Replacement rates are calculated for full-career workers from the age of 22, meaning that career lengths differ between countries. Hong Kong (China), Indonesia and Singapore have a long-term retirement age of 65 years for those starting in 2022, while in Malaysia, Sri Lanka and Thailand it will be 55 for men, and only 50 for women in Sri Lanka (Table 2.1).

Full career male workers will have a replacement rate of 49.4% on average across Asian economies, with a high of 72% in the Philippines and a low of under 40% in India, Malaysia and Sri Lanka. The average for women is slightly lower, at 45.3%. For OECD countries, the average is 50.7% for men and 50.1% for women, at average earnings. All six OECD Asia/Pacific countries have replacement rates below 40%, while they are all above 40% for the other OECD countries, with a high of 76.1% in Italy.

Most OECD countries aim to protect low-income workers (workers earning 50% average earnings) from old-age poverty, which results in higher replacement rates for them than for average earners. Low-income workers would receive gross replacement rates averaging 63.8%. Some countries, such as Australia, pay relatively small benefits to average earners, but are closer to the average for low-income workers.

Four of the Asian economies have the same replacement rate for low and average earners. Except for Pakistan, where the replacement rate is double, low earners in the other Asian economies have a replacement rate for low earners only slightly above that for the average earner.

At the top of the range, based on current legislation, low earners in China will receive a future gross replacement rate of 87.3% after a full career; retirement benefits are thus not much below their earnings when working. At the other end of the scale, Sri Lanka offers a gross replacement rate of 31.9% to low-income earners, thus implying a gross retirement income around 16% of average earnings after a full career. On average, the gross replacement rate at twice average earnings (here called “high earnings”) is 39.7%. Replacement rates for these high earners equal 73% in the Philippines and 59% in China and Viet Nam, while at the other end of the spectrum, India, Pakistan and Thailand are at 21%.

Gross pension replacement rates differ for women in nine economies, due to a lower future pension eligibility age than for men (China, Pakistan, Sri Lanka and Viet Nam) and the use of sex specific mortality rates to compute annuities (Hong Kong (China), India, Indonesia, Malaysia and Singapore). The replacement rates are expressed as a percentage of earnings which are not gender specific. Differences between the sexes are substantial in China, Pakistan and Sri Lanka, with replacement rates (i.e. monthly benefits) for women being between 13% and 34% lower than for men.

The old-age pension replacement rate measures how effectively a pension system provides a retirement income to replace earnings, the main source of income before retirement. The gross replacement rate is defined as gross pension entitlement divided by gross pre‑retirement earnings. Under the baseline assumptions, workers earn the same percentage of average worker earnings throughout their career. Therefore, final earnings are equal to lifetime average earnings revalued in line with economy-wide earnings growth. Replacement rates expressed as a percentage of final earnings are thus identical to those expressed as a percentage of lifetime earnings.