The ILO promotes a rights-based approach to the protection of older persons

This approach is based on international human rights and social security standards. It provides technical support to the development and reform of old-age pension systems in the face of the demographic transition, economic cycles and the growth of the informal economy.

Pensions for older women and men are the most widespread form of social protection in the world, and a key element in meeting SDG . Globally, 77.5 per cent of people above retirement age receive some form of old-age pension. However, major disparities still exist across regions, between rural and urban areas, and between women and men.

Pension systems are often composed of a mix of contributory and non-contributory schemes aimed at providing income security. As both the expression and the result of social solidarity, and when financed sustainably with due regard to social justice and equity, pension systems are a key means by which States can ensure redistribution and overcome various inequities in societies.

In countries with high levels of informality that face difficulties in extending contributory schemes, the introduction of tax-financed pensions has allowed the extension of coverage to previously uncovered population groups, especially women. However, in many instances the benefits provided lack a legal basis and do not provide adequate levels of basic income security that can guarantee a dignified life.

Significant progress has been made with respect to the objective of extending pension systems in developing countries to achieve universal coverage. Universal pensions have been developed in a wide variety of countries, including in low- and middle-income countries, as part of national social protection floors.

Observed trends vary substantially across regions and even among countries within the same region. In countries with comprehensive and mature systems of social protection, with ageing populations, the main challenge is to maintain a sound balance between financial sustainability and pension adequacy. At the other extreme, many countries around the world are still struggling to extend and finance their pension systems; these countries face structural barriers linked to low levels of economic development, high levels of informality, low contributory capacity, poverty and insufficient fiscal space, among others.

Apart from the challenge of extending protection to uncovered people, ensuring that those who benefit from pensions are able to maintain themselves in health and decency represents another important challenge.

Adequate protection in old age remains a challenge for women, people in low-paid jobs, those in precarious forms of employment, people working on digital platforms and migrants.

Public pension schemes, based on solidarity and collective financing in line with ILO social security standards, remain by far the most widespread pillar of old-age protection globally. Many countries are introducing parametric reforms to their contributory pension systems in order to adapt them to changing conditions and ensure their long-term sustainability. While important, these parametric reforms can only go so far in the face of macro phenomena such as wage suppression, frozen contribution rates, growing inequalities and, last but not least, the falling labour share of income.

Increasingly, public pension schemes are complemented by voluntary or mandatory defined contribution schemes (individual savings accounts and notional defined contributions), the objective of which is to raise benefit levels on the basis of market or economic performance, although without guarantee as to the levels ultimately secured.

The COVID‑19 crisis brought additional pressures to bear on the costs and financing of pension systems, but with a moderate to low impact over the long term. The massive response of countries to the crisis has highlighted the critical role that old-age protection systems, including long-term care, play in ensuring the protection of older adults, particularly in times of crisis.

Basic pension to elderly people

All Nordic countries provide a basic- or guaranteed minimum old age pension to people with citizenship or residence in the country. Though the rules seem similar, the structure of the old age pension schemes are quite different considering the size and value of the payable benefits from the basic- or guaranteed minimum pension to elderly people.

In all Nordic countries applying for a basic- or guaranteed minimum pension require a period of residence in the country. The number of years varies between one and five with three years being required in most cases. In Denmark and Sweden part of the residence period can be in an EU/EES country.

However, to receive the full benefits from this old age pension scheme a period of 40 years residence is required in al Nordic countries. A shorter period will often enable a partial benefit, typically proportional to the period of residence.

The basic-, or guaranteed pension are not dependent on previous income in all but one of the Nordic countries. Additionally, in almost all the countries it is possible to postpone the application for old age pension. Though the rules vary, this postponement typically results in increased pension benefits.

Only Sweden has an income dependant guaranteed pension.

In most countries, applying for a basic- or guaranteed old age pension also provides access to different types of supplements. These supplements can relate to low income, support for heating, health care, personal necessities, etc.

About employment-, earnings-related, and supplementary pension schemes

This page only concerns the basic- or guaranteed minimum pension to elderly people. In some of the Nordic countries this part of the pension scheme is supplemented by pensions schemes that relate to employment or earnings from working life.

[See the section Employment earnings-related, special and partial old age pensions, for more specific information on the topic of employment-, earnings related, or supplementary pension for elderly people.]

The data presented in the graph are adjusted with the purchasing power standard (purchasing power parity/Euro) to enhance the comparison of the average monthly benefits.

Using the purchasing power standard, it is possible to compare the value of the values more directly than when using the national currency.

As expected, the graph on monthly income before tax shows an increase in the monthly income for all countries reporting data. This is due to regular benefit increases.

Denmark

The basic amount, paid to all pensioners, is not income adjusted. The regular pension supplement depends on material status and is adjusted based on income in addition to the basic pension and work income. This includes, for example, share income, capital income, or private labour market pensions that exceeds a certain amount. Health and heating allowances, as well as a personal supplement, may also be paid to pensioners with low incomes and high expenses. Additionally, pensioners with a small amount of liquid assets can be awarded a supplementary pension benefit (known as the pensioner’s cheque), which is payable once a year in January.

Faroe Islands

A pension reform, which came into effect in 2020, means that there are different rules for people born before and after the turn of the year 1952/53 respectively.

Born before 1953: The basic amount is not income-adjusted. The regular pension supplement is adjusted in relation to taxable income and earnings-related pension. Pensioners with no or a low income may be awarded an annual non-taxable supplement.

Born 1953 or later: The basic amount and pension supplement are income-adjusted.

Regardless of other income all old age pensioners receive a basic amount from the labour-market pension scheme, and they also receive a tax-deduction.

Finland

The basic pension, which is based solely on an earnings-related pension, has played a less substantial role since the reforms of 1996–2001. Following the Act on Guaranteed Pension, which entered into force on 1 March 2011, the guaranteed pension was only payable to those whose total other gross income from pensions was less than EUR 828 per month in 2020. The maximum guaranteed pension in 2020 was EUR 835 per month. Any other pensions received, either from Finland or abroad, affect the amount of the guaranteed pension, and are deducted at a rate of 100 per cent.

Iceland

The basic pension is adjusted according to special rules in relation to other taxable work-related income. An additional pension is also available, depending on the recipient’s other income. In addition, a household supplement may be granted depending on income and household status. Pensioners with little or no other income may be eligible for supplementary special pension, which is payable to those whose total gross income is under a certain amount. In 2016, this amount was ISK 246 902 permonth for those who live alone, and ISK 212 776 per month for those who cohabit.