Global Evaluation of Health and Sustainability of Pension System

Abstract

Under increasing demographic pressure and fiscal stress, pension systems face growing concerns over structural level. Understanding both the drivers of pension expenditure and the structural resilience of pension institutions is crucial for informed reform. This study investigated expenditure dynamics and sustainability from 2010 to 2022 in OECD countries. Panel data regression was utilized to construct a customized OLS model: pension expenditure model, finding that GDP growth reduces pension spending, while fiscal deficits increase pension expenditure significantly. Notably, aging ratio and investment return show weak or insignificant effects, suggesting potential indirect pathways through fiscal channels. Then, a Pension System Resilience Index (PSRI) is developed by integrating five indicators: coverage rate, aging ratio, investment return. Entropy weighting and principal component analysis (PCA) are used to calculate two sets of comparable resilience scores. The results revealed strong cross-country heterogeneity among top-performing countries (e.g., Sweden, Switzerland), but substantial divergence among middle-tier systems, reflecting different structural strengths and weaknesses. The study provided an integrated evaluation framework evaluation for pension reform by combining expenditure modeling with resilience evaluation. It not only offers an integrative tool for assessing pension system health but also contributes to international policy discussions by highlighting both the fiscal pressures and institutional capacities shaping sustainable retirement systems under long-term demographic change.