Economic and Budgetary Effects of Pension Reforms in EU Member States
38 Pages Posted: 30 Jan 2012 Last revised: 6 Feb 2012
Date Written: March 26, 2009
Carone and Eckefeldt evaluate the impact of recent pension reforms in EU countries on the basis of the 2009 round of long-term projections of pension expenditure carried out by the European Commission (DG ECFIN) and the Economic Policy Committee (Ageing Working Group). In the coming decades, demographic factors are projected to be the main driver of pension expenditure growth. They are expected to be partly counterbalanced by the decline in the coverage ratio (thanks to the increase in the retirement age), less generous public pension transfers and the increase in the employment rate, especially of older workers. In several countries these developments have been enhanced by recent reforms. A comparison of the 2009 projections with the previous 2006 ones indicate the impact of recent reforms: in many countries the fall in coverage is more accentuated in the latest projection, thus offsetting the demographic dependency effect to a greater extent. Moreover, in several countries the offsetting impact of the reduction in benefits has increased, compared with the 2006 projection. Both these developments reflect the effects of the pension reforms. The authors note that more policy action is necessary in many countries, in particular in order to increase the retirement age and the employment rate of older workers.
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