to an account in the ZUS, supposedly to limit their volatility.
The third pillar comprises additional forms of savings for old age. The employer-funded collective occupational employee pension scheme (EPP) was established in 1999. In 2004, the possibility of voluntary individual retirement savings was introduced through Individual Retirement Accounts (IKE) and Individual Retirement Security Accounts (IKZE).
Enrollment in the quasi-mandatory scheme (automatic enrollment):
Automatic enrollment in the PPK is mandatory for people between 18 and 55 years of age, while those between 55 and 70 years of age can opt-in voluntarily. Participants may opt out at any time by informing their employer in writing. Employees must be re-enrolled in the PPK by their employers every four years.
Mandatory and Voluntary Contributions to the quasi-mandatory scheme (automatic enrollment):
The basic contribution rate financed by workers is usually 2% of salary, which can be reduced to 0.5% for those with lower incomes. The employer contributes a basic amount of 1.5% of workers’ salaries. Employers and workers can agree to increase their contributions to a maximum of 4% each, thus totaling 8%. The State also contributes to the accounts, regardless of the worker’s salary, with a welcoming contribution of PLN 250 (USD 59) after three months of contributions, and an annual contribution of PLN 240 (USD 57) if some requirements are met.
Pension Options and Access Requirements:
The system grants old age pensions (early, or at the official retirement age), as well as disability and survival pensions.
The official retirement age for accessing an old-age pension is 65, with at least 25 years of contributions, for men, and 60, with at least 20 years of contributions, for women. Years with no contributions must not be more than 33% of the number of years of contribution. The early retirement age is five years less than the official retirement age for men with at least 35 years of contributions (25 years if they cannot work), and for women with at least 30 years of contributions (20 years if they cannot work). The guaranteed minimum pension can be accessed if the old-age social security pension is lower than the minimum monthly old-age pension and the retirees meet the requirement of at least 25 years of contribution, in the case of men, and 20 years, in the case of women.
Men can access the old-age pension (NDC) at 65, and women at 60, by meeting the requirement of having contributed at least one day.
The guaranteed minimum pension can be accessed if the old-age social security pension is lower than the minimum monthly old-age pension and the retirees meet the requirement of at least 25 years of contribution, in the case of men, and 20 years, in the case of women.
The social security disability pension can be for total or partial disability.
The Social Security survivor’s pension for an individual survivor is 85% of the old-age or disability pension that the deceased received or was entitled to receive; 90% divided equally between two survivors; and 95% divided equally between three or more survivors.
25% of the funds can be accessed in case of serious illness, and 100% can be withdrawn to finance a mortgage until the age of 45. Saved funds can be withdrawn as a lump sum, or as a programmed withdrawal, at the age of 60.
State guarantee:
In the NDC PAYGO system, the government covers the cost of the minimum guaranteed pension by paying pension contributions to insured individuals who are on leave to care for their children or receiving maternity benefits, to individuals receiving unemployment benefits, and to unemployed graduates.
Further information:
Please review this profile/infographic prepared by Pension Research&Consulting, which reviews the basic functioning of each pillar of the Polish pension system in detail.
Laws:
1954 (social insurance for old age, disability and survival); 2010 (non-contributory social pension); 2021 (Workers’ Investment and Savings Program [WISP]).
Type of System:
Multi-pillar scheme consisting of a first non-contributory pillar (social pension program) with means testing; a second contributory pillar in which a social insurance PAYGO program and a mandatory pension savings program (Workers’ Investment and Savings Program, WISP, launched in 2021) are complemented; and a third voluntary savings pillar.
To qualify for a social security old-age pension, a person must have reached the official retirement age of 60, have at least 10 years of contributions and have stopped working (if under 65 years of age). Individuals who have reached the official retirement age, but do not qualify for the social insurance pension, may receive the means-tested non-contributory social pension, if the National Household Means Testing System for the Reduction of Poverty qualifies them as poor.
Startup:
January 2021 (Workers’ Investment and Savings Program [WISP], a mandatory individually funded program)
Managing Agencies:
The WISP is managed by the Social Security System (SSS, https://www.sss.gov.ph/).
Supervisory Agencies:
The Social Security Commission, comprising a tripartite Board of government representatives, employers and workers, is responsible for overall supervision, management and regulation.
The Social Security System (https://www.sss.gov.ph/) collects contributions and pays the PAYGO social security program’s pensions.
The non-contributory social assistance program is managed by the Department of Social Welfare and Development (https://www.dswd.gov.ph).
Membership:
-PAYGO program: mandatory enrollment for private sector employees, self-employed workers and domestic workers. Voluntary coverage for Philippine citizens working abroad, people who previously had mandatory coverage, and spouses of insured individuals who are not working. There are special systems for civil servants and military personnel.
– WISP Program: All private sector employees, self-employed workers, overseas Filipino workers, and volunteer members who: (i) Have no pension in the PAYGO social insurance program; (ii) have PAYGO social insurance program contributions; and (iii) have a monthly salary that exceeds PHP 20,250 (approx. USD 354,39).
Mandatory and Voluntary Contributions:
In the PAYGO program, employees contribute 5% of their gross monthly salary and employers contribute 10% (as of January 2025) to any of 45 income classes. A portion of the contributions of workers in the top 10 income classes (those with monthly wages above PHP 20,250 [USD 354,39]), will be allocated to the WISP. In 2021, employers´ contributions to WISP ranged from PHP 42.5 (USD 0.74) to PHP 425 (USD 7.44) per month and employees´ contributions ranged from PHP 22.5 (USD 0.39) to PHP 225 (USD 3.94) per month, depending on the gross monthly salary of workers.
Pensions / Benefits:
– PAYGO program: Earnings-related pension benefit depends on the greater of the following two average earnings: the average earnings over 5 years at 6 months prior to pension claim or the average earnings for the period in which contribution was paid. The benefit is the highest of PHP 300 (USD 5,25) + 20% of workers’ average monthly earnings + 2% of workers’ average monthly earnings for each year of service exceeding 10 years + PHP 1 000 (USD 17,5) or 40% of the workers’ average monthly earnings + PHP 1 000 (USD 17,5), whichever is greater.
There is no maximum monthly old-age pension.
Partial lump sum: The insured may choose to receive the first 18 months of pension payments (not including dependent supplements and the 13th pension payment in the first year) as a lump sum.
Dependent supplement: 10% of the old-age pension or PHP 250 (approx. $4.38), whichever is greater, is paid for each eligible child.
Payment schedule: 13 payments per year.
Pension Adjustment: Pensions are adjusted ad hoc based on changes in prices and wages and the financial health of the system, subject to approval by the Social Security Commission.
– WISP: On retirement, a fund member’s total accrued assets are converted into an annuity or life annuity paid for at least 15 years. In the event of the death of a fund member, the total balance of the member’s account is paid as a lump sum to the designated beneficiaries. Early withdrawals from WISP accounts are not allowed.
(Last updated: December 2024)
Law:
Private Sector Pensions Act 2019
Date Passed:
2019
Type of System
Comprises a public PAYGO system and a private savings system with automatic enrollment.
Started operating:
August 1, 2021
Managed by:
The Gibraltar Financial Services Commission (GFSC) is responsible for pension fund management and regulation.
Supervisory Agency:
The Gibraltar Financial Services Commission (GFSC) appoints the Pension Commission (PC), which enforces compliance with pension law requirements by employers and fund managers. (https://www.fsc.gi/).
Enrollment:
Enrollment in the new individual accounts pension scheme is mandatory. Employers must enroll their employees aged 15 or older, continuously employed for at least 1 year, with annual gross income of at least £10,000 (USD 13,415) in approved occupational pension schemes. Automatic enrollment is gradual, depending on the size of the company. As of August 1, 2021, it was mandatory for companies with 251 employees or more; as of July 1, 2022, for companies with 101 to 250 employees. As of July 1, 2025, it will be mandatory for companies with 51 to 100 employees; as of July 1, 2026, for companies with 15 to 50 employees, and as of July 1, 2027, for companies with 14 or fewer employees.
Mandatory and Voluntary Contributions:
The contribution rate for the mandatory PAYGO social insurance program is 10% of covered weekly earnings for employees, and 20% for employers. In the private savings system, employees and employers must contribute at least 2% of their weekly or monthly income to occupational pension plans.
Pension Options:
To access the full old-age pension (state pension) under this program, men must be 65 years of age, with at least 2,250 weeks of contributions, and women must be 60, with at least 2,000 weeks of contribution.
Men who have reached the official retirement age, but do not qualify for a full pension, may opt for a partial old-age pension, provided they have at least 585 weeks of contributions; women who have reached the official retirement age may do so with 520 weeks of contributions.
The full monthly old-age pension is currently £463.75 (USD 557.96), and the minimum monthly old-age pension is £120.35 (USD 144.80).
State Guarantee:
Not applicable
withdrawals from WISP accounts are not allowed.
(Last updated: December 2024)
Laws:
1951 (social security), 1960 and 1978 (legislation and regulation), 1990 (regulation), 1991 (pensions), 1992 (social security), 2000 (financing and management), 2002 (social security), 2004 (social security), 2008 (social security), 2010 (social security), 2011 (social security), 2012 (pensions), 2012 (fiscal strategy), 2015 (pensions), 2016 (pension reform); 2016 (social security coordination); and 2021 (Hellenic Auxiliary Pensions Defined Contribution Fund, TEKA).
Type of System:
The pension system comprises a first means-tested non-contributory pillar; and a second pillar in which main and auxiliary pension programs coexist.
In the second pillar, the main programs include a universal component (“National Pension”) for permanent residents of Greece who meet certain contribution requirements, and an income-related “Social Insurance” component for people employed in industry, commerce and related occupations; self-employed individuals; agricultural workers; public sector employees; and certain other categories of persons. Second-pillar ancillary programs are linked to major programs and share most of the same eligibility criteria.
Regarding ancillary programs, on September 2, 2021, parliament passed a law creating the “Hellenic Auxiliary Pension Defined Contribution Fund” (TEKA), a new mandatory individual accounts program for those entering the workforce for the first time as of 1 January 2022. This new program replaces the current mandatory notional PAYGO program [the so-called “Unified Auxiliary Fund for Social Security and Global Benefits” (ETEAEP)] Workers currently covered by the ETEAEP who were under the age of 35 on January 1, 2022, had the option of transferring to the TEKA program from January 1, 2022, to December 31, 2022; those who were 35 or older on January 1, 2022, had to remain in the ETEAEP program.
Startup:
January 2022 (Hellenic Auxiliary Pension Defined Contribution Fund, TEKA)
Managing Agencies:
TEKA is managed by a Board of Directors comprising seven members. Board members are selected in an open, transparent, and merit-based process described in detail in the regulations (Art. 12 of Law 4826/2021).
The Board of Directors sets the guidelines for the Fund’s investment policy and determines the key features of the investment schemes.
Until the first Board of Directors is constituted, for a period not exceeding twelve (12) months from the enactment of the law, the Fund shall be managed by a seven-member Temporary Steering Committee. The Temporary Steering Committee was established by Ministerial Agreement as a transitional management body, to ensure the start-up and proper functioning of the Fund during its creation. The Temporary Steering Committee carries out the preparatory work necessary for the constitution of the first Board of Directors and the recruitment of the first Director General, and draws up the Organizational Structure and Regulations necessary for the operation of the Fund.
Supervisory Agencies:
The Ministry of Labor and Social Security (http://www.ypakp.gr/) provides oversight of all schemes, including TEKA.
The Unified Social Security Fund (EFKA) (http://www.efka.gov.gr/), managed by a governor and board of directors, collects contributions and manages most programs.
Membership:
TEKA: As of 01.01.2022, all individuals entering the labor market, regardless of age, are subject to the TEKA for their ancillary insurance if they are employed in an industry for which there is mandatory additional insurance. These include public and private sector employees, as well as freelance engineers and lawyers.
As of 01.01.2023 the following individuals have the option of taking out TEKA insurance:
Mandatory and Voluntary Contributions:
Income-related pension (social insurance): 6.67% of the worker’s salary; 13.33% from the employer (total 20%).
TEKA: Employees and employers each contribute 3% of the gross monthly salary up to EUR 7,373 (approx. USD 8,557).
Pensions / Benefits:
-National pension: This pension is not related to income and is financed directly from the State budget. The minimum requirements are 15 years of contributions and 15 years of residence in the country. The total amount of the national pension is EUR 384, corresponding to 20 years of insurance and 40 years of residence in Greece from the age of 15 to the age limit required to receive the pension. The total amount is reduced by 2% for each year not exceeding 20 to 15 years of insurance (the national pension for 15 years is EUR 345.60). This amount is reduced by 1/40 for each year of residence of less than 40 years.
– Income-related pension: This is the contributory pension, which is calculated on the basis of the years of insurance and taxable income during working life, specifically from 01.01.2002 until the date of the retirement application. There is a variable accumulation rate of 0.77% for each year up to 15 years, which gradually increases to 2.55% for years 36 to 40, and beyond year 40 it is reduced to 0.5%. Past earnings are inflated with the change in the average annual Consumer Price Index until 2024, and from 2025 onwards with the annual change in wages. The supplementary insurance is public and mandatory, managed on a PAYGO basis.
– TEKA: For participants with at least 15 years of contributions, a life annuity is paid based on the participant’s account balance at the time of retirement. For those with less than 15 years of contributions, a lump-sum benefit is paid based on total employee and employer contributions (adjusted for inflation and excluding returns on investment).
(Last updated: December 2024)
Laws:
1992 (pensions); 1996 (contributions); 2001 (funeral allowance); 2003 (public service); 2008 (occupational pensions), implemented in 2009; 2016 (pension improvement); and 2021 (new voluntary individual insured pension accounts system).
Type of System:
The pension system consists of a first non-contributory pillar financed by general taxes, focused on people who do not receive a pension from the public PAYGO system, are not working, and meet the age requirements (65 for men and 60 for women); a second mandatory contributory PAYGO pillar; and a third voluntary private savings pillar with personal voluntary savings plans and a voluntary savings program supported by tax incentives and co-financed with the partial allocation of the contributions that employers pay into the PAYGO system (new voluntary individual insured pension accounts system).
Startup:
October 2022 (new voluntary individual insured pension accounts system)
Managing Agencies:
Accounts may be managed by Stravita (a state insurer with about two-thirds of the market) and Priorlife (a private insurer).
Supervisory Agencies:
The Ministry of Labor and Social Protection (http://mintrud.gov.by/) manages the programs through its local offices.
The Population Social Protection Fund (http://www.ssf.gov.by/) of the Ministry of Labor and Social Security collects contributions and manages the PAYGO program.
Membership:
PAYGO program: Mandatory coverage of dependent and self-employed workers permanently residing in the country, including priests and employees of religious organizations; members of cooperatives and farmers. There are special systems for individuals working under certain hazardous conditions, certain categories of individuals in professional activities, government employees, military personnel and individuals injured in the Chernobyl disaster.
– New voluntary individual insured pension accounts system: Voluntary enrollment of individuals covered by the PAYGO system, open to all employees at least 3 years below the official retirement age (63 for men and 58 for women, as of 2022). Account holders may suspend membership or change contribution rates at any time.
Mandatory and Voluntary Contributions:
PAYGO program: 1% of the gross wages of the worker and 28% by the employer (total: 29%).
– New voluntary individual insured pension accounts system: Employees will have the option to contribute up to 10% of gross salary (in addition to the employee’s current contribution rate of 1% for the PAYGO system) which will be tax deductible. Employers will also match the employee’s contribution, for up to 3% of gross salary (this percentage will be allocated from the employer’s total contribution to the PAYGO system on behalf of the worker, 28%). Thus, for example, if a worker decides to contribute 4% of his salary to this new voluntary scheme, the employer must contribute 3% (total: 7%); this means that 26% of the salary is allocated to the PAYGO system [1% by the worker and 25% (28%-3%) by the employer].
Minimum guaranteed return: The minimum guaranteed rate of return on employee/employer contributions will be equal to the central bank refinancing rate, currently 9.25% per annum.
Pensions / Benefits:
– PAYGO program:
To access an old-age pension, people must have reached the official retirement age and have at least 25 years or 20 years of coverage (men and women, respectively), including at least 18 years of paid contributions (men and women; gradually increasing by 6 months per year to 20 years by 2025). Partial pensions can be accessed at the official retirement age if the insured does not meet the coverage requirements for the full pension.
The monthly old-age pension is 55 per cent of the insured person’s average monthly income plus 1 per cent of the average monthly income for each year of coverage in excess of 25 years (men) or 20 years (women). An additional 1% of the insured person’s average monthly income is paid for each year of coverage that exceeds 10 years (men) or 7.5 years (women) in hazardous working conditions, up to a total of 20%.
The minimum monthly income used to calculate the pension is 1% of the minimum monthly old-age pension. The minimum monthly old-age pension is 25 per cent of the national average subsistence pension for the last two quarters.
– New voluntary individual insured pension accounts system: On retirement, participants may choose to receive a tax-free annuity or monthly life annuity, paid for 5 or 10 years. If the participant dies, eligible survivors may inherit the assets remaining in the individual account.
(Last updated: December 2024)
