Pension expenditure in Spain: a European comparison

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 simpleaverage and similar to the GDP-weighted average. • In comparison with the EU in 2019, the ageing process was less advanced in Spain and pensionscheme coverage was lower. In contrast, Spain had a lower employment rate and a higher level ofbenefits relative to the average wage. • Demographic projections suggest that pension expenditure in Spain will increase significantly. Slightlymore than 40% of this increase could be offset if Spain’s employment rate were to rise to equal that ofGermany.