Sustainability of the pension system at risk
THE TOTAL EXPENDITURE ON PENSIONS (PUBLIC AND PRIVATE) HAS INCREASED IN MOST OF OECD ECONOMIES DURING THE LAST TWO
DECADES. SPAIN IS ONE OF THE COUNTRIES WITH THE HIGHEST RISE, 2.9 PP OF GDP
In Spain, this increase is mainly explained by changes in its demographic structure and rises in the average pension amount.
THE IMPACT OF AGEING POPULATIONS
Between 2020-60, the life expectancy at age 65 will increase 25% and the working age population will fall by one-third in Spain.
The old-age dependency ratio doubled during the last 60 years. Over the next 30 years will occur the same.
INCOME OF PEOPLE OVER 65
Spain is among the Top 10 OECD countries with the highest net replacement rates in 2020.
The net pension wealth of Spaniards over 65 years is among the highest ones in the OECD.
The relative income of people over 65 years in Spain is among the Top 10 OECD countries with the highest ones, along with other 5 economies of the EU-27.
Reforms of pension systems in OECD countries
MOST COUNTRIES ARE TAKING MEASURES TO ENSURE THE SUSTAINABILITY OF THEIR PENSION SYSTEMS
Key measures
- Automatic adjustment mechanisms: more transparent and more equitable across generations However, Spain eliminates the sustainability factor, pensions are indexed to CPI and a new instrument is established, the Intergenerational Equity Mechanism.
- The contribution period required to get a full pension at the statutory retirement age.
- Higher effective retirement age.
- Number of years used to calculate the pension amount.