Social protection statistics - pension expenditure and pension beneficiaries
- Data from July 2016. Further Eurostat information, main tables and database. Planned article update: September 2018.
This article presents statistics on pension expenditure and pension beneficiaries in the European Union (EU) collected through the European system of integrated social protection statistics (ESSPROS).
In 2013, just over a quarter of the EU-28 population (26.1 %) received at least one pension (see Figure 1, data exclude Belgium, Greece and Poland). The proportion of the population receiving a pension is highest in Lithuania (31.8 %) and equals to or exceeds 30 % also in Estonia, Slovenia, Luxembourg and Bulgaria. On the contrary, it is below 20 % in Spain and Ireland and only 15.1 % in Cyprus. The interpretation of such figures is, however, not straightforward, because the characteristics of the benefits they encompass may be quite different.
- 1 Main statistical findings
- 1.1 Interpretation of data
- 1.2 Pension beneficiaries in the EU
- 1.3 Expenditure on pensions in the EU
- 1.4 Linking expenditure and beneficiaries
- 1.5 Trends in pension expenditure and beneficiaries
- 2 Data sources and availability
- 3 Context
- 4 See also
- 5 Further Eurostat information
- 6 External links
Main statistical findings
Interpretation of data
Statistics on pensions provide valuable information on a number of issues of critical importance for policymaking, including, for example, the current and future burden on public finances and the adequacy of pensions. It is essential, therefore, that users understand exactly what the data show and can interpret the figures correctly. In view of this, three general points should be mentioned. Firstly, the definition of pensions used within the European system of integrated social protection statistics (ESSPROS) framework may not correspond to that applied in each country, meaning that the figures published at EU level may differ from those published by the relevant authorities at national level. For example, at national level pensions may refer only to a specific form of old age pension while in ESSPROS the scope of pensions is much wider (see Data sources and availability).
Secondly, the figures presented here may represent aggregates of multiple types of pensions, granted for various purposes, under different conditions, and to different groups with different levels of entitlement. For example, figures may combine: first pillar (state) and second pillar (occupational) benefits; basic, complementary and supplementary benefits (see Data sources and availability); benefits that are conditional on withdrawal from the labour market and benefits that can be received in addition to income from employment; social security benefits and social assistance benefits as well as means-tested and non-means-tested benefits. The specific combination of pensions covered by such aggregates varies between countries, which limits the extent to which it is possible to compare the situation in different countries or make inferences about particular social benefits or aggregations of them. Thirdly, ESSPROS excludes - under the general definition it gives of social protection - pensions in the form of insurance policies, taken out on the private initiative of individuals or households solely for their own interest (i.e. personal or third pillar pensions) and is therefore limited to first and second pillar pensions.
Pension beneficiaries in the EU
Who is counted?
In the majority of countries (21 of the 28 EU Member States), some people benefit from more than one type of pension, meaning that a sum of the recipients of each type of pension would ‘double-count’ some individuals. For example, it may be possible, depending on the national rules, for a person to simultaneously receive a survivors’ pension and an old age pension. Accounting for this double-counting is not straightforward in practice, and is therefore often done using estimates. An approximation of the extent to which double-counting occurs between the seven types of pension (see Data sources and availability) is shown in Table 1. According to national quality reports on social protection pension beneficiaries, double-counting between the seven different types of pension does not occur in the ten countries shown as having no double-counting.
All figures on national pension beneficiaries used in this analysis, whether for all pensions or for the different types of pension, refer to the number of individuals receiving at least one pension, i.e. the figures are adjusted to take account of any double-counting.
There are three further points to bear in mind when considering data on pension beneficiaries at national level. Firstly, the numbers for each country include beneficiaries resident in other countries, who are therefore not included in the resident population used as a reference. The relative numbers of non-resident beneficiaries varies between countries. Secondly, the figures are based on numbers of beneficiaries at the year-end and do not, therefore, take account of persons who may have been in receipt of a pension for part of the year but are no longer at the end of the year (i.e. they may understate the total number of beneficiaries of at least one pension during the year). Finally, EU aggregates are simply obtained as the sum of the countries' results and therefore are not adjusted to take into account of any inter-national double counting (i.e. the total number of beneficiaries of at least one pension at EU level may be overestimated).
The majority of pension beneficiaries are receiving old age pensions
Over three quarters (76.7 %) of pension beneficiaries are in receipt of old age pension benefits that start being paid when the legal or standard retirement age is reached. The extent to which pension beneficiaries generally are concentrated in the older part of the population varies, however, between countries, depending on a number of factors, including: the relative importance and characteristics of other types of pension benefits (e.g. survivors pensions, disability pensions and pensions for those taking early retirement on health grounds); the legal retirement age (which may be different for men and women and is tending to increase in some countries); the extent to which pensions may be paid before the normal retirement age (e.g. for workers in sectors with difficult working conditions); and the relative numbers of non-resident pension beneficiaries who are, by definition, excluded from the population (although this is expected to have a relatively small impact in most countries).
This variation can be illustrated by comparing the number of people receiving at least one form of pension with the population aged 65 or over — age 65 being used as a proxy for the retirement age, although this of course varies between countries (Figure 1). In Luxembourg, Poland (2012 data) and Slovakia, the number of people receiving at least one form of pension is at least 80 % higher than the number of people aged 65 or over who are resident in the country. At the other end of the scale, the number of pension beneficiaries is only 12 % higher than the population aged 65 or over in Spain and 14 % higher in Cyprus. This variation between countries highlights the differences in the scope of pension benefits and demonstrates why it is not possible to compare or make inferences about particular social benefits using aggregate data.
Comparing the proportion of the population aged 65 or over with that receiving an old age pension (excluding anticipated and partial pensions) generally results in smaller differences (Figure 1). The variation seen reflects the extent to which the legal or standard retirement age diverges from the assumed age of 65, the relative number of non-resident recipients of old age pensions and the proportion of the population continuing to work beyond the legal or standard retirement age.
There are two cases - Spain and Croatia - where the differences are such that it seems unlikely that these factors alone provide an explanation. In both, the number of people receiving an old age pension (excluding anticipated and partial pensions) is only around two thirds (68.8 % and 64.3 % respectively) of the number of people aged 65 or over, implying that many older people do not receive an old age pension. In practice, however, many receive another type of pension. In Spain, the low figure primarily reflects the way in which women benefit from different pensions. Less than half of the female population aged 65 or over (47.5 %) receive an old age pension but a slightly higher share instead receive a survivors’ pension (52.4 %), a minority may receive both.
This demonstrates why it is important to bear in mind that old age pensions are only one part of the national pension system and that, depending on national legislation and practice, an old person may receive an old age pension, a disability pension or a survivors’ pension, or a combination of these. While disability pensions paid to pensioners above the defined legal or standard retirement age should - according to the ESSPROS methodology - be reported as old age pensions, survivors’ pensions paid to the same age group are not reported in this way. Moreover, it is known that, in some cases, technical difficulties have meant that the requirement to split disability pensions by function according to the age of the recipient are not always respected (e.g. in Croatia).
Expenditure on pensions in the EU
A total of EUR 1 683 billion (gross) was spent across the EU on pensions in 2013 (data exclude Greece and Poland), representing approximately 12.8 % of the EU GDP (see Figure 2, 2012 data). Expenditure varied considerably between countries. Greece spent 17.6 % of GDP on pensions (2012 data), more than any other country, while three others (Italy, Portugal and France) also spent 15 % of GDP or more (2013 data). Estonia, Lithuania and Ireland, meanwhile, spent 7.5 %, 7.1 % and 6.8 % of GDP respectively on pensions.
While pension benefits related to old age represented the largest part of overall expenditure in all countries, the distribution of expenditure between the different functions (old age, disability, survivors and unemployment) varied, demonstrating differences in the design of social protection systems. It is, however, important to note that a pension can serve multiple functions simultaneously, but may be recorded under a single function based on its primary purpose. This can affect the distribution of expenditure shown by the data.
It should also be noted that gross expenditure on pensions, as shown here, may not fully reflect the actual cost of pension provision or the amount actually received by beneficiaries. Some pensions may be liable to taxes and social contributions, which have the effect of returning some of the gross amount disbursed back to the government.
Linking expenditure and beneficiaries
Expenditure per pension beneficiary - what the data mean
Data on pension expenditure and on the numbers of pension beneficiaries can be combined to produce figures for pension expenditure per beneficiary of at least one type of pension. The interpretation of such figures is not, however, straightforward and requires a detailed understanding of the benefits included in the data and their characteristics.
It is important to be aware that figures for pension expenditure per beneficiary of at least one type of pension do not necessarily reflect the level or adequacy of individual pensions in different countries. As noted at the beginning of the article, the figures are based, respectively, on aggregates of gross expenditure and of beneficiaries of the wide range of pensions available within each country, granted under different circumstances and serving various distinct purposes. For example, the figures aggregate pensions that are compulsory and voluntary, contributory and non-contributory, and basic and supplementary. Invariably, different pension schemes provide different levels of benefits, often reflecting contribution levels that are not necessarily comparable between countries or even uniform within countries.
For this reason, combining data on overall expenditure and total numbers of beneficiaries is not advised, as the scope of the benefits covered is too wide for any valid interpretation of the data to be made. Comparing expenditure and numbers of beneficiaries at a more detailed level provides more meaningful figures because the scope of the benefits is more limited. Nonetheless, it is important to be aware that even at a more detailed level, the data often represent aggregates and the characteristics of their constituents may vary considerably.
Distribution of pension expenditure and beneficiaries by type of pension
Detailed data on pensions are recorded according to a two-tier classification system. While the sum of the expenditure on the different types of pension included in each classification respectively is always equal to the total expenditure, this is not the case for beneficiaries, as an individual can receive multiple pensions simultaneously, which leads to double-counting if the numbers of beneficiaries of each type of pensions are then added up. Such cases typically involve individuals receiving both an old age pension and a survivors’ pension, because disability pensions paid to those above the legal or standard retirement age are, in principle, recorded as old age pensions.
The first-level breakdown classifies pensions according to the four different ESSPROS functions: disability, old age, survivors and unemployment. Of these, pensions relating to old age were in 2013 by far the largest category, accounting for 79.5 % of total expenditure and received by 80.3 % of pension beneficiaries (see Figure 3, data exclude Belgium, Greece and Poland). Survivors’ pensions were the second largest category, accounting for 11.7 % of expenditure and received by 20.6 % of beneficiaries, followed by disability pensions, accounting for 8.5 % of expenditure and received by 12.1 % of beneficiaries. Unemployment pensions were the smallest category (accounting for 0.2 % of expenditure and of beneficiaries).
A more detailed second-level breakdown distinguishes between different types of pension within each of the four ESSPROS functions mentioned above. It is only, however, for two of the four functions - those related to disability and old age - that pensions can be subdivided into different types. Old age pensions are broken down into three types: old age pensions, anticipated old age pensions and partial pensions, with the first of these being the largest in terms of expenditure and number of beneficiaries (76.7 % of total beneficiaries and 75.4 % of total expenditure). Disability pensions are broken down into two types: disability pensions and early retirement benefits paid due to reduced capacity to work, with the former being the larger (9.5 % of total beneficiaries and 6.5 % of total expenditure). Survivors’ pensions only includes one type of pension and the category is therefore not broken down further, and unemployment pensions similarly only relate to one type of pension — early retirement benefits for labour market reasons.
Pension expenditure per beneficiary by type of pension
Pension expenditure per beneficiary of at least one pension varies between the different types of pensions (see Figure 4). The aggregate expenditure per beneficiary on pensions relating to old age was about EUR 14 000 per year in 2013, while on those relating to unemployment it was almost EUR 16 000. The aggregate expenditure per beneficiary on disability and survivors’ pensions was between EUR 8 000 and 10 000. (Note that EU-28 aggregates for 2013 exclude Greece and Poland.)
Further differences are observed when specific types of pension are considered, particularly the different types of pensions related to old age. The highest expenditure per beneficiary was recorded for anticipated old age pensions (EUR 15 905 per beneficiary) while the value of old age pensions was lower in comparison (EUR 13 867 per beneficiary). This may appear counter-intuitive, given that benefits for early retirees are typically reduced to compensate for the extension of the period over which the pension is to be paid. Anticipated pensions are, however, more likely to be contribution-based pensions, which tend to offer higher levels of benefits than non-contributory pensions. Furthermore, it is possible that individuals who have made a higher total amount of contributions over their working lives, and are thus entitled to relatively higher pensions, may be more likely to make a claim prior to reaching retirement age because they meet minimum contribution requirements, where applicable, and are more likely to be able to afford to have their benefits reduced. Expenditure on partial pensions, meanwhile, amounted to just EUR 3 085 per beneficiary on average, lower than any other type of pension. This is to be expected, given that recipients of these types of pensions are still receiving some income from employment.
Pension expenditure per beneficiary of at least one pension for the largest category of pensions, old age pensions, varies considerably between countries, ranging from an annual EUR 1 650 per year in Bulgaria to EUR 24 607 in Luxembourg (see Figure 5). Comparing the data in terms of purchasing power standards (PPS) somewhat reduces the variance across countries.
It is important to reiterate that these figures on pension expenditure per beneficiary do not necessarily reflect the level or adequacy of individual old age pensions in different countries. There are several reasons for this. First, as noted previously, the figures are based respectively on aggregates of expenditure and of beneficiaries of the wide range of old age pensions available within each country, granted under different circumstances and serving various distinct purposes. Invariably, different pension schemes provide different levels of benefits. The typical combinations of pensions in each country will have a significant influence on the figures recorded at an aggregate level. Second, the figures are based on gross expenditure and do not take into account the effect of taxes and social contributions (where relevant), which varies both between and within countries. For example, while in one country all pensions may be tax free, in another, taxes may be applied to particular types of pensions.
Trends in pension expenditure and beneficiaries
Between 2006 and 2012 the total number of pension beneficiaries in the EU increased by 3.0 % while expenditure (measured in constant prices) rose by 11.7 % (see Figure 6). The growth in the number of beneficiaries was more or less constant each year over the period while most of the increase in expenditure was concentrated between 2006 and 2009 (9.0 % rise) and only small increases were noted from 2010 to 2012. This decline in the rate of growth of pension expenditure could be a result of the sovereign debt crisis which emerged in late 2009.
The data show different trends for the different categories of pensions defined within ESSPROS by function. The overall growth in the number of pension beneficiaries can be mainly attributed to the increased number of beneficiaries of old age pensions, which grew consistently between 2006 and 2012, by 6.7 % in total, thus slightly more slowly than the population aged 65 or over which grew by 7.8 % over the same period. This increase was slightly offset by the decline in the number of beneficiaries of disability and survivors’ pensions, which fell by 6.6 % and 0.8 % respectively over the six-year period.
Expenditure on pensions rose between 2006 and 2009 — by 10.8 % for old age, by 2.4 % for disability and 5.1 % survivors’ pensions. Between 2009 and 2012, however, expenditure on old age pensions continued to rise, albeit at a much slower rate, while expenditure on disability and survivors pensions fell.
The total expenditure per beneficiary of at least one type of pension rose by 5 – 7 % between 2006 and 2009 for all three categories of pension. Changes between 2009 and 2012 were much smaller for the three categories of pensions: expenditure per beneficiary slightly rose for old age pensions, slightly decreased for survivors’ pensions and remained essentially the same for disability pensions.
Data sources and availability
All data presented in this article are from the European system of integrated social protection statistics (ESSPROS), specifically the core system and the module on the number of pension beneficiaries. These data are collected from national statistical institutes and/or ministries of social affairs in each country and are generally compiled from administrative sources. Regulation (EC) No 458/2007 of the European Parliament and of the Council provides the legal basis for the data collection and a series of Commission Regulations provide further specifications for the implementation of this Regulation.
All results on expenditure on pensions and figures on pension beneficiaries published in this article were published on the Eurostat website starting from July 2015. The implementation of the National Accounts Manual (ESA 2010) to replace the previous ESA 1995 reference is an ongoing process. Considering that many concepts used in ESSPROS are based on National Accounts, ESSPROS results are meant to be indirectly affected by the implementation of ESA 2010. The revision of ESSPROS data to take into account the new National Accounts methodology took place for the large majority of countries during the collection of 2013 data.
The concept of a ‘pension’ used in the ESSPROS framework and throughout this article is defined as periodic cash payments that address long-term risks or needs through income replacement in case of full or partial withdrawal from, or inability to participate in, the labour market. These are intended to provide the means to support a minimum standard of living and are clearly distinguished from ‘allowances’ that cover additional costs associated with old age and/or sickness or disability (e.g. the need for long-term care).
ESSPROS identifies seven distinct types of pensions. Data on these are reported according to a two-tier classification system. The first-level breakdown classifies pensions according to four different ESSPROS functions: disability, old age, survivors and unemployment. A more detailed second-level breakdown distinguishes between different types of pensions within each category, as follows:
- Disability pension: periodic payments intended to maintain or support the income of someone below the legal or standard retirement age, as established in the reference scheme, who suffers from a disability which impairs his or her ability to work or earn above a minimum amount laid down by legislation.
- Early retirement in case of reduced ability to work: periodic payments to older workers who retire before reaching the legal or standard retirement age, as established in the reference scheme, as a result of reduced ability to work. These payments normally cease when the beneficiary becomes entitled to an old age pension.
- Old age pension: periodic payments intended to: i) maintain the income of the beneficiary after retirement from paid employment at the legal or standard age; or ii) support the income of elderly persons (excluding where payments are made for a limited period only).
- Anticipated old age pension: periodic payments intended to maintain the income of beneficiaries who retire before the legal or standard age, as established in the relevant scheme. This may occur with or without a reduction of the normal pension.
- Partial retirement pension: periodic payments to those above the legal or standard retirement age who remain in paid employment but with reduced working hours or whose income from employment is below a set ceiling. In such cases, individuals typically receive a portion of the full retirement pension.
- Survivors’ pension: periodic payments to people whose entitlement results from their relationship with a deceased person protected by the scheme (e.g. widows, widowers and orphans).
- Early retirement for labour market reasons: periodic payments to older workers who retire before reaching the legal or standard retirement age due to unemployment or redundancy resulting from economic measures, such as the restructuring of an industrial sector or of a business. These payments normally cease when the beneficiary becomes entitled to an old age pension.
Within each of these seven types of pensions, specific pension benefits may be basic or supplementary/complementary. Basic benefits guarantee a base level of protection (based on the number of years of contributions, work or residency) but not necessarily up to the level of resources required for a minimum socially acceptable standard of living. Supplementary/complementary benefits top up basic benefits, extend the coverage of basic benefits, or replace the basic benefits where the recipient does not fulfil the initial entitlement conditions.
An ageing population presents a major challenge for pension systems in all Member States, and could potentially have significant consequences for the stability of public finances and future economic growth. This situation has been further aggravated by the financial and economic crisis, which stifled economic growth, reduced employment levels and created financial instability. It has thus become increasingly necessary to develop and implement strategies to adjust pension systems, in order to enable them to cope with changing economic and demographic circumstances. As a result, statistics on pensions are more important than ever before.
- Social protection statistics - financing
- Social protection statistics - social benefits
- Social protection statistics
- Social protection statistics - net expenditure on benefits
Further Eurostat information
- European social statistics - Social protection expenditure and receipts — Data 1997-2005
- Statistics in focus 14/2012 - In 2009, a 6.5 % rise in per capita social protection expenditure matched a 6.1 % drop in EU GDP
- Social protection, see:
- Social protection expenditure (spr_expend)
- Social protection receipts (spr_receipts)
- Pensions beneficiaries (spr_pension)
- Net social protection benefits (spr_net_ben)
Methodology / Metadata
Source data for tables and figures (MS Excel)
- Regulation (EC) No 458/2007 of 25 April 2007 on the European system of integrated social protection statistics (ESSPROS).
- Regulation (E) No 1322/2007 of 12 November 2007 implementing Regulation (EC) No 458/2007 of the European Parliament and of the Council on the European system of integrated social protection statistics (ESSPROS) as regards the appropriate formats for transmission, results to be transmitted and criteria for measuring quality for the ESSPROS core system and the module on pension beneficiaries.
- Regulation (EC) No 10/2008 of 8 January 2008 implementing Regulation (EC) No 458/2007 of the European Parliament and of the Council on the European system of integrated social protection statistics (ESSPROS) as regards the definitions, detailed classifications and updating of the rules for dissemination for the ESSPROS core system and the module on pension beneficiaries.
- Directorate-General for Employment, Social Affairs and Inclusion - Social protection systems - MISSOC
- Directorate-General for Employment, Social Affairs and Inclusion Social protection and social inclusion