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OECD Factbook 2010: Economic, Environmental and Social Statistics
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branch Public finance
branch Public social expenditure
    branch Public and private pension expenditure

Pension systems vary across countries and no single model fits all. Generally, there is a mix of public and private provision. Public pensions are statutory, most often financed on a pay-as-you-go (PAYG) basis - where current contributions pay for current benefits - and managed by public institutions. Private pensions are in some cases mandatory but more usually voluntary, funded, employment-based (occupational) pension plans or individual retirement savings plans (personal pensions).

Definition

Old-age pension benefits are treated as public when relevant financial flows are controlled by general government (i.e. central and local governments or social security funds). Pension benefits provided by governments to their own employees and paid directly out of the government's current budget are also considered to be public. Public pensions are generally financed on a PAYG basis, but also include some funded arrangements. All pension benefits not provided by general government are within the private domain.

Private expenditures on pensions include payments made to private pension plan members (or dependants) after retirement. All types of plans are included (occupational and personal, mandatory and voluntary, funded and book reserved), covering persons working in both the public and private sectors.

Outlays on public and private pension benefits are expressed as a percentage of GDP. The data are shown for old-age benefits only (i.e. they do not include survivors' benefits).

Comparability

Public pension expenditures come from the OECD Social Expenditure (SOCX) database while pension expenditures for private pension arrangements come from the OECD Global Pension Statistics (GPS) database. The GPS database provides information on funded pension arrangements, which includes both private and public pension plans that are funded. However, only private expenditures are considered for this indicator. At the time of writing, only data up until 2005 were available in the SOCX database.

The GPS database does not cover all types of private pension arrangements for all countries: the private pension data for Austria, Canada, Germany, Luxembourg and the United States include only autonomous pension funds. The break in series for Mexico reflects the inclusion of occupational pension plans registered by CONSAR since 2005.

No data for private expenditure are currently collected for countries ranked separately on the left-hand side of the chart.

Overview

Public spending on old-age benefits averaged 6.5% of GDP in 2005, compared with private pension benefits of an average of 1.5% of GDP in the same year (in the countries for which data are available). Public spending on old-age pensions is highest - greater than 10% of GDP - in Austria, France, Germany, Greece, Italy and Poland. By contrast, Australia, Iceland, Ireland, Korea and Mexico spend 3.5% of GDP or less on public old-age pensions.

Private expenditure on old-age benefits is the highest in Australia, Denmark, Iceland, the Netherlands and Switzerland, where it exceeds 3.5% of GDP. However, private benefit spending is negligible in around a third of OECD countries.

The share of private pensions in total expenditures on old-age benefits exceeds 50% in just Australia and Iceland. The average share of private pensions in the total is a little over 20%.

Over time, public pension expenditures have grown a little faster than national income: from an average of 5.6% of GDP in 1990 to 6.5% in 2005.

Expenditure in private pensions has also grown between 2001 and 2005, from an average of 1.8% of GDP in 2001 to 2.1% in 2008 (in countries where most of the trend between both years is available).

In recent years, there has been a shift towards funding and private sector management within statutory pension systems. This trend has been especially strong in Latin America and Central and Eastern Europe. Although negligible now, private pension expenditures in the future will be much higher in Hungary, Mexico, Poland and the Slovak Republic, for example. Other OECD countries with mandatory private pensions include Australia, Iceland, Norway, Sweden and Switzerland.

 

Sources

Further information

Analytical publications

Methodological publications

Web sites

Indicator in PDF Acrobat PDF page

Table
Public and private expenditure on pension
    Table in Excel

Figure
Public and private pension expenditure Figure in Excel
Public and private pension expenditure