Slovakia’s pension spending is rising sharply, with payouts far above the EU average when measured against household incomes, and the country faces one of the fastest-ageing populations in Europe, according to UniCredit Bank analyst Lubomir Korsnak.
Data from the country’s Socialna poistovna (Social Insurance Agency) showed that total payments for old-age pensions – including early retirement, parental bonuses and a 13th pension – surged by 25% last year. The demographic trend is worsening the pressure: there are currently 2.7 working-age Slovaks (20-64) for every pensioner, down by roughly one-third over the past 25 years. Korsnak predicts that this ratio will fall to 1.8 within the next quarter-century.
Ageing is expected to hit central and eastern Europe hardest, while Nordic countries have already passed their steepest rise in the over-65 population. At present, the lowest ratios of workers to retirees in the EU are in Italy, Finland, Bulgaria and Portugal, at 2.4. Slovakia’s pace of ageing accelerated after 2010, and the country is on track to become one of the bloc’s fastest-ageing societies.
Pensions are already a major fiscal burden. Public spending on old-age benefits reached 8.9% of GDP in 2023 – around 1.8% higher than if Slovakia followed the typical EU curve for countries with similar demographics, Korsnak said. Pension outlays have grown rapidly in recent years, rising by 1.6% of GDP since 2019.
“Slovakia currently spends far more on pensions than its age structure would justify,” he said. “These “generous” pensions will increasingly strain public finances as the population ages.”
The analyst warned that maintaining current benefits would divert resources from investment and education, further eroding the country’s long-term growth potential. (The Slovak Spectator)