Module 15 · Finance around the world
Pensions around the world
How retirement systems differ, how retirement ages and replacement rates compare, how claiming early or late changes a pension, and why Gulf expats get a gratuity.
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In this lesson
- Explain the three pillars of retirement income with country examples
- Compare retirement ages and replacement rates across countries
- Calculate how claiming earlier or later changes a pension, and the break-even age
- Explain why expatriates in the UAE receive an end-of-service gratuity instead of a state pension
Kenji, 62, in Tokyo can claim his state pension now or wait until he is 75. Ana, 31, works in Dubai on an expat contract and has no state pension at all. Marta, 58, in Maribor has been told that the retirement age will rise to 67. How do pension systems around the world differ?
Three sources of retirement income
Most countries combine three : a public pension, a workplace pension and your own saving. The public pension is usually : today’s workers pay today’s pensioners. Slovenia’s ZPIZ, Germany’s statutory insurance, the UK State Pension, the US Social Security and Japan’s two-tier system all work this way. Workplace and personal pillars are funded, and their weight varies a lot.
Retirement ages are rising
The is the age from which a full state pension is paid. Many countries are raising it as people live longer:
- Slovenia: 65 today, rising to 67 by 2035, or 62 with 40 years of service.
- Germany: 67 for everyone born in 1964 or later.
- United Kingdom: rising from 66 to 67 between 2026 and 2028.
- United States: full benefits at 67 for people born in 1960 or later, with earliest claiming at 62.
- Japan: 65, but you can claim anywhere from 60 to 75.
- China: since 1 January 2025, rising over 15 years for men from 60 to 63, and for women from 50 to 55 or from 55 to 58.
How much do pensions replace?
The is the pension as a share of pay before retirement. The OECD calculates it for a full-career average earner in mandatory schemes. Its 2025 average net rate is about 63%.
Claiming early or late
Some systems let you choose when to start. In Japan, a pension claimed at 60 is 76% of the age-65 amount, and at 75 it is 184%. In the US, claiming at 62 gives about 30% less than at 67, and waiting beyond 67 raises the benefit by up to 8% a year until 70.
When there is no state pension
In the UAE, expatriate workers have no pension scheme. Instead, they receive an from their employer: 21 days’ basic pay per year of service for the first five years and 30 days after that, capped at two years’ pay, after at least one year of service. It is a one-off sum, not a lifelong income, so expatriates need their own saving.
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