New study on population ageing and public finance targets

15 December 2003

This Commission study investigates alternative measures for analysing long-term sustainability of public finances under population ageing and presents a method to transform long-term public expenditure projections into medium-term budget balance targets. The outcome, given the expenditure projections for EU-12, determines public debt reduction and a budget balance surplus of around 1.5% of GDP by 2010 and further, of 2%, by 2020.

The framework can be used to discuss pension reforms and other policies to help contain ageing-related expenditure, with a view to clarifying the effect of these reforms on the corresponding targets for budget balance.

The paper concludes with data requirements for advancing the debate on pension reforms and sustainability of public finances, with the caveat that sufficient data is already available to bolster the conviction that reforms should not be delayed.

Study

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