Albania, among the 4 countries with the lowest spending on pensions in relation to GDP in Europe

2024-06-13 09:05:00, Ekonomi CNA

Albania, among the 4 countries with the lowest spending on pensions in relation

Illustrative photo, taken from Google

The aging of the population, as in all of Europe, will be a challenge for the pension system, but Albania currently has the lowest expenses in relation to GDP, along with three other European countries.

According to Eurostat data, the average spending in EU countries on pensions was 12.9% of GDP in 2021, while the countries with the lowest spending were Ireland with 4.5% of GDP, Turkey with 6%, Malta with 6.4% and Albania with 6.8% of GDP.

On the other hand, Greece is the leading country in Europe for high spending, with 16.4% of its GDP in 2021, followed by Italy with 16.3%, Austria with 15%, France with 14.9%, Portugal with 14.2% and Spain with 13.9%.

As can be seen from the chart below, countries with aging populations have the highest expenditure on pensions relative to GDP.

In 2021, just over a quarter of the EU population (27.2%) received at least one pension. Among EU member states, the proportion of the population receiving a pension was highest in Slovakia (33.2%) and was slightly below 33.0% in Luxembourg and Lithuania.

In contrast, the share of the population receiving at least one pension was below 20.0% in Cyprus (19.0%) and Malta (19.2%).

In our country, the financial stability of social insurance and health schemes continues to be a serious challenge for state finances, especially in the context of unfavorable demographic trends and the free movement of the workforce.

Albania has low spending on pensions in relation to GDP as the level of public revenue collection in Albania is at low levels compared to countries in the region.

The rate of public revenue collection in the country is less than 28% of GDP and remains relatively low compared to that of countries in the region, whose average is around 36% of GDP.

For this reason, Albanian pensioners in the vast majority receive payments much lower than the poverty line in Albania (6.7 USD per day.

The demographic transition is rapidly changing the structure of the population in favor of older ages. Very soon, the elderly will be the future generation, but the economic environment and society are not creating the conditions to face the consequences of aging with dignity at the same speed.

The third age, which will soon make up 30% of the population, lives in poverty and with a lack of perspective for improving financial conditions in the future./ Monitor.al