OASDI in America and Abroad

Submitted by dfm on Thu, 09/08/2016 - 15:47

The fiscal health of the Social Security program continues to prove itself a politically contentious topic. Placing politics on the sideline, I found myself wondering how the equivalents of SSA’s Old Age, Disability, and Survivors program functioned in other parts of the world. Since both recipients and politicians often criticize the American Social Security system, I decided to peruse the SSA’s Social Security Programs Throughout the World reports to find out about OASDI benefits programs in the top four countries by GDP.*

I attempted to isolate the following criteria to focus on government disability benefits programs in those countries:

  • Eligible recipients
  • Individual contribution rates
  • Employer contribution rates
  • Maximum annual earnings for contribution calculation
  • Definition of disability
  • Work history requirement
  • Option for partial/temporary disability
  • Maximum monthly benefit

United States (GDP - $18.6 trillion)

Eligible Recipients Gainfully employed persons
Individual Contribution 6.2% of covered earnings
Employer Contribution 6.2% of covered payroll
Max Taxable Earnings $118,500.00
Disabled Definition Incapable of substantial gainful employment as a result of a physical or mental impairment that is expected to last one year or result in death.
Work Requirement Usually 5 of the 10 years before disability began (exceptions for younger applicants)
Partial/Temp. Disability Option No
Max Monthly Benefit $2639.00

China (GDP - $16.5 trillion)

China’s OASDI program is comprised primarily of basic pension insurance and a mandatory individual account. Here are the figures for insured employees.

Eligible Recipients Employees in urban enterprises and urban institutions; managed as enterprises; casual workers*
Individual Contribution None for basic pension insurance; 8% of gross insured earnings for mandatory individual account
Employer Contribution Up to 20% of payroll for basic pension insurance; none for mandatory individual account
Max Taxable Earnings 300% of local average wage of previous year
Disabled Definition Total incapacity for work and ineligible for an early old-age pension, as assessed by medical experts of the Labor Ability Appraisal Committee.
Work Requirement Not published in report
Partial/Temp. Disability Option Yes
Max Monthly Benefit 40% of insured’s monthly wage paid from basic insurance for permanent disability; 100% of insured wage for up to 12 months with one 12-month extension permitted for temporary benefits.

Japan (GDP - $4.4 trillion)

Japan’s OASDI system is comprised primarily of a national pension program that is supplemented by employees’ pension insurance. Below are the statistics for insured persons.

Eligible Recipients Residents aged 20 to 59, voluntary coverage for residents aged 60-64, and Japanese citizens residing abroad (national pension system); employees covered in firms in industry and commerce (employees’ pension insurance)
Individual Contribution None for basic pension insurance; 8% of gross insured earnings for mandatory individual account
Employer Contribution 8.737% of monthly payroll*
Max Taxable Earnings 620,000 yen per month
Disabled Definition Defined as Group I (total disability requiring constant attendance) or Group II (severely restricted ability to live independently)*
Work Requirement Must be insured at first medical exam and have paid contributions for 66.7% of the period from age 20 to two months before the month of first medical exam, or must have paid continuous contributions for one year from age 20 to two months before the month of first medical exam for the national pension program.
Partial/Temp. Disability Option Yes
Max Monthly Benefit 966,000 yen annually for Group I disability and 772,800 yen annually for Group II disability from the national pension program; 125% of old-age employees’ pension for Group I disability, 100% for Group II disability, 100% for Group III disability

Germany (GDP - $3.5 trillion)

Eligible Recipients Employed persons, certain self-employed persons, military personnel
Individual Contribution 9.45% of monthly earnings over €850*
Employer Contribution 9.45% of monthly payroll; 15% of earnings for employees earning less than €450 per month
Max Taxable Earnings €71,400.00
Disabled Definition Full loss of working capacity and unable to work more than three hours per day in any form of work.
Work Requirement 5 years of contributions and 36 months of compulsory contributions in the last 5 years before disability began
Partial/Temp. Disability Option Yes
Max Monthly Benefit Calculated by multiplying pre-determined individual earning points by the pension factor and the pension value.

It is important to note that the aforementioned statistics and definitions neither comprise the entirety of the rules and regulations for the respective counties nor account for disability approval rates. Nevertheless, it sheds some insight on how the American system compares to other parts of the economically developed world. While the U.S. system is far from perfect, it boasts relatively low contribution rates. But, it also has a very strict definition of disability, strict work history requirement, and high maximum taxable earnings amount.


* List by the International Monetary Fund, Estimates for 2016
* All statistics obtained from the SSA's Social Security Programs Throughout the World reports
* China utilizes a different contribution and payout system for rural and non-salaried urban workers
* This is reduced for monthly earnings from €450.01 to €850; none for monthly earnings up to €450
* Based on 30 pre-established wage classes. 8.844% for miners and seamen.
* Ibid.
* This is true for both the national pension program and employees’ pension insurance.