EUROPE – A European report re-examining the demographic outlook for the continent and the budgetary impact of ageing populations on its pension systems in the future has been presented to the European Council of Economics and Finance Ministers (ECOFIN), as part of the European consultation process on pensions.

The report, prepared by a working group on ageing populations attached to the EC’s Economic Policy Committee, has been designed to feed into the various policy initiatives on ageing populations that are taking place at the European level ahead of the forthcoming EU summits in Laeken later this year and Barcelona in spring 2002.

In terms of the demographic outlook for Europe, the report notes that the size of the EU population will fall from 376m to 364m by 2050 – with big declines taking place in Italy, Spain and Germany.
France Ireland, Luxembourg and the UK, however, will see increasing population figures.

Significantly, the number of people of working age will fall by some 20% while the numbers of elderly persons will rise from 61m to 103m by 2050.
The biggest part of that increase will occur amongst the very old (persons aged 80 or above) whose numbers will triple in size over the same period.

As a result the old age dependency ratio will more than double from around 24% in 2000 to 49% in 2050 for the EU – i.e. the EU will shift from having four working persons to only two for every elderly person.
The highest dependency ratios are predicted at 60% in both Spain and Italy.

The report also claims that spending on public pensions will increase in all member states – by somewhere between 3% and 5% of GDP, but that there will be very large differences in the timing and scale of changes across countries.
The UK is the only member state to actually project a decrease in public pension spending as a share of GDP – while relatively low increases are predicted in Italy, Luxembourg and Sweden. The countries facing the biggest expenditure are Spain and Greece where spending increases of 8% and 12% respectively are forecast.

The report notes in one of its conclusions: “Further reforms may be needed in some member states to ensure the financial sustainability of public pension systems, and thus enable them to continue meeting their social objectives and continue responding to societal needs.”