Public spending on pensions in Spain approaches 13% of GDP, slightly more than the EU average (12.2%). The OECD predicts it will reach 16.1% by 2050.
According to the newspaper Ara in an analysis of the pension model, public spending on pensions in Spain approaches 13% of GDP, a proportion slightly higher than the EU average, which is 12.2%. This figure has been rising for years and will continue to increase, as the generation of the Spanish baby boom, born in the sixties and seventies, the largest cohort, is now starting to retire.
Projections vary depending on who makes them. According to the OECD analysis published in 2025, by 2050 public spending on pensions could reach 16.1% of GDP. The Spanish government estimates a net average spending of 14% of GDP between 2022 and 2050, while Airef places it at 14.4% and the European Commission at 14.6%. From 2050 onwards, when the bulk of the baby boom retires, the trend should reverse.
Ageing affects the entire continent. The average citizen in Spain is 45 years old, a figure almost identical to the EU average. The European Union already has fewer than three working-age residents for each pensioner, and spending on pensions, health, and long-term care for the elderly accounts for one-fifth of the community GDP.
The arrival of immigrants may alleviate this ageing and low birth rate, but it is not enough to reverse the trend. The type of employment is particularly influential: if newcomers occupy low-skilled, low-wage positions, they contribute less.
The Spanish system is a pay-as-you-go model: the contributions of active workers pay for the pensions of current retirees. The 2021 reform penalised early retirement and progressively extended the calculation period for pensions. It also created the intergenerational equity mechanism (MEI), which increases contributions by up to 0.6 percentage points and will reach 1.2 percentage points from 2029 until 2050. The goal is to refill the reserve fund, which dropped from over 66 billion euros to just over 2 billion in 2018, following the 2008 crisis.
No European country has a fully private model; most combine pay-as-you-go and capitalisation. In Denmark, 9 out of 10 workers have a company fund to which the employer contributes the majority of the monthly fee. In The Netherlands, more than 90% of workers allocate part of their salary to collective funds managed by unions and employers.
In Sweden, contributions are recorded in virtual accounts that are revalued with economic growth and adjusted to life expectancy, and 2.5% of contributions goes to a private fund chosen by the citizen. France is more similar to Spain, with a significant weight of public pay-as-you-go, a basic pension, and mandatory complementary schemes managed by points (AGIRC-ARRCO).
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