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Expenditure on pensions at 12.7% EU's GDP in 1999
Apr 16, 2002

Expenditure on pensions1 in the EU, which constitutes almost half of all expenditure on social protection2, was 12.7% of GDP in 1999. This share has varied very little since 1993, when it accounted for 12.9% of GDP. Pensions are the biggest item of social protection expenditure in all EU Member States except Ireland, Denmark and Sweden. In 1999, they constituted more than 60% of that expenditure in Italy, and between 50% and 52% in Greece, Spain, Luxembourg, the Netherlands, Austria and Portugal.

In that year, old-age pensions1 accounted for more than three-quarters of all pensions in the EU, the remainder comprising disability pensions (9.9%), survivors' pensions (9,7%) and other types of pension1 (5.1%). This information is taken from a report3. published today by Eurostat, the Luxembourg-based Statistical Office of the European Communities.

Apart from Ireland4, the share of GDP given over to pensions in the EU Member States in 1999 was lowest in Spain (9.9%) and Portugal (10.1%), while the highest shares were in Austria (14.0%) and Italy (15.1%).

Old-age pensions were the most important item of expenditure on pensions in all the Member States, particularly in the United Kingdom (80.1% of total pensions), Germany (79.2%) and France (79.1%). They accounted for a lower share in Ireland (46.2%), Austria (58.4%) and Finland (59.2%). The share of disability pensions in total pension expenditure varied from 6.2% in France to 22.0% in the Netherlands, while that of survivors' pensions was practically zero in Denmark, but 21.8% in Ireland.

In the EU, the share of old-age pensions in the value of all pensions increased steadily from 72.8% in 1990 to 75.3% in 1999, which corresponds to an annual growth rate in old-age pensions of 3.4% in real terms. This average hides markedly different increases between the Member States: real annual growth was 8.4% in Portugal and 5.3% in Luxembourg, but only 1.4% in Ireland and 2.1% in the Netherlands.

Trends in old-age pensions reflect demographic changes in each country, policy on pension increases and reforms undertaken in recent years by Member States. To eliminate the demographic factor, we can divide the total value of old-age pensions by the number of over-65s. This indicator, although imperfect (given that the age of retirement differs between countries), does provide interesting information on trends in pension expenditure per person aged 65 and over.

Between 1990 and 1999, this expenditure grew by 14% in the EU. The highest growth rates were observed in Portugal (+79%), Denmark (+40%), the United Kingdom (+34%) and Luxembourg (+32%). The lowest were recorded in Ireland and the Netherlands (+8% each).

Germany, which recorded a rise of 2% over the period 1990-1999, is a special case, in that this slight increase has to be seen in relation to the fall in average pension expenditure which occurred following the integration of the new Lšnder in 1991: from 1990 to 1991, pension expenditure per person in the 65+ age group decreased in Germany by 10%, but rose by 12% between 1991 and 1999.

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