Almost 20% of defense costs in Bulgaria are for pensions and this complicates plans
The army celebrates its holiday with a parade but without military equipment
But for over a dozen NATO members, whose Defense Defense Costs analyze, pensions make up a large – and largely neglected – part of their defense budgets.
Although these are funds that could potentially be diverted to fire power, experts warn that any abbreviation of generous pension benefits could make it difficult to recruit staff.
| « Part of what is accepted as defense costs – and it is not insignificant – it does not provide any abilities, no more troops, nor anything, but it is intended for pensions, » said Camille Grand, a former NATO assistant secretary of defense investment. |
The historical failure of European countries to achieve the goal of spending the equivalent of 2% of GDP on their military to strengthen NATO’s collective defense, angry Trump, who now wants to increase the threshold to 5%.
And while 23 of the 32 NATO members now meet the target of 2% – compared to only six in 2021 – rules that allow governments to include military pension costs, distort this picture.
| NATO does not publish the individual expenses for military pensions to its members, 30 of which are European. |
However, Reuters collected data that 13 NATO members – the US, Canada and 11 European allies – reported either in their national budgets, or, for some of them, to the UN.
- In Belgium, Bulgaria and Italy Nearly 20% of defense budgets are used to pay the military pensions, and France is not far behind by nearly 16%.
- The retirement burden of Germany is relatively lower-11.5% of defense costs, which sheds more favorable light on a country whose complex story has traditionally made her do not want to face more militarization, but which now increases her capabilities.
- The average retirement costs Among the 13 countries analyzed by Reuters were 12% of the defense budgets.
- Eight of the 11 European countries have achieved the goal for costs of 2% of GDP last year. Without pensions, however, this number falls to only fiveS
Fire power or pensions
Although NATO costs are increasing, some members are still lagging.
Belgium, Italy and Spain have committed themselves to reaching the goal of 2% this year, on time for the NATO summit in the Hague on June 24-25, where Trump wants an agreement to go to 5%.
Europe’s arms: the budget task
NATO Secretary-General Mark Route suggested that members increase defense costs to 3.5% of GDP and spend an additional 1.5% for wider security-related costs to respond to Trump’s request, Reuters reported last week.
While the parties are discussing the increase in costs, they must make sure that the goal is to actually increase fire power, said Armin Steinbach of the Brussels -based Bruegel Institute. « If much of the money goes for salaries or pensions, this is not a productive investment, » he said.
This will not be easy to change.
In Italy Economy Minister Giancarlo Georgeti said last month that he was « fully aware » that an increase in cost was needed. But he also said that the government, which is currently excluding pensions from the reported defense costs, will change its accounting in part to reflect these costs as it seeks to meet NATO’s expectations.
- Italy reports to the UN that it has spent € 5.2 billion ($ 5.9 billion) on military pensions in 2023, or 18% of total military expenses. This is more than she spent on planes and ships.
Francewhose hopes for the construction of defense power are limited by a huge budget deficit, barely manages to achieve the goal of 2% thanks to pension costs. Without this expense, the fourth largest NATO army would only be 1.7% this year.
- The French defense budget for 2025 includes € 9.5 billion for pensions, much more than € 5.7 billion, which it spends to maintain its air and underwater nuclear arsenal.
Only Germany has stated that it wants to spend generously on defense
Sacred cows
Unlike the frequently inflated retirement costs of their European allies, USA – NATO’s largest army – spends the equivalent of 8.5% of its defense budget for retirement benefits. And Washington transfers much of these costs to other parts of the administration, limiting the direct impact on defense costs.
- Of the $ 72 billion paid by the US Military Pension Fund last year, only $ 24 billion came directly from the Ministry of Defense’s budget. The rest came from income from investment of the Air Force and a subsidy from the US Department of Finance, according to the Fund’s audit report.
Some European countries – for example Belgium – They seem ready to deal with the pension problem directly. Brussels seeks to gradually increase the retirement age of the military to 67 years. Belgian soldiers can currently retire with full benefits of only 56 years.
| The conditions and retirement benefits vary in different countries. But earlier retirement than civilian jobs is one of the benefits of service in many military, and reforms perceived as a threat to what many consider to be sacred cows could be difficult. |
Emmanuel Jacob, president of Euromil, an organization that defends the rights of European servicemen, said there is a restriction on how much countries can push military benefits. « If you do not invest in men and women in the armed forces, you will eventually have a large parking lot full of nice tanks, but there is no one to manage them, » he said.
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