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Ageing and pensions in the Euro Area Survey and projection results

Author

Listed:
  • Rother, P.C.
  • Catenaro, M.
  • Schwab, G.

Abstract

Population ageing will impose a significant burden on European fiscal balances, in particular through pay-as-you-go pension systems. This study presents an independent estimate of this burden for the euro area, and quantifies the impact of two reform scenarios. Based on widely used, but optimistic assumptions, the present value of future pension deficits through 2050 is estimated at 51percent of GDP, adding to the current average explicit debt stock of around 67 percent of GDP. In this calculation, the deficits currently incurred by many pension systems as revenues fall short of expenditures, are not included. Viable parametric reforms represent no durable solution to alleviate the burden sufficiently, as they can balance pension systems at best temporarily. A comprehensive reform, including reforms of current systems, and a move towards partial funding, is found to ensure permanent financial viability of the public pension system.

Suggested Citation

  • Rother, P.C. & Catenaro, M. & Schwab, G., 2003. "Ageing and pensions in the Euro Area Survey and projection results," Social Protection Discussion Papers and Notes 25986, The World Bank.
    • Handle: RePEc:wbk:hdnspu:25986
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    Citations

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    Cited by:

    1. Dirk-jan Omtzigt, 2006. "Aging and the interaction between education, retirement and the working life," Economics Series Working Papers 274, University of Oxford, Department of Economics.
    2. María del Carmen Ramos-Herrera & Simón Sosvilla-Rivero, 2020. "Fiscal Sustainability in Aging Societies: Evidence from Euro Area Countries," Sustainability, MDPI, vol. 12(24), pages 1-20, December.
    3. António Afonso, 2005. "Fiscal Sustainability: The Unpleasant European Case," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 61(1), pages 19-44, March.
    4. Christine Fauvelle-Aymar, 2014. "The welfare state, migration, and voting rights," Public Choice, Springer, vol. 159(1), pages 105-120, April.
    5. Mr. Jorge A Chan-Lau, 2004. "Pension Funds and Emerging Markets," IMF Working Papers 2004/181, International Monetary Fund.
    6. Xiaoxing Liu & Ying Zhang & Lin Fang & Yuanxue Li & Wenqing Pan, 2015. "Reforming China’s Pension Scheme for Urban Workers: Liquidity Gap and Policies’ Effects Forecasting," Sustainability, MDPI, vol. 7(8), pages 1-19, August.

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