Public pensions in these three countries account for between one-quarter and one-third of total public expenditure. In Portugal, they currently comprise 27.3% of spending, according to the “Pensions at a Glance 2025” report by the Organisation for Economic Co-operation and Development (OECD).
Greece and Italy are the OECD countries where the weight of public pensions is highest, reaching around 16% of GDP.
Conversely, Australia, Chile, Iceland, Ireland, and South Korea spend less than 4% of GDP on public pensions, albeit for different reasons.
While Chile and Ireland have relatively young populations, in Australia and Iceland a significant part of pensions is covered by private schemes, and the retirement age of 67 is considered “high.”
In Korea, the public social security system “is not yet consolidated,” having been established only in 1988.
On average, public pension expenditure in the 38 OECD countries increased from 6.7% to 8.1% of GDP between 2000 and 2024, the last year analyzed in the report.
However, in Portugal, Finland, Greece, Mexico, and Spain, spending rose by more than four percentage points of GDP since 2000, and by two to four points in Italy, Japan, Korea, and Turkey.
In Portugal, the increase was about five percentage points, rising from 7.8% of GDP in 2000 to the current 13% of GDP.
Conversely, public spending fell by more than one percentage point in Australia, Chile, and Latvia, while Germany, Ireland, Lithuania, and the United Kingdom also showed slight declines.
Despite the pressures from an aging population, public pension spending remained stable in 15 countries: Canada, Estonia, Germany, Hungary, Iceland, Ireland, Israel, Lithuania, Netherlands, New Zealand, Poland, Slovenia, Sweden, Switzerland, and the United Kingdom.
By 2050, the OECD predicts that public pension spending will grow to between 8.8% and 10% of GDP on average across all 32 OECD countries.
In the EU27, spending is projected to rise from 9.9% of GDP in 2023 to 10.9% in 2050, despite a projected 69% increase in the number of people over 65.
Portugal (-2.8 percentage points) and Italy (-1.7 points) are the two countries expected to show the largest drops in public pension expenditure between 2050 and 2060, the OECD’s projection limit.
According to the report, private pension schemes are mandatory or achieve “near-universal coverage through employment relations agreements” in less than one-third of the 38 OECD countries.
In the others, voluntary private pensions are created at an individual’s initiative or provided by employers, meaning that “around half of OECD countries have private pensions” with some degree of significance.
Iceland, Switzerland, and the United States have the “largest flows of private pension payments,” comprising 5.2% and 5.7% of GDP. They are followed by Australia, Canada, the Netherlands, and the United Kingdom, with 3% to 4.5% of GDP, and Japan with 2.7% of GDP.
In Portugal, private pensions account for only 0.3% of GDP, one of the lowest values among OECD countries.
In Iceland, private pensions represent 64% of total pension expenditure, while in Australia, Switzerland, and the United States they account for 50% of the total. On average, the value is 18% of total expenditure.
Total expenditure on both public and private pension systems is highest in Italy, reaching 16.6% of GDP, followed by Greece with 16.3%, Austria with 14.6%, and France with 13.7%. In Portugal, it amounts to 13.3% of GDP.
The average among OECD countries is 9.4% of GDP, with the lowest levels observed in Ireland, at 3.8% of GDP, and in Korea, at 4.7%.
