The European Commission has just released “The 2012 Ageing Report: Economic and budgetary projections for the EU27 Member States (2010-2060)”, analysing the economic and budgetary impact of an ageing population over the long-term.
In 2010, the Economic and Financial Affairs Council (ECOFIN) gave the Economic Policy Committee (EPC) a mandate to update its common exercise of age-related expenditure projections by 2012 on the basis of a new population projection by Eurostat.
The long-term age-related expenditure projections provide an indication of the timing and scale of changes in economic developments that could result from an ageing population in a ‘no-policy change’ scenario. The projections show where (in which countries), when, and to what extent ageing pressures will accelerate as the baby-boom generation retires and average life span in the EU continues to increase.
Hence, the updated projections of age related expenditure and the associated sustainability assessments provide important insights on both the economic impact of ageing and the risks to the long-term sustainability of Member States’ public finances reflecting new economic environment, affected by a durable impact of the current crisis, and further reform effort by EU MS.
The report, presented to the ECOFIN council in May 2012, details the expenditure projections covering pensions, health care, long-term care, education and unemployment transfers for all Member States. A statistical annex gives a country-by-country overview of the main assumptions and results.
On the basis of current policies, age-related public expenditures (pensions, health-care and long-term care) are projected to increase by 4.1 percentage points to around to around 29% of GDP between 2010 and 2060. Public pension expenditure alone is projected to rise by 1.5 percentage points to nearly 13% of GDP by 2060. However, the report shows a large diversity across EU Member States, depending notably on progress with pension reforms.
The document has been jointly prepared by the European Commission (Directorate-General for Economic and Financial Affairs, DG ECFIN) and the Economic Policy Committee (Ageing Working Group, AWG).
“The 2012 Ageing Report: Economic and budgetary projections for the EU27 Member States (2010-2060)” may be downloaded here.