ABSTRACT

The European retreat from public insurance of the risks of the ageing society has been registered in a thorough report submitted by the European Commission and its Economic Policy Committee in February 2006. Looking ahead to 2030 and 2050 the report predicts a declining ‘benefit ratio’, that is a decline in the ratio of per capita pension benefits to per capita output. Indeed, in GDP terms public pension income per aged citizen is expected to drop year by year until by 2050 it will be only a little over half its level in 2004. In absolute terms public spending on old-age pensions, elder care and health is set to grow very modestly at a time when the absolute and relative numbers of the aged are set to rise steeply. In the ‘old’ Europe of the 15 pre-enlargement states, public pension spending as a proportion of GDP is now set to rise from 10.8 per cent of GDP in 2004, to 12.3 per cent in 2030 and to 12.9 per cent in 2050. Over this time the numbers of those over 65 will grow from 65.2 million in 2004 to 114.2 million by 2050, while the total population declines slightly. The elderly population will nearly double in size but the average public pension received will, in GDP terms, drop by more than 40 per cent. The EU-wide projections, covering 25 countries and some 450 million people, are quite similar, with overall public pension spending growing even more slowly despite a rapidly increasing aged population (EPC and EC 2006: 11, 33, 71). Most of the new member states switched from public to private provision with haste and the portents, so far, are not good.