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SCMP Reporter

CANADA'S social security system for the aged is like Britain's - two-tiered - consisting of the Old-Age Security (OAS) scheme and the Canada Pension Plan (CPP.)   The full OAS pension is C$385.81 (HK$2,160.53) per month.

  OAS applies at 65 and is not means tested, although the Government claws some money back from the wealthy by taxing it.

  There are minimum residence requirements.

  The Government funds the scheme on a pay-as-you-go basis out of general revenue.

 Because of its heavy exposure to the scheme, the Government has made efforts to use the tax system to avoid excessive payments to the wealthy.

  It had long been a tradition in Canada that everyone should receive the same pension. But this ended in 1989 when claw back provisions were introduced on incomes above C$50,000.

   Last year, those earning in excess of C$84,000 had all their OAS pension taxed.

  If people lacked sufficient independent income, the Government stepped in with a tax free Guaranteed Income Supplement (GIS.)   The current maximums are C$844.31 per month for singles and C$1,368.92 per month for a married couple.

  The CPP is also payable at age 65, with the amount of benefit linked to contributions.

  It is payable anywhere in the world after 65. Early retirement is allowed between 60 and 65 if the recipient was not working. Benefits are reduced by 0.5 per cent for every month if the retirement date is earlier than age 65; that is to say, at 60, there are 60 months to normal retirement so the pension declines by 30 per cent.

  The CPP is partially funded. This means part of its liability will not have to come out of future contributions. In 1987, it was given until 2016 by which time it was expected to have accumulated an amount equal to two years' payments.

  Current contribution rates under the CPP are 2.6 per cent of pensionable earnings from employer and employee and 5.2 per cent from self-employed.

  Pensionable earnings are defined as between C$3,400 and C$34,400.

  In the West and other European countries, pensions differ according to social needs.

    BRITAIN BRITAIN operates a two-tiered national scheme, made up of the Basic State Pension Scheme (BSP) and the State Earnings Related Pension Scheme (SERPS.)   These give all British residents a universal pension and there is no means test or income test.

  Benefits are paid to males at 65 and females at 60.

  The basic full pension under the BSP at the start of this year was GBP56.1 (HK$667.50) per week, indexed for inflation but reduced proportionally if minimum contribution requirements had not been met.

  The BSP is funded on a pay-as-you-go basis by contributions from employers, employees and the Government.

  The funding of SERPS is similar but the employer is allowed to contract out if there is coverage from a private source offering equal or better benefits.

  Contributions from employers and employees are based on a sliding scale related to earnings. At the bottom of the scale, someone earning between GBP2,912 and GBP4,939 would pay two per cent on the first GBP2,912 and 7.2 per cent on the balance, with the employer contributing a flat 1.6 per cent of earnings.

  People earning above GBP21,840 per year pay two per cent on the first GBP2,912 and 7.2 per cent on the next GBP18,928, with their employers paying 7.4 per cent.

   One attraction of the British system is mobility; pensions are payable overseas, enabling recipients to take advantage of better climates and lower costs of living. UNITED STATES THE United States has a reputation overseas as a low welfare society but it provides a comprehensive pension scheme through a Federal system introduced in 1937.

  Most employees in the US and abroad are required to contribute. Exceptions are casual agricultural workers, domestics, rail workers and government employees covered by other schemes.

  At the start of this year, contribution rates were 6.2 per cent from employer and employee. Self-employed people are required to pay 12.4 per cent.

  The pension benefit is calculated on a multiple of annual indexed monthly earnings up to a maximum US$1,147 (HK$8,831) per month available from age 65. Also taken into account are the factors of age and retirement date.

   The scheme is funded on a pay-as-you-go basis with a contingency reserve.

   Eligibility is based on a minimum 40 ''quarters of coverage'' - a measure of the amount of earnings on which payments have been made. A quarter is currently set at US$620 but only four are allowed to be earned in any one year.

   There is an income test with reductions made if recipients earn over US$670 per month while they are under 65, or US$930 per month while they are between 65 and 70.

  The government fund from which payments are made is projected to reach about US$5 trillion in about 30 years.

 GERMANY THE reunification of Germany placed a strain on the country's pension system.

  Since 1992, the social security laws of the former west Germany have applied to the whole country.

  There is a minimum contribution requirement of five years.

  The pension paid is related to the period over which contributions have been made and the movement in average net wages.

  The retirement age under Germany's scheme is 65.

  Those retiring after contributing for 45 years and earning below DM64,000 (HK$321,280) receive about 70 per cent of their final salary. This is reduced by about 20 per cent for those earning about DM240,000.

  Contributions are 9.6 per cent of earnings from employer and employee and 19.2 per cent from the self-employed.

  The government grants an annual subsidy of about 14.6 per cent of the total pension cost.

   It also covers contributions from employer and employee during maternity leave and unemployment.

  Germany's retirement system dates back to the middle of the last century.

     when funds were set up to provide for miners in their old age.



West shows generosity