Global Trends in Public Pension Spending and Outlook Benedict Clements Fiscal Affairs Department International Monetary Fund January 2013 This presentation represents the views of the author and should not be attributed to the IMF, its Executive Board, or its management.
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Global Trends in Public Pension
Spending and Outlook
Benedict Clements
Fiscal Affairs Department
International Monetary Fund January 2013
This presentation represents the views of the author and should not be attributed to the IMF, its Executive Board, or its management.
Plan of Presentation
2
I. Trends and drivers of public pension spending in
advanced and emerging economies
II. Fiscal context and projected spending increases
III. Risks to projections
IV. Conclusions
I. Trends and drivers of
public pension spending
3
4
After rapid increases over 1970-1990, reforms have
slowed the growth of public pension spending
advanced economies
0
2
4
6
8
10
12
14
16
18
1970 1980 1990 2000 2010
Pe
nsio
n S
pen
din
g, p
erc
ent o
f G
DP
Lowest Average Highest
Sources: OECD, EC, ILO, UN, and IMF staff estimates.
Note: The average includes Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece,
Iceland, Ireland, Italy, Japan, Luxembourg, the Netherlands, New Zealand, Norway, Portugal, Spain, Sweden,
Switzerland, the United Kingdom, and the United States. The lowest/highest refers to the single country with
the lowest/highest spending.
0.9
0.3
2.0
-0.1
1.5
-0.6
1.1
-0.5
-3
-2
-1
0
1
2
3 A
gin
g
Elig
ibili
ty
Re
pla
cem
ent
rate
Lab
or
forc
e
part
icip
atio
n
Ag
ing
Elig
ibili
ty
Re
pla
cem
ent
rate
Lab
or
forc
e
part
icip
atio
n
1970-1990 (Advanced)
1990-2010 (Advanced)
Co
ntr
ibutio
n to
Sp
en
din
g G
row
th
Evolution of Public Pension Expenditures in Advanced Economies, 1970–2010
(Percent of GDP)
5
Higher replacement rates and aging have
driven spending in advanced economies
Sources: OECD, EC, ILO, UN, and IMF staff estimates.
0.0
2.0
4.0
6.0
8.0
10.0
12.0
1970 1980 1990 2000 2010
Pensio
n S
pendin
g, perc
ent of G
DP
Australia Japan Korea New Zealand
6
Trends vary across countries
Sources: OECD, ILO, UN, and IMF staff estimates.
0.7
-0.4
0.5
-0.2
4.8
-2.3
2.7
-0.4
-3
-1
1
3
5 A
gin
g
Elig
ibili
ty
Re
pla
cem
ent
rate
Lab
or
forc
e
part
icip
atio
n
Ag
ing
Elig
ibili
ty
Re
pla
cem
ent
rate
Lab
or
forc
e
part
icip
atio
n
1990-2010 (Australia)
1990-2010 (Japan)
Co
ntr
ibutio
n to
Sp
en
din
g G
row
th
Evolution of Public Pension Expenditures in Advanced Asia and Pacific, 1990–2010
(Percent of GDP)
7
Higher replacement rates and aging have
driven spending in advanced economies
Sources: OECD, ILO, UN, and IMF staff estimates.
0.9
-0.1
0.1
-0.1
1.1
-3.8
0.9
-0.8
-4
-2
0
2 A
gin
g
Elig
ibili
ty
Re
pla
cem
ent
rate
Lab
or
forc
e
part
icip
atio
n
Ag
ing
Elig
ibili
ty
Re
pla
cem
ent
rate
Lab
or
forc
e
part
icip
atio
n
1990-2010 (Korea)
1990-2010 (New Zealand)
Co
ntr
ibutio
n to
Sp
en
din
g G
row
th
Evolution of Public Pension Expenditures in Advanced Asia and Pacific, 1990–2010
(Percent of GDP)
8
Higher replacement rates and aging have
driven spending in advanced economies
Sources: OECD, ILO, UN, and IMF staff estimates.
0
2
4
6
8
10
12
1990 2000 2010
Pe
nsio
n S
pen
din
g, p
erc
ent o
f G
DP
Other Emerging
Emerging Europe
Emerging Asia
9
Large increases in pension spending in emerging
economies, but from low level in Asia
Evolution of Public Pension Expenditures in Emerging Economies, 1990–2010
(Percent of GDP)
Sources: OECD, EC, ILO, UN, and IMF staff estimates.
Note: Emerging Europe includes Bulgaria, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Russia,
Turkey, and Ukraine. Emerging Asia includes China, India, Indonesia, Malaysia, Pakistan, Philippines, and
Thailand. Other emerging includes Argentina, Brazil, Chile, Colombia, Egypt, Jordan, Mexico, Saudi Arabia,
and South Africa.
1.8
-1.5
2.1
0.7 1.0
-0.4
0.7
-0.3
0.2 0.0
0.9
0.0
-3
-2
-1
0
1
2
3 A
gin
g
Elig
ibili
ty
Re
pla
cem
ent
rate
Lab
or
forc
e
part
icip
atio
n
Ag
ing
Elig
ibili
ty
Repla
cem
ent
rate
Lab
or
forc
e
part
icip
atio
n
Ag
ing
Elig
ibili
ty
Re
pla
cem
ent
rate
Lab
or
forc
e
part
icip
ation
1990-2010 (Emerging Europe)
1990-2010 (Other Emerging)
1990-2010 (Emerging Asia)
Co
ntr
ibu
tio
n to
Sp
en
din
g G
row
th
10
Higher replacement rates and aging have
driven spending in emerging economies
Evolution of Public Pension Expenditures in Emerging Economies, 1990–2010
(Percent of GDP)
Sources: OECD, EC, ILO, UN, and IMF staff estimates.