Pension spending is cash expenditure (including lump-sum payments) on old-age and survivors' pensions.

Old-age cash benefits provide an income for persons retired from the labour market or guarantee incomes when a person has reached a standard pensionable age or fulfilled the necessary contributory requirements. This category also includes early retirement pensions: pensions paid before the beneficiary has reached the standard pensionable age relevant to the programme. It excludes programmes concerning early retirement for labour market reasons.

Old-age pensions includes supplements for dependants paid to old-age pensioners with dependants under old-age cash benefits. Old age also includes social expenditure on services for the elderly people, services such as day care and rehabilitation services, home-help services and other benefits in kind as well as the provision of residential care in an institution.

Private pension spending includes payments made to private pension plan members, or dependants after retirement and covers persons working in both the public and private sectors.

This indicator is measured as a percentage of GDP broken down by public and private sector.