The small but famous
Scattered around the mountains and coasts of southern Europe are a number ofsmall states, famed for fiscal secrecy, millionaire citizens, or in some cases just embarrassing appearances on the sports pages once football's World Cup qualifiers get underway.
Liechtenstein has a population of just 32,000 nationals, and boasts a pensions system very similar to neighbouring Switzerland. Of this population fractionally over 10% are aged over 65, although given the existing differentiation in retirement age between the sexes, there will be marginally more pensioners than official statistics indicate. Some reforms are underway at the moment with regard to the retirement age of 65 for men and 62 for women. The aim is to set a new age limit of 64 by 2005. Early retirement is allowed, and this may prove to be a future trend, as the private schemes provide for this and it is allowed under the social security system.
First pillar contributions are unusual in Europe, but again in line withSwitzerland. Employers and employees make equal contributions in most cases, and these are based on total earnings. In line with the Swiss system there are supplementary occupational plans, some of which are mandatory and others voluntary. The aim is to provide income of between 60-75% of final for all citizens, according to the country's pensions and social security department.
Whilst best known as the playground of millionaires and the home of the world's most famous motor race Monaco is also home to thousands of Monegasques in full-time employment. Because of the unique status of Prince Ranier's fiefdom those born there benefit from a comprehensive social security system which provides free health care for the majority, and other benefits.
The pension provided by the state is paid for out of equal contributions from employer and employee. These total 12.30% of gross salary, and provide a tax free pension for those in full-time employment, except in the case of the Monegasques who live in France who are subject to taxation by the French authorities. A further contribution is made to the fund by the employer, to finance the provision of the wide benefits bestowed by the social security system. Calculated as a percentage of the salary, this payment is recalibrated each year to take into account the cost of the services.
The situation is different, and complicated for those who are categorised as self-employed. In the case of this class of workers the monthly contribution to the system includes sickness and invalidity proportions as they are considered to be outside of the safety net which the social security system provides. There is access to supplementary schemes, which are attractive to the self-employed, but less so to those employed within companies in Monaco, whose welfare is catered for by the principality.
The tiny republic of San Marino has been memorably described as "Not so much a small state as a small mountain", and so it is hardly surprising that its pension system does not differ greatly from that provided by the rather larger state of Italy.
With retirement ages of 65 for men and 62 for women tax deductible contributions are made by employers and employees to a direct benefit scheme. The 1995 Dini reforms in Italy have not been copied in San Marino, but the other major difference with Italy is on taxation. Although pensions are deemed taxable income, the rates applied to San Marinos incomes is much lower than that which their Italian neighbours bear.
Although there are no pension funds operating within San Marino, there is nothing to prevent an employee taking out a scheme providing supplementary retirement benefits. Open ended pension plans sold by banks and, predominantly, insurers throughout Italy are available to San Marinos. As these were first brought to the market at the end of 1998 scant information is available on how many San Marinos have taken advantage of them, although a spokesman for the Christian Democrat party in San Marino city said take up was low, a situation confirmed by a number of consultants in Rome and Milan.
Nestling high in the mountains, sandwiched between France and Spain, Andorra has a pension system which has more in common with the former. A population of 70,000 boasts just 7,000 pensioners which suggests that the problems of an ageing population has yet to penetrate this particular mountain range. The retirement age for men and women is fixed at 65, when the retiree becomes eligible for a pension whose value is calculated on earnings over the working life. Points are accumulated on the basis of the monthly returns which the employer provides to the Caixa Andorrana Segureda Social. Pension receipts are not taxable. Employees contributions are calculated on a sliding scale dependent upon the type of work undertaken. These range from 5% through 6% to a maximum of 7% of salary. Employers contributions are fixed at 13%.
There are no mandatory or voluntary supplementary schemes, although insurance schemes providing for illness or invalidity are available.