10 Countries Paying People to Retire

24/7 Wall St.: 10 Countries Paying People to Retire

24/7 Wall St. identified the top 10 countries with the most generous public pensions. Based on a recent report by the OECD, we examined pension replacement rates, which measures how effectively a pension system provides income during retirement to replace earnings prior to retirement. A pension replacement rate of 100% means an employee would continue to receive a full salary during retirement. The countries on the list promise to cover the highest portion of the salaries of those joining the workforce in 2010.

24/7 Wall St. considered a number of other factors to provide additional context: the retirement age and life expectancy for both men and women, net pension replacement rates (pension payouts after adjusting for taxes and other fees) and replacement rates for those making more or less than the median income, along with additional factors provided by the OECD to examine the fiscal health of countries.
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10 Countries Pay... 24/7 Wall St. identified the top 10 countries with the most generous public pensions. Based on a recent report by the OECD, we examined pension replacement rates, which measures how effectively a pension system provides income during retirement to replace earnings prior to retirement. A pension replacement rate of 100% means an employee would continue to receive a full salary during retirement. The countries on the list promise to cover the highest portion of the salaries of those joining the workforce in 2010.

24/7 Wall St. considered a number of other factors to provide additional context: the retirement age and life expectancy for both men and women, net pension replacement rates (pension payouts after adjusting for taxes and other fees) and replacement rates for those making more or less than the median income, along with additional factors provided by the OECD to examine the fiscal health of countries.
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10. Czech Republ... Pension Replacement Rate: 50.2%
Male/Female Retirement Age: 61/58.7
Male/Female Life Expectancy: 79/81.8
Sovereign Debt as percentage of GDP: 36.6%
Employment Rate: 65.3%

The Czech Republic manages to pay 61-year old males with a median income more than half his salary prior to retirement. The deal gets even better for women, whose retirement age of 58.7 is the fourth lowest of a ll of the countries measured by the OECD. Still, pension spending is 9.1% of GDP, lower than any country on the list except for Turkey. Meanwhile, the country’s debt as a percentage of GDP is 36.6%, lower than all countries on the list except for Slovenia and Luxembourg.
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9. Portugal Pension Replacement Rate: 53.9%
Male/Female Retirement Age: 65/65
Male/Female Life Expectancy: 83/85.3
Sovereign Debt as percentage of GDP: 88%
Employment Rate: 65.2%

In Portugal, both men and women retire at 65, an old retirement age compared to the majority of countries on the list. But at retirement, the pension replacement rate is 53.9% for median income workers, and that number rises to 69.2% after taking into account tax benefits. But Portugal is struggling fiscally, and with sovereign debt accounting for 88% of GDP, it still has a long way to go to reach fiscal health. Meanwhile, its long-term unemployment rate for people age 15-64 is 5.64%, tied with Greece for the second-highest on this list and tied for the fourth highest among all OECD countries.
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8. Finland Pension Replacement Rate: 57.8%
Male/Female Retirement Age: 65/65
Male/Female Life Expectancy: 82.4/86.1
Sovereign Debt as percentage of GDP: 41.7%
Employment Rate: 68.4%

The retirement age for both men and women in Finland is also 65, but retirees get 57.8% of their income prior to retirement. Finland currently pays out 12% of its GDP in public pensions, which is the sixth highest out of the 31 countries for which the OECD has data and well higher than the OECD average of 8.4%. But the high pension spending hasn’t necessarily taken an undue burden on the country’s overall fiscal health. Finland’s sovereign debt of 41.7% of GDP is far better than countries such as Greece and Italy.
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7. Slovenia Pension Replacement Rate: 62.4%
Male/Female Retirement Age: 63/61
Male/Female Life Expectancy: 80.3/84.9
Sovereign Debt as percentage of GDP: 36%
Employment Rate: 65.8%

In Slovenia, men can retire at 63 and women at 61. When they retire, Slovenians are paid 62.4% of their salaries. It gets even better after taxes, where the net pension replacement rate is as high as 85.4% for workers making the median income. This is higher than all but four countries on the list. Despite this, Slovenia’s sovereign debt as a percentage of GDP is 36%, the lowest on this list except for Luxembourg.
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6. Turkey Pension Replacement Rate: 64.5%
Male/Female Retirement Age: 44.9/41.0
Male/Female Life Expectancy: 75/78.8
Sovereign Debt as percentage of GDP: 42.9%
Employment Rate: 46.8%

The retirement age above isn’t a typo — men retire at 44.9 in Turkey and women at 41. Despite the early retirement age, the country still pays out 64.5% of a person’s salary for retirement, which on average lasts for more than 30 years for men and nearly 38 years for women. Net replacement rates are even better. Turkey’s 93.1% payout is better than all countries except for Greece and Luxembourg.

Fortunately for Turkey, the generous pensions haven’t taken a significant toll on the government. The country’s debt is only about 43%, far better than countries such as Greece and Italy. Furthermore, only 7.3% of GDP is spent on pensions, the 10th lowest out of the 31 countries for which the OECD provided data, which is more remarkable given the early retirement age. The country also spends $7,960 per person on health care, the best out of any country the OECD measured.
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5. Italy Pension Replacement Rate: 64.5%
Male/Female Retirement Age: 59/59
Male/Female Life Expectancy:82/86.1
Sovereign Debt as percentage of GDP: 109%
Employment Rate: 56.9%

Italians can receive a cushy pension at quite an early age. At age 59, an employee making the median income — along with those making half and one-and-a-half times the median income — can begin receiving a pension paying out 64.5% of an individual’s salary. Considering that the average woman lives to the age of 86, that is a long pension payout. Italy is the only country except for Greece to hold more debt than its GDP. The country spends 15.3% of its GDP on public pensions, more than any other country in the OECD.
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4. Austria Pension Replacement Rate: 76.6%
Male/Female Retirement Age: 65/60
Male/Female Life Expectancy: 82.5/85.4
Sovereign Debt as percentage of GDP: 65.8%
Employment Rate: 72.2%
Those making the median income in government can receive more than three-quarters of their salary following retirement. That is an especially good deal for women, who are expected to live for more than 25 years after retiring at 60. This could take a hefty toll on the government, but the high employment for those aged 15-64 of 72.2% helps to keep these pensions funded. Furthermore, household disposable income of $27,541 is higher than any country on this list except for Luxembourg, which helps put Austria’s economy on stronger footing compared to some of its European peers.
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3. Spain Pension Replacement Rate: 81.2%
Male/Female Retirement Age: 65/65
Male/Female Life Expectancy: 83/86.1
Sovereign Debt as percentage of GDP: 51.7%
Employment Rate: 58.4%

Despite Spain’s significant economic woes, the country manages to pay out a sizable pension to employees. Spain’s pension pays 81.2% of the salary for those making the median income, half the median income and one-and-a-half times the median income. While the retirement age is higher than in many of the countries on the list, men are expected to live 18 years after retirement age, while women are expected to live more than 21 years following retirement, leading to a sizeable government payout. This comes as Spain has been severely hampered by unemployment. More than 9% of those between ages 15-64 have been looking for a job for more than a year, more than any other country measured by the OECD.
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2. Luxembourg Pension Replacement Rate: 87.4%
Male/Female Retirement Age: 60/60
Male/Female Life Expectancy: 80.9/84.7
Sovereign Debt as percentage of GDP: 12.6%
Employment Rate: 65.3%

In Luxembourg, once reaching the age of 60, citizens making the median income can begin drawing 87.4% of their income. Meanwhile, for those making only half the median income, they can take home 97.9% of their salary by age 60. Fortunately, Luxembourg’s economy is far stronger than other European countries such as Greece. Its sovereign debt is only 12.6% of GDP, the best of all countries on this list and the fourth best of countries measured by the OECD. Furthermore, household disposable income is $35,321, second only to the U.S. in the countries measured by the OECD, while household wealth is $72,644, after only the U.S. and Switzerland.
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1. Greece Pension Replacement Rate: 95.7%
Male/Female Retirement Age: 57/57
Male/Female Life Expectancy: 80.9/ 84.2
Sovereign Debt as percentage of GDP: 147.8%
Employment Rate: 58.5%

Greece’s public employees get a pretty sweet deal. They get to enjoy nearly a full salary for life beginning at age 57, the earliest retirement age of all countries except for Turkey. After figuring in tax deductions, the replacement rate for those making the median income is 111.2%, the only country with net replacement rates above 100% for that income level. Since both men and women are expected to live into their 80s, the government is on the hook for a lot as evidenced by the 13.6% of GDP that is spent on public pensions — more than all countries in the OECD except for three. Government spending in Greece has definitely taken its toll. The country has $147.80 of debt for every $100 in GDP, a higher ratio than any other country on the list by a longshot.
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