This chapter examines the cash flows of pension providers and public pension reserve funds. It then explores how the contributions to and benefit payments from these entities have changed.
Pension Markets in Focus 2025
Abstract
The net flows of contributions and benefit payments can also explain the growth in assets earmarked for retirement. Beyond investment income, contributions to pension providers and public pension providers are the main source to finance future retirement income. At the same time, pension providers may make payments to plan members, and public pension reserve funds to public pension schemes. The difference between contributions (inflows) and payments (outflows) can contribute to the growth or decline in pension assets. This chapter looks at whether pension providers and public pension reserve funds benefitted from a positive cash flow of contributions over benefit payments in 2024 and how contributions and benefit payments have evolved during this period.
Pension providers generally benefitted from positive cash flows in 2024, which further supported asset growth that year. Pension providers received contributions in excess of benefit payments and other expenditure in most jurisdictions, especially among non-OECD jurisdictions (26 out of 33) (Figure 3.1).1 This positive cash flow was the strongest relative to the amount of assets at end-2023 in Georgia, the Philippines and Türkiye, where the asset-backed pension system is still relatively recent and the total amount of assets of pension providers still relatively low compared to other jurisdictions (below 10% of GDP). Among OECD countries, Latvia, Lithuania and Korea also recorded relatively strong positive cash flows in 2024.
As a percentage of total investment at end-2023
Source: OECD Global Pension Statistics.
Negative cash flows reduced asset growth in most cases. Pension providers faced negative cash flows in some of the largest OECD pension markets (e.g. Australia, Canada) and several European countries (e.g. Belgium, Czechia, the United Kingdom). Yet, pension assets grew in these countries, thanks to the relatively strong investment performance in 2024. Peru is one of the few exceptions where the investment performance (3.7% nominal) was insufficient to offset the outflows from the plans, as the Peruvian Congress approved new early withdrawals. Peru had the most negative cash flows among all reporting jurisdictions (-16.4% of assets at end-2023). Some public pension reserve funds also faced negative cash flows (e.g. Sweden, the United States) as reserves were used.
Contributions paid to pension providers continued to grow in 2024. Annual contributions to pension plans have been growing on average over the last decade in most jurisdictions, with only a few exceptions (Luxembourg, Spain, Malta (Figure 3.2)). The trend reversed in Spain in 2024 with contributions increasing by over 10%. Contributions grew in many jurisdictions in 2024, with the strongest growth in Pakistan and Türkiye due to high inflation rates, and in Latvia, Malawi and Romania, where asset-backed pension systems are mandatory. Yet, several European and Latin American countries saw a decline in contributions paid to pension plans in 2024 compared to 2023.
In percent
Note: For more details, please see the methodological notes in Annex B.
Source: OECD Global Pension Statistics and other sources.
The increase in the number of people participating in a pension plan drives the growth in contributions. The proportion of the working-age population participating in a pension plan has been growing and this trend continued in 2024 (Table 3.1). The proportion of working-age people participating in a pension plan increased the most in Armenia, Georgia, the Slovak Republic and Uruguay, where participation is either mandatory or encouraged through automatic enrolment. The increase in participation rates is more limited in countries where asset-backed pension plans are already widely rolled out, such as Sweden, although Sweden saw an expansion of collective bargained pensions. By contrast, among OECD countries, participation rates declined in Czechia, Estonia (second pillar), Luxembourg and Mexico, and among other jurisdictions, in Egypt, Hong Kong (China) (ORSO schemes),2 and the Maldives (slight decline), for example. The reasons for the decline differ across jurisdictions. For example, in Luxembourg, the decline in the number of members of pension funds results from the transfer of members of two occupational pension funds (IORPs) in liquidation to insurance vehicles. In Mexico, the number of individual accounts managed by pension fund administrators (AFORES) declined in 2024 because of the transfer of over 2 million accounts to the newly created Welfare Pension Fund to supplement members’ pensions,3 and because of the exclusion of zero-balance accounts from the total of accounts.4 In Hong Kong (China), the fall in participation in ORSO schemes can be attributable to the structural changes under which more employers have chosen to offer Mandatory Provident Fund (MPF) schemes. In a few cases, the number of members increased at a slower pace than the working-age population (e.g. Colombia). Despite widespread growth in membership, participation remains low in some jurisdictions, such as in Albania, or some types of plans, despite greater public awareness about asset-backed pensions.
As a percentage of the working-age population
Note: For more details, please see the methodological notes in Annex B.
Source: OECD Global Pension Statistics and other sources.
Positive labour market developments supported the increase in membership as well as contributions to pension plans. Employment rates continued to improve in most OECD countries in 2024 (OECD, 2025[18]). People may access certain plans only through work. Higher employment rates therefore support the number of members having access to and participating in workplace pension plans, as was the case for instance in 2024 in Australia. By contrast, declining employment rates can negatively affect participation in pension plans. While the unemployment rate globally is historically low, there are large regional and country variations, with high unemployment rates in some countries (e.g. in South Africa) (ILO, 2025[19]), which could be a barrier to participation in workplace pension plans. Informality may also be a barrier to increased participation of the population in a pension plan in some countries (e.g. Zambia).
Increases in wages may have also contributed to the overall increase in contributions to asset-backed pension plans. Contributions to occupational pension plans may be levied on salary. Real wages are growing in nearly all OECD countries (OECD, 2025[18]). In Sweden, wage growth supported the growth of contributions to pension plans. In Australia, both labour growth and nominal wage growth boosted employer contributions. In Bulgaria, the average wage increased by 14%, leading to a larger volume of contributions to pension funds. Higher take-home pay may also give people more opportunity to save, including for retirement in voluntary plans.
Pension policies can also affect participation or contributions to pension plans. Some countries have raised their contribution rates in 2024 (e.g. Australia, Mexico, Romania). In Australia, the contribution rate of employers to superannuation increased by 0.5 percentage point to 11.5%, as a part of the rise to 12% by July 2025. The contribution rates to the second pension pillar in Romania increased by 1 percentage point to 4.5% in 2024. In Mexico, mandatory contributions to individual accounts have been gradually increasing from 6.5% of salary in 2021 to reach 15% by 2030. In Estonia, people could apply in 2024 to increase their contribution rate to the second pension pillar from 2% to either 4% or 6%, but this change is effective from January 2025. Some other policy measures include authorisations for parents to set up or contribute to a pension plan for their children (e.g. NPS Vatsalya in India). Kazakhstan also introduced mandatory enrolment for children.5 By contrast, the Slovak Republic reduced the contribution rate to the second pension pillar in 2024, which probably explains the decline in contributions that year.
The level of contributions to pension plans varies widely across jurisdictions. Figure 3.3 shows that Iceland has the largest amount of contributions paid to asset-backed pension plans relative to the size of its economy (10.1%). By contrast, contributions represent less than 0.1% of GDP in voluntary pension funds in Pakistan. These differences across countries are due to the differences in participation rates and contribution rates.
As a percentage of GDP
Note: For more details, please see the methodological notes in Annex B.
Source: OECD Global Pension Statistics and other sources.
Pension benefits also continued to grow in most jurisdictions in 2024. Payments have been rising for years, showing that asset-backed pension systems support benefit payments at old-age (either paying larger amounts and/or for a larger number of people). These payments represented a higher proportion of GDP at end-2024 than at end-2014, with some of the largest increases recorded in Latvia, Iceland, Portugal, and Switzerland, among OECD countries (Figure 3.4, Panel A). In Canada, payments increased between 2014 and 2024 but not as fast as GDP, probably as the amount paid by asset-backed pension plans was already relatively high in 2014. In a number of countries, payments remain relatively small as a percentage of GDP, such as Lithuania and Türkiye. The growth rate of payments was especially large in 2024 in Latvia, the Slovak Republic and Türkiye, among OECD countries, and Georgia and Kazakhstan among other jurisdictions (Figure 3.4, Panel B). Systems where payments have started recently may show higher growth rates of benefits (e.g. Georgia, Türkiye) given the lower volume and starting base, than countries where payments were already larger. Payments decreased in 2024 in a few countries, dropping by around 10% or more in Mozambique, Serbia, Spain and Peru.
Note: For more details, please see the methodological notes in Annex B.
Source: OECD Global Pension Statistics and other sources.
The increase in benefit payments results from more people being entitled to benefit payments from asset-backed pension plans. As the number of people accumulating savings increases, the number of people entitled to benefit payments is expected to rise as well with a time lag. Many jurisdictions note an increase in the number of people receiving benefits from their plans. The number of beneficiaries increased by 4.3% in Australia, 4.8% in Austria, 2.6% in Germany, and at higher rates in Chile (9.9%), Colombia (11.7%) and Costa Rica (39.3%). Switzerland also noted an increase in the number of beneficiaries. The number of people claiming benefits from asset-backed pension plans can change depending on the evolution of conditions to get benefits, including in the pay-as-you-go system as experienced in the Slovak Republic in 2024. The Slovak Republic increased public old-age pensions by 14.5% on 1 January 2024 and further by 5.22% from 1 July 2024, which led to a surge in the number of early retirement applications to benefit from this indexation. The number of beneficiaries is still low in some jurisdictions (e.g. 616 for the second pillar in North Macedonia) and will likely further increase as people currently in the accumulation phase reach retirement and use their pots.
The increase in benefit payments also reflects larger average payments per entitled individual. Costa Rica noted a higher average pension, attributing it to the maturing of the pension system as people may retire with larger pension pots.6 Higher inflation in recent years may have also played a role depending on the extent to which benefits may be indexed to inflation. The Netherlands reported that some pension funds granted some benefit indexation to their members, although the overall indexation was reportedly lower than in 2023.
Most payments from asset-backed pension plans are one-off payments in many jurisdictions, limiting the extent to which members get protection against longevity risk from their asset-backed pension plans at retirement. People may have the choice between different pay-out options depending on the country (e.g. annuity, programmed withdrawal, lump sum, a combination). The options available may be based on certain criteria, such as age, number of contributing years, or size of the pension pot. For example, Austria set a threshold for lump sum payments by pension companies, which is reviewed every year.7 In many countries, a lump sum is the main form of benefit payments (e.g. Belgium, Czechia, Italy). Low balances may account for this type of payouts in some cases, when there may be little incentives for people to take an annuity or the industry to offer this type of product, as in Czechia (OECD, 2020[20]). Switzerland reported that the proportion of people choosing a lump sum instead of an annuity is increasing. The provision of longevity risk protection by asset-backed pension plans may be limited unless individuals purchase an annuity on their own.
Early withdrawals and transfers of money out of a plan represent another type of outflow from pension plans, which can slow down asset accumulation. Early withdrawals and transfers represent an outflow, or leakage, for the asset-backed pension system as a whole, unless the amount withdrawn or transferred is put back into another pension arrangement. Individuals directly receive money from pension providers when they withdraw their assets before retirement, and this money is unlikely to return to the asset-backed pension system. Most countries allowing early access to savings usually set conditions. Transfers may happen when individuals change fund, change job and roll over the assets, or when funds wind up - on their initiative or urged by national authorities - or purchase buy-out contracts. There is a leakage if assets are paid to individuals and do not return to the system before retirement.
In Latvia, many people withdrew their savings form the third pillar (private pension funds) in 2024 in order to avoid higher personal income tax on capital gains that increased from 20% to 25.5% on 1 January 2025.
Some countries changed conditions to access savings in 2024. Hungary allowed people to access savings in individual accounts for housing purposes from 2025. Türkiye also issued a regulation on partial withdrawals in the individual pension system in September 2023, effective from 1 July 2024, allowing members to withdraw up to 50% of their savings without terminating their contracts in cases of marriage, home purchase, education, and natural disasters. Peru allowed a seventh wave of early withdrawals in 2024. The seven waves of withdrawals led to an overall out flow of PEN 115.2 billion between 2020 and 2024 to more than 7 million members.
← 1. Other expenditure includes administrative costs for operating the plan for example.
← 2. Close to 100% of the total employed population in Hong Kong (China) is covered under the MPF System and/or other retirement protection schemes, among which ORSO schemes are one of the segments.
← 3. The Welfare Pension Fund was created in 2024 to ensure that workers reaching 65 receive a supplement when their pension is lower than a certain amount
← 4. As of September 2024, accounts meeting the following conditions are no longer counted as accounts managed by AFORES: a) AFORES have stopped operating them; b) all sub-accounts have a zero balance for a minimum of six consecutive two-month period; c) the accounts have not received any contributions since their opening. However, these accounts will be counted again if members start making contributions.
← 5. Kazakhstan launched the “National Fund for Children” programme on 1 January 2024. Under this programme, 50% of the annual investment income of the National Fund of the Republic of Kazakhstan is allocated to special savings accounts for children until they reach the age of 18. They can use these funds in the future to purchase housing or finance education. The Unified Accumulative Pension Fund (UAPF) is responsible for maintaining records of these savings. If members do not use the allocated funds from the National Fund within 10 years, the unused amount will be transferred as voluntary pension contributions to their accounts in the UAPF.