Global Trends in Public Pension Spending and Outlook · PDF file 2013-01-04 ·...

Click here to load reader

  • date post

    11-Aug-2020
  • Category

    Documents

  • view

    1
  • download

    0

Embed Size (px)

Transcript of Global Trends in Public Pension Spending and Outlook · PDF file 2013-01-04 ·...

  • 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

    P e

    n s io

    n S

    p e n

    d in

    g , p

    e rc

    e n t o

    f G

    D P

    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

    g in

    g

    E lig

    ib ili

    ty

    R e

    p la

    c e m

    e n t

    ra te

    L a b

    o r

    fo rc

    e

    p a rt

    ic ip

    a ti o

    n

    A g

    in g

    E lig

    ib ili

    ty

    R e

    p la

    c e m

    e n t

    ra te

    L a b

    o r

    fo rc

    e

    p a rt

    ic ip

    a ti o

    n

    1970-1990 (Advanced)

    1990-2010 (Advanced)

    C o

    n tr

    ib u ti o

    n t o

    S p

    e n

    d in

    g G

    ro w

    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

    P e n s io

    n S

    p e n d in

    g , p e rc

    e n t o f G

    D P

    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

    g in

    g

    E lig

    ib ili

    ty

    R e

    p la

    c e m

    e n t

    ra te

    L a b

    o r

    fo rc

    e

    p a rt

    ic ip

    a ti o

    n

    A g

    in g

    E lig

    ib ili

    ty

    R e

    p la

    c e m

    e n t

    ra te

    L a b

    o r

    fo rc

    e

    p a rt

    ic ip

    a ti o

    n

    1990-2010 (Australia)

    1990-2010 (Japan)

    C o

    n tr

    ib u ti o

    n t o

    S p

    e n

    d in

    g G

    ro w

    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

    g in

    g

    E lig

    ib ili

    ty

    R e

    p la

    c e m

    e n t

    ra te

    L a b

    o r

    fo rc

    e

    p a rt

    ic ip

    a ti o

    n

    A g

    in g

    E lig

    ib ili

    ty

    R e

    p la

    c e m

    e n t

    ra te

    L a b

    o r

    fo rc

    e

    p a rt

    ic ip

    a ti o

    n

    1990-2010 (Korea)

    1990-2010 (New Zealand)

    C o

    n tr

    ib u ti o

    n t o

    S p

    e n

    d in

    g G

    ro w

    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

    P e

    n s io

    n S

    p e n

    d in

    g , p

    e rc

    e n t o

    f G

    D P

    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

    g in

    g

    E lig

    ib ili

    ty

    R e

    p la

    c e m

    e n t

    ra te

    L a b

    o r

    fo rc

    e

    p a rt

    ic ip

    a ti o

    n

    A g

    in g

    E lig

    ib ili

    ty

    R e p la

    c e m

    e n t

    ra te

    L a b

    o r

    fo rc

    e

    p a rt

    ic ip

    a ti o

    n

    A g

    in g

    E lig

    ib ili

    ty

    R e

    p la

    c e m

    e n t

    ra te

    L a b

    o r

    fo rc

    e

    p a rt

    ic ip

    a ti o n

    1990-2010 (Emerging Europe)

    1990-2010 (Other Emerging)

    1990-2010 (Emerging Asia)

    C o

    n tr

    ib u

    ti o

    n t o

    S p

    e n

    d in

    g G

    ro w

    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.

  • ISL IRL

    KOR

    NZL SVK USA

    AUS

    AUT

    BEL

    CAN

    CZE DNK

    FIN

    FRA GRC

    LUX NLD NOR

    PRT

    SVN ESP SWE

    CHE

    GBR

    GER

    ITA

    JPN

    0

    4

    8

    12

    16

    20

    0 10 20 30 40 50 60 70

    S p e n d in

    g (

    p e rc

    e n t

    o f

    G D

    P )

    Replacement Rate (percent of average wage)

    Advanced

    IND IDN

    MYS

    PAK PHL SAU ZAF

    TUR

    EGY JOR

    ARG

    BRA

    CHN

    CHL

    MEX

    POL

    RUS

    THA

    BGR

    EST HUN

    LVA

    LTU ROM

    UKR

    0

    4

    8

    12

    16

    20

    0 10 20 30 40 50 60 70

    S p e n d in

    g (

    p e rc

    e n t

    o f

    G D

    P )

    Replacement Rate (percent of average wage)

    Emerging

    0 2 4 6 8 10 12 14 16

    -80 120 Old-age dependency ratio=0-10 Old-age dependency ratio=10-20

    Old-age dependency ratio=20-30 Old-age dependency ratio=30-40

    Pension Spending, Replacement Rates, and Aging, 2010

    11

    Variation in spending reflects differences in

    aging, system generosity, and coverage rates

    Sources: OECD, EC, ILO, UN, and IMF staff estimates.

  • II. Fiscal context and projected spending

    increases

    12

  • 0

    20

    40

    60