EU Ageing Report published
Future pension expenditure as a percentage of GDP in Germany lower than in 2000.
VS – 05/2024
Every
three years, as part of the European Union's (EU) fiscal policy monitoring
mechanisms, the Economic and Financial Affairs Council (ECOFIN) analyses the
fiscal risks associated with an ageing society. The current report projects an increase in public healthcare, long-term care and old-age provision
of 1.6 percentage points for the EU and 1.8 percentage points for Germany by
2070. Compared to the last report dated 2021, the age-related fiscal risks in
the EU will decrease by half a percentage point and in Germany by one
percentage point. In Germany, this decline is primarily due to the lower
increase in future public pension expenditure.
Finance ministers focus on social policy
In
the EU, social policy is the responsibility of the member states. However, the
social insurances are parafisci - that is: The income and expenditure of the
statutory social insurance is part of public finances, they are therefore at
the centre of European economic policy management, which is aimed, among other
things, at sustainable public finances in the medium and long term. Since the
Maastricht Treaty in 1992, economic governance in the EU has been a cornerstone
of economic and monetary union. It has been continuously developed and
intensified, particularly as a result of the economic and financial crisis.
Most recently, on 29th April, the ECOFIN Council adopted the reform
of the budget rules. In this context, the importance of projections of the
long-term sustainability of public finances has also increased significantly at
European level in recent years. This particularly applies to the budgets of the
statutory social insurance institutions and their future development.
Ageing society
The
report is based on the population projections of the EU Statistical Office
(Eurostat). According to the report, the old-age dependency ratio, i.e. the
ratio of 65 year-olds and older to 20 to 64 year-olds, will increase by 23
percentage points in the EU by 2070. An increase of 17.6 percentage points is
calculated for Germany.
Pension expenditure remains below the level of 2000
In
the latest report, the increase in the future cost burden for public pension
expenditure in Germany has decreased significantly compared to the last report.
Public expenditure on pensions as a percentage of gross domestic product (GDP)
is currently projected to rise by 1.2 percentage points from 10.2 per cent at
present to 11.4 per cent in 2070. In the previous report published in 2021, an
increase to 12.4 per cent in 2070 was calculated. According to the current
projection, the share of pension expenditure in GDP in 2070 would be lower than
in 2000. At that time, public pension expenditure accounted for 11.8 per cent
of GDP.
Healthcare expenditure remains stable
According
to the European report, the ageing of society will have virtually no impact on
future public healthcare expenditure in Germany. The projected age-related
increase up to 2070 is 0.1 percentage points (EU: 0.4 percentage points). The
situation in the care sector is different. An increase of 0.5 percentage points
is projected for Germany (EU: 0.8 percentage points).