Series: Economic Bulletin.
Author: Miguel Ángel Martín and Roberto Ramos.
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Abstract
Rationale
There is significant disparity in the pension expenditure-to-GDP ratio across European countries. This article examines the size of the Spanish pension system relative to those of other EU countries and analyses the drivers behind the differences observed.
Takeaways
- In 2019, pension expenditure in Spain, relative to the size of its economy, was above the EU’s simple average and similar to the GDP-weighted average.
- In comparison with the EU in 2019, the ageing process was less advanced in Spain and pension scheme coverage was lower. In contrast, Spain had a lower employment rate and a higher level of benefits relative to the average wage.
- Demographic projections suggest that pension expenditure in Spain will increase significantly. Slightly more than 40% of this increase could be offset if Spain’s employment rate were to rise to equal that of Germany.