(By Kate Carlisle) Rome, April 17 - Italian pension spending amounted to 266 billion euros in 2011, up 2.9% over 2010, the country's statistics agency Istat said on Wednesday. In March, a European Commission report said the country's pension spending is forecast to reach 5.7 billion euros this year, 16.2% of Italy's GDP, reflecting the country's ageing population. That represents a small increase from the 15.9% of GDP in 2012 spending, but the proportion is expected to remain stable in 2014. The Italian statistics agency said old age pensions absorbed 71.6% and survivors' benefits took up 14.7%, while disability and welfare payments amounted to 4.2% and 7.9%, respectively. Geographically speaking, 47.9% of pension payments go to northern Italy, 20.5% to the centre, and 31.6% to the south. In 2011, the average annual pension was 11,229 euros, up 352 euros - an increase of 3.2% - over 2010. However, in 2011 nearly half of the 7.4 million pensioners in Italy received monthly benefits under 1,000 euros, Istat said. Approximately 44% of the country's retirees make due with less than 1,000 euros, while for 2.2 million pensioners (13.3%) their benefits are below 500 euros. Almost half of Italy's pensioners in 2011 were between the ages of 65 and 79, while 23% were over 80 years old, the country's statistics agency said on Wednesday. According to Istat, 27.8% of those who drew retirement benefits in 2011 were under 65 years old. There were 71 retirees for every 100 employed people in Italy in 2011, Istat said. Southern Italy, with its high unemployment, was hardest hit with a ratio of 82 pensioners for every 100 workers compared to 66 to 100 in the north, according to the study conducted by Istat and the national pension body INPS. Pensioners living in rural Italy are among the worst hit of the millions of retired citizens living in poverty, the national association of retirees said Wednesday. As many as seven in 10 retired people in rural areas live below the poverty line, reported the National Association of Retirees (ANP) and Italian Farmers Confederation (CIA). Most in the poorest group live in rural areas, where they have been hit hard by higher taxes, cuts to pensions, and reductions to healthcare spending, said the ANP-CIA. That threatens the dignity of Italian pensioners, said Gigi Bonfanti, past secretary-general of labour union CISL. "Millions of people every day must deal with the risk of finding themselves out on the streets at any moment," said Bonfanti. "It is unacceptable that a pensioner cannot live in dignity and may even be forced to cut spending on basic goods".