To achieve this redistributive objective, the United States and the Philippines provide higher wage replacement rates for individuals with lower lifetime wages. Many developing countries use explicit minimum or maximum pension levels for the same purpose. None of these mechanisms seems to work as expected. Once certain income-specific characteristics of workers are taken into account, public schemes redistribute little lifetime income to the poor. For one thing, the well-off live longer than the poor and so collect pensions over a longer period.
Many poor people contribute but die before they become old enough to collect benefits.
People who live longer than average require larger lifetime incomes to maintain their standard of living, and pensions are designed to insure against this eventuality. However, the longevity differences between rich and poor are predictable, not random, so the differences in benefits received because of these longevity differences are expected and constitute redistribution rather than insurance. Besides drawing a pension over fewer retirement years, lower-income workers usually enter the labor market earlier because they leave school earlier. Yet they often fail to accrue much extra pension credit during these extra contributing years. Germany and Hungary grant pension credit to university students, who thus earn pension benefits during those years without contributing for them.