Public pension replacement rates

Public pension replacement rates







Public pension replacement rates

Social security is an insurance program that attends to the needs of the aged group, survivors and disabled people and in particular is done through payroll taxes. This program generally aims at providing benefits to the unemployed and retirees. The causes for public pension replacement rates variances between United States and Greece may includes the high rates of the aging population, the degree of the pension benefits, the average age at retirement and the rate of the labor force participation (Schmitt, 1993).

Social security systems are sometimes used to turn towards the use of replacement rates, which are used as a measure of degree of benefits. According to research, it is said that the public pension replacements rates are low in United States of America than in Greece because it is argued that a god number of immigrant families have the tendency of bringing in their relatives who are aged to the United States (Quadagno, 2010). They do this with the intention of putting all their burdens of their support to the state and the federal. These variances also exist due to the differences in the entire size of the federal government where the government does not allow the old immigrant to participate in any work.

Therefore, this increases the number of people to get retirement benefits hence leading to a reduction in the public pension replacement rates unlike in the Greece. United states tend to depend mostly on the taxes contributed by employees not by employers. However, Greece is ranked third because its social security contributions are from employers hence they tend to provide high rates of benefits as the public pension replacement rates. This is because it is noted that employers’ contributions do not appear particularly in the calculations of the replacement rates.

The role of the national debt in public pension replacement rates of the Greece debt burden

The national debt helped in increasing the accrual pension rights depending on the way people worked. For instance, in case a person works for a very long period of time, they could be provided with their pension rights which were taken to act as incentives for those who worked for long before retiring. This was thus to act as a compensation for the predicted decrease in the replacement rates. In addition, there was also significant rules which were changed as away of continuing the increase of the legal age that every person is supposed to retire. According to research, such additions in the age of retirement may not necessarily cause or lead into longer working of the elderly at retirement. However, it is to take the place of the active population that is joining the labor force because of the longer education.

Another role of the national debt in public pension replacement rates of the Greece debt burden includes dealing with the effects of demographic trends on public pension expenditures in the absence of changes in the benefits of pension, participation of labor force and the retirement age (Jaeger, 1996). Through this, the country gets to know the current trends whether they are unsustainable because without reforms population aging will produce an unprecedented and harmful accumulation of public debt.

In addition, the national debt also plays the role of borrowing money than pay it back with interests. This helps in increasing the funds for public pension replacement rates of the Greece debt burden. The national debt also leads to introduction of an automatic connection between pensions and life expectancy of the public pension replacement rates of Greece debt burdens. It also provides various range of indicators, covers the design of national retirement income provision, entitlement of pension, incomes of aged people and the finances of pension systems in which pension systems functions.


Jaeger, A. (1996). Aging populations and public pension schemes. Boston, MA: International Monetary Fund.

Schmitt, R. (1993).The Future of pensions in the United States. Pennsylvania, CA: University of Pennsylvania Press.

Quadagno, P. (2010). Aging and the Life Course: An Introduction to Social Gerontology (5th ed). New York, NY: McGraw-Hill Companies, Inc.



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