Replacement rates give an indication of the pension promise relative to individual earnings, but they are not comprehensive measures of cumulated pension payments; they look only at the benefit level relative to individual earnings at the point of retirement, or at a given, later age. For a full picture, life expectancy, normal retirement age and indexation must also be considered. Together, these determine for how long the pension benefit is paid, and how its value evolves over time. Pension wealth – a measure of the stock of future discounted flows of pension benefits – takes account of these factors. It can be thought of as the lump sum needed at the retirement age to buy an annuity giving the same flow of pension payments as that promised by mandatory retirement-income schemes.

In defined benefit systems there is often no or a weak link between the replacement rate and the expected duration of benefit withdrawal. However, in the long run, ensuring financial sustainability imposes a trade‑off between the replacement rate and the duration of retirement. When retirement ages and pension benefits are held constant, pension wealth increases with longevity gains. In defined contribution systems there is a more direct link between the size of the benefit and the expected duration of benefit withdrawals. In these systems the pension wealth measure is equal to the accumulated assets and therefore independent of longevity increases as these automatically reduce the monthly benefits.

Gross pension wealth at individual earnings equal to the average wage is highest in China at 15.7 times annual individual earnings for men and 15.4 times for women (Table 2.4). It is also larger than 10 times for men and women in the Philippines, Singapore, Thailand and Viet Nam. The lowest pension wealth for men is in Pakistan at 6.1 and for women in Sri Lanka at 6.1, due to low replacement rates, while Hong Kong (China), India and Malaysia are all around 8‑9 times.

This indicator is built based on the gender-specific average mortality rates within countries. It thus assumes away differences in life expectancy across income levels. Given that individuals with low (high) income generally have a lower (higher) life expectancy, this implies that the computed numbers overestimate (underestimate) pension wealth for low (high) earners. With this caveat in mind, higher individual replacement rates for low earners than for average earners mean that the computed pension wealth relative to individual earnings is also higher. For men with earnings equal to half average‑earnings, pension wealth is 11.5 times their annual earnings on average, and it is 12.4 times for women. China has the highest pension wealth at low earnings for both men and women at 20.2 and 20.4 times, respectively, with Sri Lanka lowest at 7.4 and 6.1 times.

In countries where the duration in retirement is shorter, such as Indonesia and Pakistan, pension wealth is smaller. The opposite applies in Hong Kong (China) and Singapore, where life expectancy is high. Similarly, since women’s life expectancy is longer, pension wealth for women is higher in all countries that use unisex mortality tables to compute annuities or that have defined benefit systems. In addition, some countries have lower retirement ages for women; further extending the payment time.

Pension wealth is affected by indexation rules at a given initial replacement rate level. China has a discretionary indexation to a mix of wages and prices but all other Asian economies index to prices when they have a withdrawal system in place. Those with lump-sum withdrawals are assumed to have a price indexed annuity for comparison purposes.

The calculation of pension wealth uses a uniform real discount rate of 1.5%. Since the comparisons refer to prospective pension entitlements, the calculations use country-specific mortality rates by age and sex at the year of retirement. Pension wealth is expressed as a multiple of gross annual individual earnings.