Pensions at a Glance 2025

Public expenditure on pensions

Key Results

Public spending on cash old-age pensions and survivors’ benefits in the OECD increased from an average of 6.7% to 8.1% of GDP between 2000 the latest available year. Public spending is highest in Greece and Italy at over 16% of GDP and lowest in Iceland and Ireland at under 3%. Public pensions are often the largest single item of social expenditure, accounting for 18% of total government spending on average.

Greece and Italy spent the largest proportion of national income on public pensions among OECD countries, at around 16% of GDP for the latest available year (Table 8.2). Other countries with high gross public pension spending are in continental Europe, with Austria, France and Portugal around 13%‑14% of GDP. Public pensions generally account for between one‑quarter and one‑third of total public expenditure in these countries.

At the other end of the spectrum, Australia, Chile, Iceland, Ireland and Korea spent less than 4% of GDP on public pensions. Chile and Ireland have relatively young populations. In Australia and Iceland, much of retirement income is provided by compulsory occupational schemes (see the next indicator of “Pension-benefit expenditures: Public and private”), leaving a lesser and declining role for public pensions; in addition, the retirement age is high at age 67. Korea’s pension system is not mature yet: the public, earnings-related scheme was only established in 1988, and the targeted basic pension is at a relatively low level.

Spending also tends to be low in countries with favourable demographics, such as Israel, Mexico and New Zealand. However, this is not always the case: Türkiye spends 6.1% of GDP on public pensions despite having the third lowest old-age to working-age ratio among OECD countries (Table 6.2). For Türkiye, expenditure levels can be explained by historically low retirement ages, resulting in longer periods in retirement than in many other countries.

Trends

Public pension spending increased from an OECD average of 6.7% to 8.1% of GDP between 2000 and the latest available year. It was estimated that population ageing captured by the shift in demographic structures alone would have triggered an increase in pension expenditure of 2.5% of GDP on average, between 2000 and 2017. Higher employment lowered total pension expenditure by 1.1% of GDP on average (Chapter 1, (OECD, 2021)). Spending increased by more than four percentage points of GDP from 2000 in Finland, Greece, Mexico, Portugal and Spain, and by between two and four percentage points in Italy, Japan, Korea and Türkiye. Conversely, public spending fell by over one percentage point in Australia, Chile and Latvia. Germany, Ireland, Lithuania and the United Kingdom also recorded slight declines. Despite ageing pressure, public pension spending was relatively stable as a proportion of GDP from 2000 in 15 countries: Canada, Estonia, Germany, Hungary, Iceland, Ireland, Israel, Lithuania, the Netherlands, New Zealand, Poland, Slovenia, Sweden, Switzerland and the United Kingdom.

Gross and net spending

The penultimate column of the table shows public spending in net terms: after taxes and contributions paid on benefits. Net spending is significantly below gross spending in Austria, Belgium, Denmark, Finland, France, Greece, Italy, Luxembourg, Norway, Poland, Sweden and Switzerland, due to taxes on pension benefits. Gross and net spending are similar where pensions are not taxable such as in Hungary, the Slovak Republic and Türkiye or where public benefits are generally below basic tax reliefs (Australia, Czechia, Iceland, Ireland and Slovenia).

Non-cash benefits

The final column of the table shows total gross public spending on older people, including non‑cash benefits. In Denmark, Finland, Norway and Sweden, non-cash benefits exceed 1.5% of GDP. The most important are housing benefits. These are defined as “non-cash benefits” because they are contingent on particular expenditure by individuals. Australia, Belgium and the Netherlands also record high figures for non-cash benefits.

Further reading

Adema, W. and M. Ladaique (2009), “How Expensive is the Welfare State?: Gross and Net Indicators in the OECD Social Expenditure Database (SOCX)”, OECD Social, Employment and Migration Working Papers, No. 92, OECD Publishing, Paris, https://doi.org/10.1787/220615515052.

OECD (2021), Pensions at a Glance 2021: OECD and G20 Indicators, OECD Publishing, Paris, https://doi.org/10.1787/ca401ebd-en.

Table 8.2.  Public expenditure on cash old-age and survivor benefits

	Level (% of total government spending)		Level (% of GDP)						Change of level (p.p.)		Level in net terms (% of GDP)	Total including non-cash (% of GDP)
	2000	Latest	1990	2000	2010	2020	Latest	2000 ‑ Latest		Latest		Latest
Australia*	12.8	9.1	3.1	4.7	3.8	4.2	3.4	‑1.3		3.4		4.5
Austria	23.8	25.0	11.8	12.3	13.1	14.3	14.0	1.8		11.9		14.8
Belgium	18.4	19.5	9.4	9.1	9.9	11.5	10.7	1.6		9.3		11.7
Canada*	12.0	13.9	4.5	5.0	5.1	6.4	5.9	0.9		5.5		5.9
Chile**		10.8	7.9	5.0	3.4	3.1	3.7	‑1.3		4.3		3.1
Colombia**		11.8			5.5	6.3	5.7			7.5		5.6
Costa Rica**		16.2				5.9	5.1			5.9		5.3
Czechia	16.8	18.2	5.5	6.8	8.0	8.6	8.2	1.4		8.2		8.5
Denmark	11.9	15.2	6.1	6.3	7.1	8.2	7.5	1.2		5.4		9.3
Estonia	16.5	16.1		6.0	7.6	7.2	6.8	0.8		6.5		6.9
Finland	15.5	22.1	7.2	7.4	9.8	12.6	12.2	4.8		9.6		13.7
France*	21.9	22.9	10.5	11.5	13.2	14.4	13.4	1.9		12.0		13.8
Germany	22.8	21.3	9.5	10.9	10.7	11.2	10.8	‑0.1		10.2		11.6
Greece	21.9	28.5	9.6	10.5	14.4	17.9	16.2	5.7		14.2		16.2
Hungary	15.7	15.9		7.4	9.5	7.7	7.6	0.2		7.6		8.1
Iceland	4.6	5.9	2.2	2.1	1.5	3.0	2.9	0.8		2.9		3.3
Ireland	10.3	12.5	4.8	3.1	5.2	3.3	2.9	‑0.2		2.8		3.0
Israel**	10.0	11.0		4.4	4.8	5.0	4.5	0.0		4.8		5.5
Italy	29.0	28.7	11.3	13.5	15.3	17.4	16.1	2.6		13.0		16.2
Japan*		28.6	4.6	6.9	9.5	9.6	9.2	2.3		8.7		9.4
Korea*	5.6	10.3	0.7	1.3	1.9	3.5	3.8	2.5		3.8		4.0
Latvia	23.3	16.2		8.9	9.4	7.7	7.5	‑1.3		7.2		8.1
Lithuania	17.9	17.4		7.1	7.8	7.1	6.5	‑0.6		6.5		6.8
Luxembourg	18.8	20.1	8.1	7.1	7.5	9.0	8.6	1.5		7.1		8.6
Mexico**		13.4	0.4	0.7	1.6	4.6	5.3	4.6		5.2		5.3
Netherlands	13.1	14.0	7.5	5.7	5.9	6.8	6.4	0.8		5.9		7.5
New Zealand*	12.1	12.0	7.1	4.6	4.5	5.1	5.1	0.6		4.3		5.2
Norway	11.1	13.7	5.5	4.7	5.3	7.6	6.5	1.8		5.4		8.6
Poland	24.3	25.7	5.0	10.4	11.1	11.4	11.2	0.8		9.4		11.2
Portugal	18.3	27.3	4.8	7.8	12.0	13.6	12.9	5.1		12.9		13.0
Slovak Republic	11.7	16.6		6.3	6.7	7.7	7.4	1.2		7.4		7.9
Slovenia	21.8	21.3		10.4	11.0	11.2	10.6	0.2		10.5		10.7
Spain	20.8	24.8	7.7	8.1	9.1	12.8	12.3	4.2		11.7		12.7
Sweden	13.9	16.0	7.2	7.4	8.0	8.5	8.0	0.6		6.3		10.3
Switzerland	18.0	18.4	5.1	6.0	6.1	6.9	6.6	0.6		5.0		6.8
Türkiye			0.7	3.9	7.3	7.4	6.1	2.2		6.1		6.1
United Kingdom*	20.6	15.2	6.8	7.3	8.3	7.8	7.1	‑0.2		6.8		7.5
United States**	16.4	18.1	5.8	5.7	6.6	7.4	7.3	1.7		6.8		7.4
OECD	16.6	17.7	5.9	6.7	7.7	8.5	8.1	1.4		7.4		8.5

Note: Latest data is for 2021, except for * = latest data is for 2022 and ** = latest data is for 2023.

Source: OECD Social Expenditures Database (SOCX); OECD Main Economic Indicators Database.

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