Does collecting a pension hurt the economy?

 Pensions contribute to economic well-being but some argue that giving pensions hurt our economy.  The OECD 2019 published Pensions at a Glance 2019 In this study the researchers looked at the disposable income of those countries whose seniors have pensions They found that on average among OECD countries, people older than 65 have a disposable income equal to 87% of the total population. It is less than 70% of the economy-wide average in Estonia and Korea, but slightly more than 100% in France, Israel and Luxembourg. Moreover, income drops further with age in old age, and those older than 75 have a significantly lower income than the 66-75 in all OECD countries, with an average difference of 14 percentage points. In most non-OECD G20 countries it is the other way around, old-age income rises slightly with older ages, except in China and the Russian Federation.

Women’s pensions are lower than men’s. Older women often had short careers and lower wages than men, resulting in low benefit entitlements. In the EU-28, women’s average pensions were 25% lower than the average pension for men in 2015 (Figure 1.6). The gender gap stood at over 40% in Germany, Luxembourg and the Netherlands and below 10% in Denmark, Estonia and the Slovak Republic. This also translates into a disproportionate share of poor elderly people being women. On the one hand, with recent moves towards tighter links between labour

Of the four main sources of income on which older people draw, public transfers (earnings-related pensions, resource-tested benefits, etc.) and private occupational transfers (pensions, severance payments, death grants, etc.) account for two-thirds of the total income. Public transfers account for 55% and private occupational transfers represent 10% of older people’s incomes on average. The countries where over-65s are most reliant on public transfers are Austria, Belgium, Finland and Luxembourg: more than 80% of their incomes come from that source.

Public transfers represent only 6%, 15% and 18% of all income in Mexico, Turkey and Chile, respectively. Private occupational transfers are of particular importance in 12 OECD countries, with the Netherlands being highest at 39%.

Work accounts for 25% and capital for about 10% of older people’s incomes on average. Work is especially important in Korea and Mexico, where it accounts for more than half of old-age income; it also represents a large share of income in Chile, Estonia, Israel, Japan, Korea, Latvia, Lithuania, New Zealand, Poland, the Slovak Republic, Turkey and the United States.

Also, as incomes are measured at the household level, work is likely to be a more important income source for older people where many of them live in multi-generational households.

Capital, mostly private pensions, represents 40% of all income sources of older people in Canada. In Denmark and New Zealand, capital represents over 20% of all income.

In most countries, pensioners are not a drain on the economy, they contribute to it by paying taxes and working.