Pension contribution rates have remained broadly stable since the mid-1990s. The average contribution rate in the 25 OECD countries that levy separate public contributions increased from 19.2% in 1994 to 19.6% in 2012, reaching a high of 20.0% in 2004. This probably reflects governments’ concerns over the effect on employment of high labour taxes. Indeed, these concerns seem to have taken precedence over the pressure on pension-system finances from ageing populations and maturing of schemes.

Public spending on cash old-age pensions and survivors’ benefits in the OECD increased 27% faster than the growth in national income between 1990 and 2009, from an average of 6.1% of gross domestic product (GDP) to 7.8%. Public pensions are often the largest single item of government expenditure, accounting for 17% of total government spending on average.

Payments from private pension schemes were worth 1.6% of gross domestic product (GDP) on average in 2009 in the 25 OECD countries for which data are available. This is equivalent to a fifth of average public spending on retirement benefits. Private-pension payments increased 27% faster than GDP between 1990 and 2009.

Public spending on pensions has been on this rise in most OECD countries for the past two decades, as shown by the previous two indicators. Long-term projections show that pension spending is expected to go on growing in 28 out of 31 OECD countries where data are available. On average pension expenditure is forecast to grow from 9.3% of gross domestic product (GDP) in 2010 to 11.7% of GDP in 2050.