According to the OECD Pensions at a Glance 2017 report, state pension expenditure between 1990 and 2013 rose from 4.8 percent of Gross Domestic Product (GDP) - below the OECD average of 5.8 percent - to 14 percent of GDP, which is well above the current OECD average of 8.2 percent.
The organisation’s projections show that in Portugal the weight of pensions on GDP is expected to continue to rise and reach a peak of 15 percent of GDP by 2030/35 and to adjust from there, but always remaining above 13 percent until 2060, with the country continuing to spend more on pensions, compared to the average of the OECD countries.
On average for OECD countries, the report estimates that spending on pensions will increase from 8.9 percent of GDP to 10.9 percent of GDP by 2060.
Between 2000 and 2013, pension expenditure rose in Portugal by 78.4 percent, the third highest increase among the OECD member countries, only surpassed by Mexico (which increased pension expenditure by 175.4 percent to 2.3 percent of GDP) and by South Korea (which increased pension spending by 99.3 percent to 2.6 percent of GDP).
Further reforms are needed across OECD countries to mitigate the impact of population ageing, increasing inequality among the elderly and the changing nature of work, according to a new OECD report.
“The challenges of financial sustainability and pension adequacy mean that bold action from governments is still needed,” said OECD Secretary-General Angel Gurría. “The world of work is changing fast and policymakers must ensure that decisions made today take this into account and our pension and social protection systems do not leave anyone behind in retirement.”
Over the past two years, one-third of OECD countries changed contribution levels, another third modified benefit levels for all or some retirees and three countries legislated new measures to increase the statutory retirement age. Under legislation currently in place, by 2060 the normal retirement age will increase in roughly half of the OECD countries, by 1.5 years for men and 2.1 years for women on average, reaching just under 66 years. The future retirement age will range from 60 years in Luxembourg, Slovenia and Turkey to 74 in Denmark, according to the latest estimations.
The projected increase in retirement ages will be exceeded, however, by expected advances in longevity, meaning that the time people spend in retirement will increase relative to people’s working lives. Employment at older ages will need to increase further to ensure adequate pensions for many people, according to the report.
Pensions at a Glance 2017 provides comparative indicators on the national pension systems of the 35 OECD countries, as well as for Argentina, Brazil, China, India, Indonesia, the Russian Federation, Saudi Arabia and South Africa.