The impact of ageing on public expenditure:projections for the EU25 Member States on pensions, health care, long-term care, education and unemployment transfers (2004-2050) - Annex to the full report

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1. Tekst

Delegations will find attached the annex to the full report on the impact of ageing on public

expenditure, prepared by the Economic Policy Committee and the European Commission, for the

14 February meeting of the Council (ECOFIN).

________________________

Annex

Special Report n° 1/2006 Annex

EUROPEAN ECONOMY

E C

UROPEAN OMMISSION

D IRECTORATE G ENERAL F OR E CONOMIC AND F INANCIAL AFFAIRS

ANNEX

The impact of ageing on public expenditure: projections for the

EU25 Member States on pensions, health care, long-term care,

education and unemployment transfers

(2004-2050)

Report prepared by the

Economic Policy Committee and the European Commission (DG ECFIN)

ANNEXES

1.

SUMMARY OF THE BASELINE PROJECTIONS RESULTS FOR ALL AGE-RELATED PUBLIC SPENDING ITEMS 6
2.

CHARACTERISTICS OF PENSION SYSTEMS IN THE EU MEMBER STATES 12 3. DETAILED RESULTS OF THE PENSION PROJECTIONS SENSITIVITY TESTS 31
4.

METHODOLOGIES USED TO PROJECT HEALTH CARE SPENDING 45 5. DATA INPUTS TO THE HEALTH CARE PROJECTIONS 58
6.

ADDITIONAL SCENARIOS FOR PUBLIC SPENDING ON HEALTH CARE 72 7. DETAILED RESULTS OF THE PROJECTIONS ON HEALTH CARE 80
8.

DATA USED TO MAKE THE PROJECTIONS ON LONG-TERM CARE 86
9.

ADDITIONAL SCENARIOS FOR PUBLIC SPENDING ON LONG-TERM CARE 89 10. METHODOLOGY FOR CORE PROJECTIONS OF UNEMPLOYMENT BENEFIT EXPENDITURE 94
11.

THE APPROACH USED AT EU LEVEL TO ASSESS THE SUSTAINABILITY OF PUBLIC FINANCES 96
12.

DEFINITIONS AND PROPERTIES OF DEBT PROJECTIONS AND THE SUSTAINABILITY INDICATORS 106
13.

A SENSITIVITY TEST FOR ASSESSING THE SUSTAINABILITY OF PUBLIC FINANCES: THE COST OF DELAY IN ACHIEVING BUDGETARY CONSOLIDATION 111
14.

GUIDELINES FOR TAKING INTO ACCOUNT ASSETS OF PUBLIC PENSION

FUNDS IN THE ASSESSMENT OF THE SUSTAINABILITY OF PUBLIC FINANCES 112 ANNEX - LIST OF AWG MEMBERS AND CONTRIBUTORS 119 STATISTICAL ANNEX: COUNTRY TABLES 124

LIST OF TABLES

Table 1 1 Total age related public spending: pension, health care, long term care, education

and unemployment transfers (% of GDP) baseline scenario........................................... 6

Table 1 2 Gross public pension expenditure (% of GDP) baseline scenario .......................... 7

Table 1 3 Projections for public spending on health care AWG reference scenario ............... 8

Table 1 4 Projections for public spending on long term care AWG reference scenario.......... 9

Table 1 5 Projections for public spending on education (% of GDP) baseline scenario ...... 10

Table 1 6 Projections for public spending on unemployment transfers (% of GDP) baseline

scenario............................................................................................................................. 11

Table 2 1 Pension benefit formulation in the social security (public) pension schemes in

Member States.................................................................................................................. 12

Table 2 2 Some statistical indicators related to pensions......................................................... 16

Table 2 3 Indexation and taxation regimes of the pension schemes ........................................ 17

Table 2 4 Contribution rates of public pension schemes ......................................................... 19

Table 2 5 Pension expenditure projection models in the Member States ............................... 22

Table 2 6 Main features of recent pension reforms.................................................................. 27

Table 3 1 High life expectancy scenario: gross public pension expenditure as a share of GDP

between 2004 and 2050.................................................................................................... 31

Table 3 2 High life expectancy scenario: gross total pension expenditure as a share of GDP

between 2004 and 2050.................................................................................................... 31

Table 3 3 High life expectancy scenario: total assets in pension schemes as a share of GDP

between 2004 and 2050.................................................................................................... 32

Table 3 4 High life expectancy scenario: contributions to public pension schemes as a share of

public pensions................................................................................................................. 32

Table 3 5 Higher employment rate scenario: gross public pension expenditure as a share of

GDP between 2004 and 2050........................................................................................... 33

Table 3 6 Higher employment rate scenario: gross total pension expenditure as a share of

GDP between 2004 and 2050........................................................................................... 33

Table 3 7 Higher employment rate scenario: total assets in pension schemes as a share of GDP

between 2004 and 2050.................................................................................................... 34

Table 3 8 Higher employment rate scenario: contributions to public pension schemes as a

share of public pensions ................................................................................................... 34

Table 3 9 Higher employment rate of older workers scenario: gross public pension

expenditure as a share of GDP between 2004 and 2050 .................................................. 35

Table 3 10 Higher employment rate of older workers scenario: gross total pension expenditure

as a share of GDP between 2004 and 2050 ...................................................................... 35

Table 3 11 Higher employment rate of older workers scenario: total assets in pension schemes

as a share of GDP between 2004 and 2050 ...................................................................... 36

Table 3 12 Higher employment rate of older workers scenario: contributions to public pension

schemes as a share of public pensions.............................................................................. 36

Table 3 13 Higher labour productivity scenario: gross public pension expenditure as a share of

GDP between 2004 and 2050........................................................................................... 37

Table 3 14 Higher labour productivity scenario: gross total pension expenditure as a share of

GDP between 2004 and 2050........................................................................................... 37

Table 3 15 Higher labour productivity scenario: total assets in pension schemes as a share of

GDP between 2004 and 2050........................................................................................... 38

Table 3 16 Higher labour productivity scenario: contributions to public pension schemes as a

share of public pensions ................................................................................................... 38

Table 3 17 Lower labour productivity scenario: gross public pension expenditure as a share of

GDP between 2004 and 2050........................................................................................... 39

Table 3 18 Lower labour productivity scenario: gross total pension expenditure as a share of

GDP between 2004 and 2050........................................................................................... 39

Table 3 19 Lower labour productivity scenario: total assets in pension schemes as a share of

GDP between 2004 and 2050........................................................................................... 40

Table 3 20 Lower labour productivity scenario: contributions to public pension schemes as a

share of public pensions ................................................................................................... 40

Table 3 21 Higher interest rate scenario: gross public pension expenditure as a share of GDP

between 2004 and 2050.................................................................................................... 41

Table 3 22 Higher interest rate scenario: gross total pension expenditure as a share of GDP

between 2004 and 2050.................................................................................................... 41

Table 3 23 Higher interest rate scenario: total assets in pension schemes as a share of GDP

between 2004 and 2050.................................................................................................... 42

Table 3 24 Higher interest rate scenario: contributions to public pension schemes as a share of

public pensions................................................................................................................. 42

Table 3 25 Lower interest rate scenario: gross public pension expenditure as a share of GDP

between 2004 and 2050.................................................................................................... 43

Table 3 26 Lower interest rate scenario: gross total pension expenditure as a share of GDP

between 2004 and 2050.................................................................................................... 43

Table 3 27 Lower interest rate scenario: total assets in pension schemes as a share of GDP

between 2004 and 2050.................................................................................................... 44

Table 3 28 Lower interest rate scenario: contributions to public pension schemes as a share of

public pensions................................................................................................................. 44

Table 5 1 Overview of available age related expenditure profiles on health care ................... 59

Table 5 2 Projected changes in life expectancy for elderly cohorts males ............................ 63

Table 5 3 Projected changes in life expectancy for elderly cohorts females ......................... 64

Table 5 4 Assumptions on the evolution of unit costs average yearly rate of growth of GDP

per capita .......................................................................................................................... 65

Table 5 5 Assumptions on the evolution of unit costs average yearly rate of growth of GDP

per worker......................................................................................................................... 65

Table 5 6 Overview of studies with data on death related costs for particular EU Member

States ................................................................................................................................ 67

Table 5 7 The ratio between cost borne by a person with N remaining years of life and a

survivor, by age cohort ..................................................................................................... 69

Table 6 1 Overview of additional scenarios for public spending on health care ..................... 72

Table 6 2 Projection results for high life expectancy scenario (A I)........................................ 73

Table 6 3 Projection results for improved health scenario (A II) ............................................ 74

Table 6 4 Projection results for the EU10 cost convergence scenario (A III) ......................... 75

Table 6 5 Projection results for fast growth scenario (A IV) unit costs evolve 1% faster than

GDP per capita between 2005 and 2014 .......................................................................... 76

Table 6 6 Available data on the composition of health care spending and on the recent

evolution of unit costs ...................................................................................................... 78

Table 6 7 Projection results for scenario A V, fast cost growth variant (respective components

increasing 1 p.p. above GDP per capita between 2005 and 2014) ................................... 79

Table 6 8 Projection results for scenario A V, extrapolation of past trends variant (respective

components following past trends between 2005 and 2014) ........................................... 79

Table 7 1 Pure ageing scenario (I) : projected spending on health care as % of GDP ............ 80

Table 7 2 Constant health scenario (II) : projected spending on health care as % of GDP ..... 80

Table 7 3 Death related costs scenario (III) : projected spending on health care as % of GDP

.......................................................................................................................................... 81

Table 7 4 Scenario capturing income elasticity of demand exceeding unity (IV) : projected

spending on health care as % of GDP .............................................................................. 81

Table 7 5 Scenario where unit costs evolve in line with GDP per worker (V) : projected

spending on health care as % of GDP .............................................................................. 82

Table 7 6 AWG reference scenario (VI) : projected spending on health care as % of GDP .... 82

Table 7 7 High life expectancy scenario (A I) : projected spending on health care as % of

GDP .................................................................................................................................. 83

Table 7 8 Improved health scenario (A II) : projected spending on health care as % of GDP 83

Table 7 9 EU10 cost convergence scenario (A III) : projected spending on health care as % of

GDP .................................................................................................................................. 84

Table 7 10 Fast cost growth scenario (unit costs growing 1 p.p. above GDP per capita

between 2005 and 2014) (A IV) : projected spending on health care as % of GDP ........ 84

Table 7 11 Extrapolation of past trends scenario (all components following past trends

between 2005 and 2014) (A V) : projected spending on health care as % of GDP ......... 85

Table 8 1 Detailed description of data received on long term care ......................................... 87

Table 9 1 Overview of additional scenarios for public spending on long term care ............... 89

Table 9 2 Projection results for the "high life expectancy scenario (A I) ................................ 90

Table 9 3 Projection results for the "improved disability" scenario (A II) ............................. 91

Table 9 4 Projection results for the scenario "increase in formal care" (A III) .................. 92 Table 9 5 Projection results for the scenario "increase in formal care" (A IV)..................... 93

Table 11 1 Qualitative factors taken on board in reaching policy recommendations on the

sustainability of public finances ..................................................................................... 102

1.

S UMMARY OF THE BASELINE PROJECTIONS RESULTS FOR ALL AGE RELATED PUBLIC SPENDING ITEMS

Table 1 1 Total age related public spending: pension, health care, long term care, education and unemployment transfers (% of GDP) baseline scenario

Change

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2004-

25.4 25.3 25.1 25.5 26.6 28.2 29.9 31.1 31.6 31.8 31.7 6.3 BE

26.8 26.8 27.0 27.9 28.6 29.5 30.8 31.7 32.1 31.9 31.6 4.8 DK

23.7 23.4 22.5 22.2 22.9 23.8 24.7 25.4 25.7 26.1 26.4 2.7 DE

GR 8.9 8.9 8.7 8.7 8.7 8.9 9.1 9.4 9.7 9.9 10.2 1.2 20.1 20.0 19.7 19.6 20.4 21.7 23.4 25.2 27.3 28.7 28.6 8.5 ES

26.7 26.6 26.7 26.9 27.6 28.1 28.6 29.4 29.6 29.7 29.6 2.9 FR

IE 15.5 15.2 15.4 16.3 17.1 18.0 18.8 19.7 20.7 22.1 23.3 7.8 26.2 26.2 25.7 25.6 25.9 26.4 27.3 28.1 28.7 28.6 28.0 1.7 IT

19.5 19.5 19.4 20.5 21.6 23.5 25.0 26.6 27.4 28.1 27.8 8.2 LU

20.9 20.5 20.6 21.5 22.4 23.4 24.7 25.7 26.2 26.1 25.8 5.0 NL

25.2 24.9 24.2 24.0 24.2 25.2 26.0 26.5 26.1 25.7 25.3 0.2 AT

23.8 24.2 24.2 24.9 26.3 27.1 28.0 29.5 31.1 32.6 33.6 9.7 PT

25.4 25.2 25.6 26.5 27.7 28.8 30.1 30.8 30.7 30.6 30.6 5.2 FI

29.6 29.2 28.2 28.3 28.6 29.5 30.9 31.7 31.9 31.7 31.8 2.2 SE

UK 19.6 19.6 19.4 19.5 19.9 20.7 21.8 22.5 22.9 23.2 23.6 4.0 16.4 16.4 16.5 16.7 17.6 18.8 20.5 21.9 23.4 25.0 28.2 11.8 CY

19.3 19.3 18.8 18.6 19.2 20.0 21.0 22.4 24.1 25.5 26.4 7.2 CZ

17.1 17.5 16.5 15.4 15.1 15.0 14.8 14.6 14.3 14.3 14.4 -2.7 EE

20.7 20.9 21.0 21.3 22.3 22.9 23.5 24.7 26.4 27.4 27.7 7.0 HU

16.0 16.0 15.3 14.8 15.1 15.7 16.3 16.6 16.8 17.0 17.4 1.4 LT

17.5 16.9 14.6 14.1 14.6 15.5 16.0 16.2 16.2 16.1 16.2 -1.3 LV

18.2 18.2 19.1 19.7 20.4 20.5 20.0 19.5 19.2 18.9 18.5 0.3 MT

PL 23.7 23.4 20.2 18.1 17.9 17.7 17.6 17.5 17.3 17.1 17.0 -6.7 16.2 16.5 15.4 14.9 15.3 15.8 16.5 17.1 17.7 18.3 19.1 2.9 SK

24.2 24.2 24.0 24.5 25.5 27.0 28.6 30.2 31.7 33.0 33.8 9.7 SI

EU25 23.4 23.3 22.7 22.7 23.2 24.0 24.9 25.8 26.4 26.7 26.8 3.4 23.5 23.3 22.9 23.0 23.5 24.4 25.4 26.3 26.8 27.1 27.2 3.7 EU15

24.0 23.9 23.4 23.5 24.1 24.9 25.9 26.9 27.5 27.8 27.8 3.7 EU12

21.1 21.0 19.4 18.4 18.7 19.0 19.4 19.9 20.5 21.0 21.4 0.2 EU10

19.3 19.3 18.8 18.7 19.3 20.0 20.8 21.8 23.0 23.9 24.7 5.4 EU9 (EU10-Pl)

1)

Total expenditure for GR does not include pension expenditure. The Greek authorities have agreed to provide the pension projections in 2006. In the context of the most recent assessment of the sustainability of public finances based on the Greek stability programme, public spending on pensions was projected to increase by 10.3% of GDP between 2004 and 2050. 2) Total expenditure for: GR, FR, PT, CY, EE, HU does not include long term care 3) The projection results for public spending on long term care for Germany does not reflect current legislation where benefit levels are fixed. A scenario which comes closer to the current setting of legislation projects that public spending would remain constant as a share of GDP over the projection period. Note: these figures refer to the baseline projections for social security spending on pensions, education and unemployment transfers. For health care and long term care, the projections refer to "AWG reference scenarios"

Table 1 2 Gross public pension expenditure (% of GDP) baseline scenario

Country 2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Change 2004-2050

BE 10.4 10.4 10.4 11.0 12.1 13.4 14.7 15.5 15.7 15.7 15.5 5.1 CZ 8.5 8.5 8.2 8.2 8.4 8.9 9.6 10.6 12.2 13.3 14.0 5.6

DK 9.5 9.6 10.1 10.8 11.3 12.0 12.8 13.3 13.5 13.1 12.8 3.3

DE 11.4 11.1 10.5 10.5 11.0 11.6 12.3 12.7 12.8 12.9 13.1 1.7 EE 6.7 7.1 6.8 6.0 5.4 5.1 4.7 4.5 4.4 4.3 4.2 -2.5 GR : : : : : : : : : : : :

ES 8.6 8.7 8.9 8.8 9.3 10.4 11.8 13.4 15.2 16.2 15.7 7.1

FR 12.8 12.8 12.9 13.2 13.7 14.0 14.3 14.8 15.0 14.9 14.8 2.0 IE 4.7 4.6 5.2 5.9 6.5 7.2 7.9 8.5 9.3 10.3 11.1 4.8

IT 14.2 14.3 14.0 13.8 14.0 14.4 15.0 15.6 15.9 15.4 14.7 0.4 CY 6.9 7.0 8.0 8.8 9.9 10.8 12.2 13.5 15.0 16.7 19.8 10.5 LV 6.8 6.4 4.9 4.6 4.9 5.3 5.6 5.9 5.9 5.7 5.6 -1.2 LT 6.7 6.7 6.6 6.6 7.0 7.6 7.9 8.1 8.2 8.3 8.6 1.8

LU 10.0 10.0 9.8 10.9 11.9 13.7 15.0 16.4 17.0 17.7 17.4 7.4

HU 10.4 10.7 11.1 11.6 12.5 13.0 13.5 14.6 16.0 16.9 17.1 6.7 MT 7.4 7.5 8.8 9.8 10.2 10.0 9.1 8.4 7.9 7.5 7.0 -0.4

NL 7.7 7.4 7.6 8.3 9.0 9.7 10.7 11.4 11.7 11.4 11.2 3.5

AT 13.4 13.2 12.8 12.7 12.8 13.5 14.0 14.0 13.4 12.7 12.2 -1.2 PL 13.9 13.7 11.3 9.8 9.7 9.5 9.2 8.9 8.6 8.3 8.0 -5.9

PT 11.1 11.5 11.9 12.6 14.1 15.0 16.0 17.4 18.8 20.0 20.8 9.7 SI 11.0 11.0 11.1 11.6 12.3 13.3 14.4 15.6 16.8 17.8 18.3 7.3 SK 7.2 7.4 6.7 6.6 7.0 7.3 7.7 7.9 8.2 8.5 9.0 1.8

FI 10.7 10.4 11.2 12.0 12.9 13.5 14.0 14.1 13.8 13.7 13.7 3.1 SE 10.6 10.4 10.1 10.3 10.4 10.7 11.1 11.4 11.6 11.4 11.2 0.6 UK 6.6 6.7 6.6 6.7 6.9 7.3 7.9 8.3 8.4 8.4 8.6 2.0

EU15 10.6 10.5 10.4 10.5 10.8 11.4 12.1 12.6 12.9 13.0 12.9 2.3 EU10 10.9 10.9 9.8 9.2 9.5 9.7 9.8 10.1 10.6 10.9 11.1 0.3

EU12 11.5 11.5 11.3 11.4 11.8 12.5 13.2 13.8 14.2 14.3 14.1 2.6 EU25 10.6 10.6 10.3 10.4 10.7 11.3 11.9 12.5 12.8 12.8 12.8 2.2

EU9 (EU10-PL) 8.8 8.9 8.8 8.8 9.3 9.8 10.4 11.1 12.2 13.0 13.6 4.8

Table 1 3 Projections for public spending on health care AWG reference scenario

(% of GDP)

Country 2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Change (2004-50)

BE 6.2 6.2 6.4 6.6 6.8 6.9 7.1 7.3 7.5 7.6 7.6 1.4 DK 6.9 6.9 7.0 7.2 7.4 7.6 7.7 7.7 7.8 7.8 7.8 1.0 DE 6.0 6.1 6.3 6.5 6.7 6.8 6.9 7.0 7.1 7.2 7.2 1.2 GR 5.1 5.1 5.4 5.5 5.6 5.7 5.9 6.2 6.5 6.7 6.8 1.7 ES 6.1 6.1 6.3 6.5 6.7 7.0 7.3 7.6 7.9 8.1 8.3 2.2 FR 7.7 7.7 8.0 8.2 8.4 8.6 8.9 9.2 9.3 9.4 9.5 1.8 IE 5.3 5.3 5.5 5.7 5.9 6.2 6.4 6.7 6.9 7.1 7.3 2.0 IT 5.8 5.8 6.0 6.1 6.3 6.5 6.7 6.9 7.0 7.1 7.1 1.3 LU 5.1 5.1 5.3 5.4 5.6 5.7 5.9 6.1 6.2 6.3 6.3 1.2 NL 6.1 6.1 6.3 6.5 6.7 6.9 7.1 7.3 7.4 7.4 7.4 1.3 AT 5.3 5.3 5.5 5.7 5.9 6.1 6.3 6.5 6.7 6.8 6.8 1.6 PT 6.7 6.7 6.8 6.8 6.7 6.6 6.6 6.8 6.9 7.1 7.2 0.5 FI 5.6 5.6 5.8 6.0 6.2 6.4 6.6 6.9 7.0 7.0 7.0 1.4 SE 6.7 6.7 6.8 7.0 7.2 7.4 7.5 7.6 7.7 7.7 7.7 1.0 UK 7.0 7.0 7.2 7.4 7.6 7.9 8.1 8.4 8.7 8.8 8.9 1.9 CY 2.9 2.9 3.1 3.3 3.4 3.5 3.6 3.8 3.9 4.0 4.0 1.1 CZ 6.4 6.5 6.8 7.1 7.4 7.6 7.8 8.0 8.1 8.3 8.4 2.0 EE 5.4 5.5 5.8 6.0 6.1 6.1 6.2 6.3 6.4 6.5 6.5 1.1 HU 5.5 5.5 5.7 5.9 6.0 6.2 6.3 6.3 6.4 6.5 6.5 1.0 LT 3.7 3.7 4.0 4.2 4.3 4.3 4.4 4.4 4.5 4.6 4.6 0.9 LV 5.1 5.2 5.5 5.8 5.8 5.9 5.9 6.0 6.1 6.2 6.2 1.1 MT 4.2 4.3 4.5 4.8 5.0 5.3 5.5 5.7 5.9 6.0 6.1 1.8 PL 4.1 4.1 4.4 4.6 4.8 5.0 5.1 5.2 5.3 5.4 5.5 1.4 SK 4.4 4.4 4.7 5.0 5.2 5.5 5.7 5.9 6.0 6.2 6.3 1.9 SI 6.4 6.5 6.7 6.9 7.2 7.4 7.6 7.8 7.9 8.0 8.0 1.6

EU25 6.4 6.4 6.6 6.8 7.0 7.2 7.4 7.6 7.8 7.9 7.9 1.6 EU15 6.4 6.5 6.7 6.9 7.1 7.3 7.5 7.7 7.9 8.0 8.1 1.6 EU12 6.3 6.3 6.5 6.7 6.9 7.1 7.3 7.5 7.7 7.8 7.8 1.5 EU10 4.9 5.0 5.2 5.4 5.5 5.7 5.8 6.0 6.1 6.2 6.2 1.3

EU9 (EU10-PL) 5.5 5.5 5.7 5.9 6.1 6.3 6.4 6.5 6.6 6.7 6.8 1.3

Table 1 4 Projections for public spending on long term care AWG reference scenario

(% of GDP) *

Country 2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Change (2004-50)

BE 0.9 0.9 0.9 1.0 1.1 1.1 1.3 1.4 1.6 1.8 1.8 1.0 DK 1.1 1.1 1.1 1.1 1.2 1.5 1.7 1.9 2.0 2.1 2.2 1.1 DE 1.0 1.0 1.0 1.0 1.2 1.3 1.4 1.5 1.6 1.9 2.0 1.0 EL

ES 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.6 0.6 0.7 0.8 0.2 FR

IE 0.6 0.6 0.6 0.6 0.6 0.6 0.7 0.8 0.9 1.1 1.2 0.6 IT 1.5 1.5 1.5 1.5 1.6 1.6 1.7 1.8 1.9 2.1 2.2 0.7 LU 0.9 0.9 1.0 1.0 1.0 1.0 1.1 1.2 1.3 1.4 1.5 0.6 NL 0.5 0.5 0.5 0.5 0.5 0.6 0.8 0.9 0.9 1.0 1.1 0.6 AT 0.6 0.6 0.7 0.7 0.8 0.9 1.0 1.1 1.2 1.4 1.5 0.9 PT

FI 1.7 1.7 1.9 2.0 2.1 2.4 3.0 3.3 3.4 3.5 3.5 1.8 SE 3.8 3.8 3.7 3.5 3.7 4.2 4.9 5.1 5.2 5.3 5.5 1.7 UK 1.0 1.0 1.0 1.0 1.1 1.1 1.3 1.4 1.5 1.6 1.8 0.8 CY

CZ 0.3 0.3 0.3 0.3 0.4 0.4 0.5 0.6 0.6 0.6 0.7 0.4 EE

LT 0.5 0.5 0.6 0.6 0.6 0.6 0.6 0.7 0.7 0.8 0.9 0.4 LV 0.4 0.4 0.4 0.4 0.5 0.5 0.5 0.6 0.6 0.7 0.7 0.3 MT 0.9 0.9 0.9 0.9 0.9 0.9 1.0 1.1 1.1 1.2 1.1 0.2 PL 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.2 0.2 0.2 0.2 0.1 SK 0.7 0.8 0.8 0.7 0.7 0.8 0.9 1.0 1.1 1.2 1.3 0.6 SI 0.9 1.0 1.1 1.2 1.3 1.4 1.5 1.7 1.9 2.1 2.2 1.2

EU25 0.9 0.9 0.9 0.9 0.9 1.0 1.1 1.2 1.3 1.4 1.5 0.6 EU15 0.9 0.9 0.9 0.9 1.0 1.0 1.1 1.2 1.3 1.4 1.5 0.7 EU12 0.7 0.7 0.7 0.8 0.8 0.9 0.9 1.0 1.1 1.2 1.3 0.5 EU10 0.2 0.3 0.3 0.3 0.3 0.3 0.3 0.4 0.4 0.4 0.5 0.2

EU9 (EU10-PL) 0.3 0.3 0.4 0.4 0.4 0.4 0.5 0.5 0.6 0.6 0.7 0.3 * The projection results for public spending on long term care for Germany does not reflect current legislation where benefit levels are fixed. A scenario which comes closer to the current setting of legislation projects that public spending would remain constant as a share of GDP over the projection period.

Table 1 5 Projections for public spending on education (% of GDP) baseline scenario

Country 2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Change 2004-2050

BE 5.6 5.6 5.2 5.0 4.9 4.9 5.0 5.1 5.0 5.0 5.0 -0.7 DK 7.8 7.7 7.5 7.6 7.5 7.3 7.3 7.5 7.6 7.6 7.5 -0.3 DE 4.0 4.0 3.6 3.3 3.2 3.2 3.3 3.3 3.3 3.2 3.2 -0.9 EL 3.5 3.4 3.1 2.9 2.9 3.0 3.0 3.0 3.0 3.0 3.1 -0.4 ES 3.7 3.6 3.2 3.1 3.2 3.1 3.0 2.9 2.9 3.0 3.1 -0.6 FR 5.0 4.9 4.7 4.6 4.6 4.6 4.5 4.5 4.5 4.5 4.5 -0.5 IE 4.1 4.0 3.5 3.5 3.4 3.4 3.2 3.0 3.0 3.0 3.1 -1.0 IT 4.3 4.2 3.9 3.8 3.7 3.6 3.5 3.5 3.6 3.7 3.7 -0.6 LU 3.3 3.2 3.1 2.9 2.8 2.8 2.7 2.7 2.6 2.5 2.4 -0.9 NL 4.8 4.8 4.7 4.7 4.6 4.5 4.6 4.7 4.7 4.7 4.6 -0.2 AT 5.1 5.0 4.6 4.3 4.1 4.1 4.2 4.2 4.2 4.1 4.1 -1.0 PT 5.1 5.0 4.7 4.6 4.7 4.6 4.5 4.4 4.5 4.6 4.8 -0.4 FI 6.0 6.0 5.6 5.4 5.3 5.3 5.4 5.4 5.3 5.3 5.3 -0.7 SE 7.3 7.3 6.7 6.5 6.4 6.4 6.6 6.6 6.6 6.5 6.4 -0.9 UK 4.6 4.5 4.2 4.0 4.0 4.0 4.1 4.1 4.0 3.9 4.0 -0.6 CY 6.3 6.2 5.1 4.3 4.0 4.1 4.3 4.4 4.2 4.0 4.0 -2.2 CZ 3.8 3.8 3.3 2.9 2.8 2.9 3.0 3.0 3.0 3.1 3.1 -0.7 EE 5.0 4.8 3.8 3.4 3.5 3.8 3.8 3.7 3.5 3.5 3.6 -1.3 HU 4.5 4.4 3.9 3.7 3.5 3.5 3.5 3.6 3.7 3.8 3.8 -0.7 LT 5.0 4.9 4.2 3.5 3.2 3.2 3.3 3.4 3.3 3.3 3.3 -1.6 LV 4.9 4.6 3.5 3.0 3.2 3.5 3.7 3.6 3.3 3.3 3.5 -1.4 MT 4.4 4.4 3.7 3.3 3.2 3.3 3.3 3.3 3.3 3.3 3.3 -1.2 PL 5.0 4.9 3.9 3.3 3.0 2.9 3.0 3.0 3.0 3.0 3.1 -1.9 SK 3.7 3.6 3.0 2.4 2.2 2.1 2.2 2.2 2.3 2.3 2.4 -1.3 SI 5.3 5.2 4.6 4.3 4.3 4.5 4.7 4.7 4.7 4.8 4.9 -0.4

EU25 4.6 4.5 4.2 4.0 3.9 3.9 3.9 3.9 3.9 3.9 4.0 -0.6 EU15 4.6 4.5 4.2 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 -0.6 EU12 4.4 4.4 4.0 3.9 3.8 3.8 3.8 3.8 3.8 3.8 3.8 -0.6 EU10 4.7 4.6 3.8 3.3 3.1 3.1 3.2 3.2 3.2 3.2 3.3 -1.3

EU9 (EU10-PL) 4.4 4.3 3.7 3.3 3.2 3.2 3.3 3.4 3.4 3.4 3.5 -0.9

Table 1 6 Projections for public spending on unemployment transfers (% of GDP) baseline scenario

Country 2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Change 2004-2050

BE 2.3 2.2 2.0 1.8 1.8 1.8 1.8 1.8 1.7 1.8 1.8 -0.5 DK 1.5 1.4 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2 -0.3 DE 1.3 1.3 1.1 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 -0.4 GR 0.3 0.3 0.3 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 -0.1 ES 1.1 1.1 0.9 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 -0.4 FR 1.2 1.2 1.1 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 -0.3 IE 0.7 0.7 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 -0.2 IT 0.4 0.4 0.4 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 -0.1 LU 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.2 0.2 0.2 0.2 -0.1 NL 1.8 1.7 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 -0.2 AT 0.8 0.7 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 -0.1 PT 1.0 0.9 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 -0.1 FI 1.5 1.4 1.2 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1 -0.4 SE 1.1 1.1 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 -0.2 UK 0.4 0.4 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.0 CY 0.4 0.3 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.0 CZ 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.0 EE 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.0 HU 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.0

LT 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 -0.1 LV 0.3 0.3 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 -0.1 MT 1.2 1.2 1.2 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 -0.2 PL 0.5 0.5 0.4 0.3 0.3 0.2 0.2 0.2 0.2 0.2 0.2 -0.4 SK 0.3 0.3 0.2 0.2 0.1 0.1 0.1 0.1 0.1 0.1 0.1 -0.2 SI 0.5 0.5 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 -0.1

EU25 0.9 0.9 0.8 0.7 0.6 0.6 0.6 0.6 0.6 0.6 0.6 -0.3 EU15 0.9 0.9 0.8 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 -0.2 EU12 1.0 1.0 0.9 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 -0.3 EU10 0.4 0.4 0.3 0.3 0.2 0.2 0.2 0.2 0.2 0.2 0.2 -0.2

EU9 (EU10-PL) 0.3 0.3 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 -0.1

2.

C HARACTERISTICS OF PENSION SYSTEMS IN THE EU M EMBER S TATES Table 2 1 Pension benefit formulation in the social security (public) pension schemes in Member States

(PR= private sector (main private sector scheme if different rules for sectoral schemes, PU=public sector where the schemes differ)

MS Type of the scheme Pension base Indexation of Accrual of pensions Max. accrual Number of years Stat. retire ment age past earnings rate

DB=defined (reference wage) (thresholds, ceilings) (50:50=w:p) (gross replacement rate) needed for a full pension (M=men, W=women) benefit

DC=defined contribution

BE PR: DB PR: Average of lifetime wages PR: to prices+ partial adjustment PR: Service years/45 (women 44; 45 in 2009) PR: 60% 45 (women 44; 45 in 2009) 65 M 64 W (up to ceiling), max 45 (women 44; 45 in 2009)

welfare

PU: DB PU: average wages of the last five years PU: To prices + real PU: Service years up to 45/60 PU: 100% of 45 65 wage (service years)/60 (=75% of (service years)/45) increases in the corresponding civil

servants

scales

CZ DB Earnings of 30 years (after 1986) To average Flat rate component + No max 25 63M 61W, with 2 children earnings earnings related component: 1.5%/year

DK Flat rate plus means tested supplements Based on years lived in DK Flat rate 40 lived in DK 65

DE DB Pension points accrued during the whole work career Implicitly to Based on pension points No ceiling 65 wages (depends on the wage level relative to average wage and career length) defined,( in general, max 2 pension

points

MS Type of the scheme Pension base Indexation of Accrual of pensions Max. accrual Number of years Stat. retire ment age past earnings rate per year.)

EE DB Length of career up to 1999, then (implicitly to Flat rate component 63 M 59,5 W contribution (earnings) wages) +contribution( earnings) points related component

GR DB PR: Average of best 5 years' wages out of last 10 years PU: Earnings of the last month; contributions paid up to a ceiling of wages To civil Pre 1993: Non linear 80 / 60% + 20% 37 IKA: insured bef. 1.1.1993: 65 M 60 W. after 1.1.1993: 65 M, W servants' wages formula, number of dependants taken into acc. (appr. 2% /year) Post 1993: 1.714% of wage

ES PR: DB PR: Average of last 15 years' wages PU: length of service To prices (up to a ceiling) 15 years of contributions: 50% of pension rights; 3p.p. for each additional year until 25 years; thereafter, 2 p.p. for each additional year up to 35 years PR: PU: flat rate (5 cat.) 35 65 PU: Flat rate

FR DB PR: Average of the best 25 years (to those born after 1948) PU: Last 6 months' wages To prices PR: 1.33%/year PR: 50 PR: 40 60 PU: 2%/year > 1.875%/year PU: 75 PU: 37.5 > 40

IE Social welfare: Flat rate PU: DB Contributions for years No formal Social welfare: 65/66 depending on agreements. Government decisions Flat rate

each PU: 40 scheme year in the Budget.

IT Old: DB Average of last 5/10 years' wages, progressively increasing To prices 2% of reference wage per each year of contributions 80% 40 65 M 60 W New: NDC Lifetime contributions To GDP NDC: none NDC: none DG principle

MS Type of the scheme Pension base Indexation of Accrual of pensions Max. accrual Number of years Stat. retire ment age past earnings rate

CY PR: DB 1.5% for e r Flat rate component + 60% of the 61 M 60 W component earnings related component average wage + supp. 67%

PU: Final salary Tax financed 33.3 years LV Old: DB New: NDC 62 M 60 W (62 as of

Lifetime contributions Prices + 50% of the real wage sum increase DC principle No max No max 1.7.2008)

LT DB Contributions for 30 years Flat rate component 62,5 M 60 W +contribution( earnings) related component

LU DB Average lifetime wages + To prices plus the real wage growth 1.85% / year 40 After career length years working lifetime

HU DB Lifetime earnings since 1988 Net wages Accrual of pension points weighted 62 M 60 W by earnings brackets (appr; 2%/year)

MT DB Average of the best consecutive 3 years out of last 10 years Contributions for 30 years, subject to a ceiling 67 61 M 60 W NL Flat rate Based on years lived in NL Flat rate, 70% of net min. wage 40 lived in NL 65

AT DB Average of best 15 years' Net wages 2%, to be lowered to 1.78 by 2009 80 45 65 (W: phased in by 2033) wages, extended to 40 years' wages by 2028

PL Old: DB New: NDC 65 M 60 W

Lifetime contributions + Wage sum Flat rate component Calculation of initial capital, based on career length +contribution related component

PT PR: DB PR: Average of best 10 years' wages out of last 15 years (old) Average Wages 2%/year 80 40 60,5 of lifetime wages

MS Type of the scheme Pension base Indexation of Accrual of pensions Max. accrual Number of years Stat. retire ment age past earnings rate phased in 2002 PU: empl.pre 1993: Last wage

PU: DB 2.5% > 2.25 in 2013 36 > 40

SI DB Average of best 15 consecutive years' Net wages 2% /year until 1999; No max; 1.5%/year after 63m/ 61w 40 years at 63 for men; 38.5 years 58 wages in 2005; 1.5%/year as of 2000; FDC for thereafter, number of years to be raised to 18 by 2008 occupational pensions

61 for women

SK DB After 1994: average of lifetime earnings; Implicitly assumed Accrual of pension points (depending on career length and earnings brackets; higher for No max; in general, 50% after 40 years. No max; a min. of 10 years for 62 to

wages

the lowest earnings), the subject to a ceiling eligibil.

FI DB Average of lifetime wages 80:20 1.5% / year up the age 52 1.9%/year between 53 62, 4.5%/year between 63 68 No max No max Flexible between 63 68 SE NDC Lifetime contributions Average wage DC principle No max No max Flexible, from growth

onwards

UK Flat rate Men: 44 years' contributions Women: 39 years' contrib.; Contributions scaled by wage brackets Flat rate 65 M 60 W

Table 2 2 Some statistical indicators related to pensions

Employment rate of older Average exit age from the Gross replacement rate, Gross replacement rate, Net replacement rate, all 1) 1) 2) 2)

workers labour market public pensions all pensions

2001 2004 2001 2004 2005 2050 2005 2050

BE 25,1 30,0 56,8 59,4 39 37 43 47 CZ 37,1 42,7 58,9 60,0 61 53 61 53 DK 58,0 60,3 61,6 62,1 45 39 49 64 DE 37,9 41,8 60,6 61,3 43 34 43 48 EE 48,5 52,4 61,1 62,3 33 15 33 36

GR 38,2 39,4 59,3 59,5 105 94 105 94 ES 39,2 41,3 60,3 62,2 91 85 91 85 FR 31,9 37,3 58,1 58,9 66 49 66 49 IE 46,8 49,5 63,2 62,8 31 34 67 67

IT 28,0 30,5 59,8 61,0* 79 64 79 80 CY 49,1 49,9 62,3 62,7 46 57 46 57 LV 36,9 47,9 62,4 62,9 61 36 61 55 LT 38,9 47,1 58,9 60,8 31 42

LU 25,6 30,8 56,8 57,7 91 91 91 91 HU 23,5 31,1 57,6 60,5 66 58 66 77 MT 29,4 31,5 57,6 57,7 72 53 72 53 NL 39,6 45,2 60,9 61,1 30 30 71 69

AT 28,9 28,8 59,2 58,8* 64 69 64 69 PL 27,4 26,2 56,6 57,7 63 36 63 36 PT 50,2 50,3 61,9 62,2 75 70 75 70 SI 25,5 29,0 .. 56,2*

SK 22,4 26,8 57,5 58,5 49 50 49 50 FI 45,7 50,9 61,4 60,5 57 52 57 52 SE 66,7 69,1 61,8 62,8 53 40 68 56 UK 52,2 56,2 62,0 62,1 17 19 66 69 EU15 38,8 42,5 60,3 61,0 EU12 35,2 38,6 59,9 60,7 EU25 37,5 41,0 59,9 60,7

*

indicator for 2003 Sources: 1) Eurostat: Structural indicators database. Figures are calculated from Labour Force Surveys, based on yearly changes in the participation rates of the single-year age groups between 50 and 70 years. 2) European Commission (2006), Synthesis report on adequate and sustainable pensions (forthcoming ), indicators calculated by the Indicators Sub-Group of the Social Protection Committee. The figures are calculated for a single (male) person with a career of 40 years full-time work at average earnings, contributing to the social security (first pillar, including statutory private pension scheme) and occupational (second pillar) pension schemes and retiring at the age of 65.

Table 2 3 Indexation and taxation regimes of the pension schemes

MS Indexation of pension benefits Taxation regimes

BE Earnings relate pensions are indexed to prices in the private sector scheme and to wages in civil servants' pensions Minimum guaranteed pensions are indexed to prices + discretionary targeted increases to welfare

CZ Decision is made by the government, but the minimum amount is guaranteed by the law. The minimum is set by the law and usually has represented an inflation growth (measured by the aggregate consumer price index) plus at least a third of the growth in real average wage. Social benefits are not subject to personal income taxation except for pensions from the pension insurance scheme provided that the amount of pensions exceeds CZK 162,000 per year. Currently, out of 3.2 million pensions paid out, approximately only 3.2 thousand pensions exceed this limit. DK The public pensions (old age, voluntary early Pension payments from all pillars are subject to personal income tax. retirement, disability and survivors' pensions) are indexed to average wage growth of the private sector.

DE The indexation of the pension point value depends on the increase of gross wages, the change of the contribution rate and the sustainability factor, which is based on the change of the employment/pensioner ratio. Old pensions are not taxed; the 2002 reform changed the taxation regime from the TTE principle to the EET principle, indicating that the contributions and return on assets became tax free while pension benefits will be taxed.. The taxable share of pensions is 50% in 2005 and increases by two percentage points per year for new pensioners until 2020, and after that by one percentage point per year, so that the whole pension will be taxable from retirement in 2040. EE State pension insurance, 50:50: Indexation depends with equal weights (50% 50%) on the increase of social tax revenues (wage sum) and the increase of consumer price index. In principle, pensions are subject to income taxation but the threshold is set at such a level that, virtually, pensions are not taxed. GR Minimum pensions are indexed to wages, earnings related pensions discretionary.

ES All pension benefits are indexed to expected inflation. If actual inflation is above the expected one, the difference is paid to all pensioners. All pension benefits are taxed as labour income in general. Only certain disability pension benefits are tax exempted. The average effective tax rate for pension income was about 5% in 2003. FR Private sector pensions are indexed to price inflation since 1993; the indexation of public sector pensions was aligned with that of private sector in 2003. Subject to income tax but with favourable rules. Average tax rate applicable to pensioners was 3.8%.

IE There is no formal indexing arrangement for the social welfare Those aged 65 and over are treated more favourably under the Irish income tax code than the taxpayers in general. Tax is due on private and public sector occupational pensions as they become payable, with the exception of lump sum payments. pensions system. Instead, pensions are increased each year by Government decisions, taking account of budgetary considerations.

IT Pensions are indexed to prices. All pensions are taxed as labour income, allowing for deductions that are phased out along increasing income level. Pension income below 7,500 Euro per year are tax exempt (no tax area). CY The basic (flat rate) part of the pension is indexed to wages and the supplementary earnings related part to prices. Not taxed

LV Annual adjustments are differentiated according to the amount of pension. Small pensions are indexed fully to CPI plus to 50% of the real growth of contribution wage sum. The medium pensions are indexed with CPI. The same rules for indexation are applied for all state pensions. Pensions granted before 1996 are not subject to personal income taxation. Pensions granted from 1996 onwards are subject to taxation for the part exceeding 110 lats/month (165).

MS Indexation of pension benefits Taxation regimes

LT Currently, no automatic indexation but legal acts are adopted for each increase of pensions Not taxed

LU Pensions are automatically adjusted to price evolution each time prices increase by more than 2.5%. In addition, pensions are adjusted every two years to the real wage evolution. Whereas price indexation is automatic, the decision on indexing pensions to wage evolution is the responsibility of government and has to be approved by the parliament. Taxation of pensions is identical with that of wages. HU Pensions (both the PAYG and funded part of the social security pensions) granted before 1 January are indexed by an index with weights of 50:50 to net wages and inflation. Currently, pensions are not taxed. Taxation of pensions will be introduced in 2013. MT Pension benefits are linked to the Retail Price Index.

NL Public flat rate pensions are linked to the minimum wage (70% of the legal minimum wage). Most occupational pension funds aim at wage or price indexation. Pension savings in the second pillar are taxed as personal income. It is, however, not guaranteed but conditional on the financial position of the fund (coverage ratio). Private pensions are indexed to productivity

AT Pension benefits are adjusted yearly by consumer price inflation as of 2006, (earlier to net wages). Pension benefits are subject to personal income taxation PL The pensions (both from the general old age and Subject to personal income taxation. farmers' pension schemes) are indexed to prices; minimum pensions to prices and wages.

PT Pensions are indexed to prices plus to a real increase of 0.1 p.p. annually; minimum pensions are indexed to wages. Subject to personal income taxation.

SI The pensions are indexed with the rate of (net)wage growth of all employed persons as of 2006 (earlier less than 100%). The indexation takes place twice a year, in February and November. Not taxed (except for a small part of higher pensions). SK

Pensions are indexed 50:50 to wages and prices. Not taxed

FI Earnings related pensions are indexed to an index with weights of 20:80 to wages and prices. Minimum guaranteed pensions are indexed to prices; discretionary increases by Budget laws Minimum and earnings related pensions are subject to income tax but a specific pension income deduction applies which makes all pensions up to the level of minimum

pensions tax free Private voluntary pensions are subject to capital income taxation with the flat rate of 28% (in 2005)

SE Minimum social security pensions are indexed to prices ; earnings related pensions (both PAYG and funded part) are indexed to average wage growth. (However, the indexation is front loaded so that 1.6 percentage point increase is given at the time of retirement, while later index adjustments are equal to the average wage growth minus 1.6 percentage points). All pensions are subject to personal income tax.

UK State pensions are indexed to prices. Occupational and private pensions in defined benefit schemes are normally indexed by inflation or 2.5%, whichever is the lower. In a defined contribution scheme the accumulated fund continues to be managed with investment returns accumulating until the `end' of the scheme. Basic state pensions are not taxed. Also State Second Pensions mostly are below the threshold for the taxation.

Table 2 4 Contribution rates of public pension schemes

Contribution rate, % of wages 1 Observations 2

37.94% (social security) Employer: 24.87% Employee: 13.07% "Wage moderation" contribution: 7,48% Small additional social security contributions depend notably on the firm size; different measures lead to a marked reduction in the effective rates compared to the abovementioned rates. The contribution rate covers all branches of social security, including health care, unemployment, disability, family allowances, and the general pension scheme for wage earners and self employed. The contributions account for approximately two third of the total social security revenues; specific social security taxes and transfers from the state budget account for the rest. Means tested minimum pensions are financed by taxes. In order to finance the future increase in pension expenditure, the Belgian authorities plan to accumulate budgetary resources in a public "ageing fund" using the decrease in interest payments. BE

28.00% Employer: 21.50% Employee: 6.50% The contribution rate covers both earning related and flat rate social security pensions. In 2004, the social security pension system was in balance for the first time since 1996. CZ

Public pensions are financed by taxes, with the exception of the voluntary early retirement scheme, to which there is a small own contribution. (Also the statutory supplementary schemes (ATP) are subsidised from tax revenues.)

19.5% in 2004 2006 Employer: 9.75% Employee: 9.75% Subsidies from the Federal budget account for 27.5% of pension expenditure in 2004 (33% in 2003). In addition, social assistance pensions are financed by taxes. A target has been set that the contribution rate should not exceed 20% until 2020 and 22% until 2030. DE

22% Employer: 16% to the I pillar scheme Pension insurance contributions covered 94% of social security pensions in 2004. Special

pensions to some groups of government officials (policemen, EE

4% to the III pillar scheme parliamentarians, judges) are financed from the government budget.

(or 20% to I pillar if the person has not joined the III pillar scheme) Employee: 2% to the III pillar scheme, only to those who have joined

20% (if insured before 31.12.92) Employer: 13.33% Employee: 6.67% 30% (if insured betw. 1.1.93 31.12.2002 ) Employer: 13.33% Employee: 6.67% State: Tax subsidies to the financing of contribution based pensions would have to rise from the current 4.8% of GDP to 15.5% in 2050. In addition, pensions of uninsured persons over 65 and civil servants are financed by taxes. The current contribution rate is applied equally to all employees and covers only pension benefits.

10.00%

After 1.1.2003 Employer: 13.33% Employee: 6.67% State: 1% of GDP in 2003 2008 on aver.

1% of GDP in 2009 2032

28.3% (social security, except health care and The contribution rate covers contributory benefits for old age, disability and survivors' pensions and maternity benefits. The social security sector is expected to produce a surplus until 2020, thereafter a deficit. Means tested minimum pensions are financed by taxes. unemployment benefits) Employer: 23.6% Employee: 4.7%

Basic scheme: Employer: 9.8% (below ceiling) Employer: 1.6% (above the ceiling) Employee: 6.55% (below the ceiling) Mandatory supplementary scheme: Rate varies between 7.5% The contribution rate covers old age and survivors' pensions; disability pensions are covered by health insurance contributions. The contribution rate will be raised by 0.2 percentage points in 2006. Further, employment measures are expected to reduce unemployment, which would allow to transfer unemployment contributions to pension financing. FR

20% (incl. employer and

employee contributions), Depending on wage level and employee status

12.5 14.75%, excluding the health levy Employer: 8.5 10.75% Employee: 4%; self employed: 3% Social insurance (flat rate) pensions are financed by contributions. In recent years, the Social Insurance Fund has been in surplus. Means tested social assistance pensions are financed by taxes. In the future, due to the extension of the contributory scheme, there will be a shift from tax funding to contributions. IE

32.7% Employer: 23.81% Employee: 8.89% The self employed: Contribution rate covers old age, survivors' and disability pensions of the social security scheme. Social assistance pensions and additional amounts due to social assistance purposes are financed by taxes (2.3% of GDP in 2003). IT

Farmers: 20% Shopkeepers: 19% as of 2013 Artisans: 19% as of 2014

Contribution rate, % of wages 1 Observations 2

12.6% of wages In addition, social (minimum flat rate) pensions (8.5% of total pension expenditure) and civil servants' earnings related pensions (27% of total pension expenditure) are financed from the state budget. The total contribution to social security for employees, covering sickness, maternity, unemployment, work injury and pensions, is 16.6%, of which employers pay 6.3%, employees 6.3% and the state budget 4.0%. The financing of pensions requires 12.6% of wages in total. CY

25.51 % of the wage within the total social insurance contribution rate of 33.09% (of which the rate for employers is 24.09% and employees 9%) is needed to finance the old age, survivors' and service pensions in 2004. However, the contribution for the calculation of the NDC pension is fixed at 20% (not separated between employer and employee) of which 2% goes to the funded scheme up to 2006, increased gradually to 10% by 2010, to persons participating in the funded scheme. The total social insurance contribution covers old age, survivors', service (during the transition period) and disability pensions, work injury, maternity, sickness and unemployment benefits and funeral benefits. The NDC pension contribution covers old age pensions (including minimum pension and actuarial early retirement) and it is the basis for the calculation of survivors' pensions. LV

26% Employer: 23.5% Employee: 2.5% The pension contribution rate is further broken down by type of pension: (basic) old age pension (10.5%), supplementary old age pension (10.6%), disability and survivors' pensions (4.9%); In 2004, a private (2 LT

nd tier of the I pillar) scheme was introduced with a switch of

a contribution rate at 2.5% (employee's part) to a private fund. This rate will be increased to 5.5% (2.5% by the employee + 3.0% from the employer's total contribution) by 2007. In 2004, the State Social Insurance Fund turned to be in surplus. State pensions to servicemen, policemen, meritorious persons, scientists, judges, casualties as well as social assistance pensions are financed from the state budget.

24% Employer: 8% Employee: 8% State: One third of the contribution rate is financed by taxes. The guaranteed minimum income for old people and public sector employees' pensions are financed by taxes. Currently, the contribution rate allows accumulating the pension fund over its statutory requirement. The future development of the contribution rate depends heavily on the growth rate. Further, public sector pensions are financed form the State budget, 2.5% of GDP in 2004. 8%

26.5% Employer: 18% Employee: Disability pensions and survivors' benefits (13% of all pension expenditure) are financed by health insurance contributions and transfers from the government budget. Social insurance fund required a subsidy of 23.6 of its total expenditure from the State budget (1.8% of GDP) in 2004. Also, supplementary means tested allowances guaranteeing the minimum old age income are financed by taxes (0.6% of GDP). HU

8.5% (fully to the PAYG scheme, if not

joined the 2 nd tier of the I pillar; 0.5% to the PAYG scheme and 8.0% to the funded scheme when joined

30% Employer: 10% Employee: 10% State (tax revenues): 10% (with a substantial variation acc. to age and wage level of the employee) (Self employed: 15% + state: 7.5%) Covers all social insurance, including all pensions, short term benefits, hospital, community and elderly care. MT

17.9% (old age pension) 1.25% (survivors' scheme) Employee: 19.15% A target has been set to ensure that the old age pension contribution rate will not be raised above 18.25%. The contribution rate of 17.9% is expected to produce a surplus until 2010. Thereafter, the deficit is covered from the reserve fund and taxes. In addition, a contribution rate of 1.25% is paid for the survivors' scheme and a rate of between 7.09 13.93% for disability benefit schemes. NL

22.8% Employer: 12.55% Employee: 10.25% ; different rates in the civil service schemes without any ceilings The contribution rate was harmonised for all groups in 2004; however, the rates paid by the self employed (17.5%) and farmers (15%) are lower but subsidised up to 22.8% from general tax revenues. Furthermore, contributions are paid from tax revenues for periods of child care, military/civilian service, sickness benefits, maternity allowances and long term care. There is a deficit guarantee for the statutory pension insurance to be covered from the Federal budget. In 2004, the government financing of the pension system accounted for 2.6% of GDP. AT

Contribution rate, % of wages 1 Observations 2

Total pension contribution: 32.52% of gross wage, of which: The earnings related old age pension contribution constitutes of a notional defined contribution scheme (12.22%) and a pre funded defined contribution scheme (7.3%); these rates are to be kept constant in the future. The outflow of the funded contributions creates a financing gap in the PAYG Social Insurance scheme in 2004 it was 1.2% of GDP, while the total subsidy for the financing of pensions amounted to 3.8% of GDP. Disability and survivors' pensions are financed from separate contribution (13.0%). Farmers' old age and disability pensions are financed up to 90% of the pension payments from state budget subsidies (1.7% of GDP in 2004). Furthermore, minimum pension guarantee (topping up a small pension from earnings related pension system) as well as contributions during selected career breaks (maternity and parental leave, periods out of work due to the care of a disabled child, unemployment benefit period) are financed by taxes (or other public sources). 19.52% (old age pension) 13.00% (disability & survivors pensions)

Paid by:

employer: 16.26%, of which

9.56% (old age) 6.50% (disability and survivors) employee: 16.26%, of which

9.56% (old age) 6.50% (disability and survivors)

(In addition: 0.97 3.86% (work injury; paid by employer) and 2.45% (sickness and maternity; paid by employee))

34.75% (contributory cash benefits) Employer: 23.75% Employee: 11% The contribution rate covers all contributory benefits (pensions, sickness, unemployment, maternity, professional deceases, family benefits). Means tested universal non contributory social pension and other benefits are financed by taxes (3.3% of GDP in 2000). The social security sector currently produces a surplus of 1.7% of GDP, projected to turn into a deficit of 1.5% of GDP by 2050. PT

24.35% Employer: 8.85% Employee: 15.50% The contribution rate covers old age, survivors' pensions, disability pensions and health insurance contributions for retired persons. The public pension scheme is subsidised by state budget for the difference between contributions collected and the actual payment of the pensions concerned. It is currently in surplus (0.1% of GDP in 2005) but, without reforms, would fall into a deficit about2010, increasing to 10% of GDP in 2050 under current policies and activity rates. SI

24% in 2005; Employer: 17%, of which In addition, employers pay a contribution of 4.75% of wages into the Reserve Solidarity Fund. A mandatory funded pension scheme was introduced in 2005. For those, who join the scheme, half of the old age pension contribution (9%) is passed on to personal accounts of private funds. This introduction of the mandatory funded pension scheme is estimated to result in a deficit in the financing of the social security pensions by 1.3% of GDP as of 2006. 14% to old age scheme

3% to disability scheme

Employee: 7%; of which

4.0% to old age scheme 3.0% to disability scheme

Earnings related pensions in 2005: Employer: 16.8% (private sector) The earnings related pension contribution for the private sector (21.6%) is estimated to rise by about 7 percentage points (taking account of the 2005 reforms). Means tested (against pension income) national basic pensions and the pensions of sea farers, self employed persons and farmers are partially financed by taxes; the subsidy totalling to 1.7% of GDP in 2004. 18.9% (state sector) 23.4% (municipalities)

Employee: 4.8% National basic pensions: Employer: 2.3% (private sector)

18.5% (old age pension) Employer: 10.21% Employee: 7% Note that the contributions add up The earnings related pension system is a notional defined contribution system (16%) and a pre funded defined contribution system (2.5%); these rates are to be kept constant in the future. Income guarantee pensions (means tested against public pensions), disability and survivors' pensions and contributions during career breaks are financed by taxes. to 17.21% only

SE because the contribution paid by the employee (7%) is deducted from the income of which contributions are defined. 1.7% (survivors' scheme)

19.85% (social security except health); in 2005 Employer: 10.9% in 2005 Employee: 8.95% in 2005 (Class 1 contribution rates; for those not contracted out, earnings between the primary threshold and the upper earnings limit for employees) The contribution rate covers the basic state pension and the additional earnings related pension (SERPS/State Second Pension) as well as disability and widow's benefits, contributory jobseeker's allowance, maternity and guardian allowances, redundancy payments. Means tested Minimum Income Guarantee/Pension Credit benefits and civil servants' pensions are financed by taxes. The contribution rates to private pension schemes vary considerably: in 2004, in open funds 9 17% and in closed funds 7 21% of wages. UK

1 Source: National Strategy Reports 2005; European Commission, MISSOC and Ageing Working Group update in 2005. The rates apply to the general, first pillar social protection schemes. In many Member States, there are floors or ceilings for earnings which are subject to contributions. Rates may also be different for the self employed. 2 The observations are based on the information given in the 2005 national strategy reports and by the Ageing Working Group.

Table 2 5 Pension expenditure projection models in the Member States

Country Name and owner organisation of the model Type of the model Base data on pensions Modelling issues and other observations

BE The Maltese System (Model for analysis of long term evolution of social expenditure) Federal Planning Bureau Deterministic macrosimulation model. Administrative and national account data Occupational pensions no Detailed sub models for each social security scheme as for demographic and socio demographic projections Modelling the whole social security system

CZ Pension model Ministry of Finance Semi aggregated simulation model; GAMS Pension data of 2003 by age cohorts and All pension benefits under social security system modelled. sexes; data on inflows and outflows of pensioners

DK All public pensions covered Ministry of Finance Public pension expenditure with the breakdown to public old age (flat rate), means tested supplements and civil servants' pensions according to 2004 National account statistics. Assumes a constant share of population by gender, age and origin on public pensions with corrections for reforms (e.g. a lower statutory retirement age) and changes in the labour force participation rates. DE Pension projection model Ministry Two sub models: (1) the demographic pension model (cohort model) and (2) the financial Pension data of 2004 by age cohort and sex; data on inflows and outflows of pensioners. Occupational pensions: no of Health and Social

Security pension model (a partial equilibrium model)

EE Pension model Ministry of Finance Macrosimulation model Administrative data of National Additional assumptions: Pension Insurance Fund wage structure by age and gender (to calculate the earnings related pension expenditure)

structure of different pensioners (according to changes

in legislation)

structure of wages of switchers to the II pillar

GR Projection Models for different In most part, the data used were submitted by the pension funds (IKA etc.) directly to the National Actuarial Authority Separate models for different funds require also that the total population is divided into sub populations of the funds funds National Actuarial Authority

IKA is the largest social insurance organization in the country, covering approximately half of the labour force and pensioners

The technical approach is focussed on modelling employees' and employers' contributions and the provision of pensions. The outcome of the projection produces a cash flow pattern.

Country Name and owner organisation of the model Type of the model Base data on pensions Modelling issues and other observations

ES Four projection models for a) social security old age and early pensions; Deterministic, partial equilibrium model Social security administration data and Ministry of Economy and Finance data The whole social security pension system is covered by the model; Occupational and private pensions not modelled. b) social security

disability pensions; c) social

security survivors' pensions; d) public sector (CPE) pensions

FR Ministry of Health and Solidarity associated by Ministry of Finance and the French pension policy council (COR) Partial equilibrium model, supported by the results of a microsimulation model for the Occupational pensions: no private sector pensions, run by

CNAVTS (national pension fund for salaries workers)

IE Model for social insurance and assistance pensions Ministry of Social and Family affairs Partial equilibrium model Private sector occupational pensions: no A separate model for public sector employees' pensions Ministry of Finance

IT RGS pension model, Ministry of Economy and Finance, Department of General Accounts macrosimulation model based on a Social security system database Numbers enrolled in the pension system are projected according to the level of disaggregation provided by the `state' variables dynamic, multi state approach involving a large number of `state' variables

`monetary' variables (pension amount, wages) are projected in terms of their mean value associated to each possible "positions" within the system

Takes migration flows into account

CY PROST (the World Bank model)

LV Social Insurance Budget Model Ministry of Welfare Social security schemes (public and private tiers) Microsimulation model Pension data from the State Social Insurance Agency Complementary calculations on special service pensions (artists,

Country Name and owner organisation of the model Type of the model Base data on pensions Modelling issues and other observations workers in international affairs etc.)

LT The State Social Insurance pension system together with the I and II tier of the I pillar: PRISM Ministry of Social Security and Labour Pension Reform Illustration and Simulation Model, semi aggregated Pension data from state social The program methodology based on the `average person' parameter modelling. insurance institutions

The number of the recipients of the State pensions and the projections of the pension size were estimated by using the model which was created specially for this purpose and based on Excel program

Social security schemes (public and private tiers)

LU General Inspection Authority of Social security (IGSS) Sequential approach, transition Pension data from the National Social Insurance Institution Basic dimensions of the model are age, sex, and country of origin. Additional dimensions allow differentiate between employment statuses (blue collar, white collar, civil servants) and the pension type (old age, early old age, disability, survivor). probabilities

HU Ministry of Finance Deterministic semi aggregated Age specific exit probabilities and average benefit levels are calculated from developments observed in the past and corrected in line with movements in labour supply and effects of legislative changes. microsimulation model

Social security pensions (public and private tiers)

Basic unit of calculation: group of pensioners of the same age, sex and with the same type of benefit

MT PROST (the World Bank model); used The World Bank's reform option Base year 2002 by the Economic Policy simulation model Division of the Ministry of finance

NL Separate models for social security schemes First pillar The three pillars that form the pension system are treated separately. (MOSI), occupational An OLG General Equilibrium model pensions (EXPLOT) and

occupational early retirement Second Pillar GDP slightly higher than assumed by the AWG pensions (PVK) Central Planning Bureau model of a single average pension fund

AT Two independent models: Private sector and public sector Static microsimulation model Bundesministerium fur Financen

Country Name and owner organisation of the model Type of the model Base data on pensions Modelling issues and other observations

PL FUS04 model Ministry of Economy, Labour and Social Policy Multiple decrement cohort component Separate models for 1) (ZUS) the general scheme (old age and disability pensions) 2) Pre retirement pensions 3) (KRUS) farmers pensions 4) Security provision pensions (armed forces, police, etc.) actuarial model

PT ModpensPor Model Private Partial equilibrium model Base year 2004 Runs aggregate projections on variables such as contributions, sector social security

schemes Ministry of Labour and Social Solidarity Civil benefits and maternity benefits, as well as micro level projections (based on individual profiles) on pensions and family benefits. serants pension schemes Ministry of Finance

SI Institute for Economic Research, Ministry of Finance Generational accounting model Administrative data of the Pension Insurance Institute Overlapping Generations: 5 year intervals, 1, 2, 5 or 10 different household groups. Sectoral disaggregation: 2 30 sectors. Social security module, Government, taxes. Dynamic overlapping generations general equilibrium model .

SK PROST Ministry of Finance The World Bank's reform option toolkit, a semi aggregated simulation model Age and sex specific data from Social Insurance Agency and the Ministry of Finance Inputs: All AWG assumptions (age specific for each year); Earnings profiles from National Statistical Office

Number of contributors, beneficiaries, coverage rate (age specific)

Number of pensions as a percent of population

linked with participation rates and unemployment rates

New pension defined by average replacement rate

Number of switchers from pure PAYG to mixed system

FI Model for national (minimum) Deterministic state model Administrative data of the institutions, covering also longitudional data on careers, wages, pension accruals etc. pensions; Social Insurance Institution Model for earning related social security pensions; Finnish Centre for Pensions

SE SESIM Ministry of Finance Dynamic microsimulation model The start year is 1999 and the initial sample The base population used in SESIM is formed by a random draw of 104 000 individuals from LINDA (longitudional database of administrative data). To this sample 8 000 individuals have been added from the National Social Insurance Board register for pensions rights (oversees residents with Swedish pension rights). is approximately 100 000 individuals.

Country Name and owner organisation of the model Type of the model Base data on pensions Modelling issues and other observations

UK Government Actuary's Department (GAD) responsible for the part of the pension projections relating to the National Insurance Fund. In Basic retirement pension ? Pensions Credit Occupational schemes: no Separate models for different pension schemes (Basic state pensions,

static microsimulation model

2004 HM Treasury employees, disability benefits)

commissioned GAD to produce Public service pensions public service pension projections. Department for Work and Pensions (DWP) ? produces the Pension Credits and other types of benefits ?

Table 2 6 Main features of recent pension reforms

Country Main features of the reforms implemented

BE The standard retirement age for women will increase gradually from age 63 in 2003 to 64 in 2006 and will be 65 in 2009 in the general schemes for wage earners and self employed. Early retirement (seniority pension) is still possible, but the required contribution period has been increased from 32 years in 2003 to 35 years in 2005. Also, the "older workers' unemployment scheme" has been recently reformed and is under discussion for further reforms. 2003

CZ Before the pension reform in 2003, men retired at the age of 60 and women at 53 57, depending on the number of children (one year less per child). Since January 2004, the age of retirement is increased constantly over time (2 months per year for men and 4 months per year for women) to reach 63 years for men and 59 63 for women (still depending on the number of children) in 2013. The so called "temporarily reduced pension", an early retirement scheme, has been abolished, while the so called "permanently reduced pension" scheme (allowing early retirement up to three years before the normal retirement age) is still in place but with a stronger reduction of the pension benefit (0.9% for each 90 calendar days from the statutory retirement age). 2003

DK 2003 In 2003, eligibility to disability pensions was redefined so that, instead of defining the disability degree, the work ability degree is defined. Persons with some work ability are directed to subsidised jobs (and if unemployed, to special unemployment benefit) instead of granting a disability pension. As of 1 July 2004, the statutory retirement age is 65 instead of 67. At the same time, the voluntary early retirement pension was made less attractive with the aim of increasing the effective retirement age. 2004

DE 1992 2001

An increase of the statutory retirement age to 65 was legislated in 1992. The transition period of the increase of the statutory retirement age was fastened several times (1996, 1999, 2001 and 2004) will be completed by 2012 for those born in 1952 or later. The statutory retirement age for women and the unemployed will rise from 60 to 65 by 2011. For those born in 1952 or later, early retirement will be possible at the age of 62 with the condition of at least 35 years of contribution. In addition, pensions are reduced by 3.6% per year in the case of early retirement, while a bonus of 6% per year is granted for deferred retirement. The reduction for disability pensions before the age of 62 is up to a maximum of 10.8%. The 2001 reform aimed at promoting the development of supplementary pension schemes whilst reducing slightly the target replacement ratio in the social security scheme. The 2004 old age pension insurance Sustainability Act introduced a sustainability factor in the pension indexation formula. This requires maintaining the set quantitative ratio between the numbers of beneficiaries and contributors (dependency ratio). This sustainability factor led to no index adjustments in pensions in 2004 and 2005. Time spent in school and university will no longer be counted as years worked. The possibility of leaving the labour market at the age of 58 while receiving unemployment benefits until pension retirement (so called 58er regulation) will be abolished in 2008.

2002, 2004

EE 2001 Changes in the PAYG system include rising the retirement age for female to 63 by 2016 and revising the benefit formula. Legislation passed in mid September 2001 set up mandatory individual accounts for the funded tier, allowing to switch a part of the statutory social security pension into private pension funds. Since 2002, over half the labour force has joined funded schemes.

ES 2002 2005 The mandatory retirement age (65) was abolished, while the accrual of pension rights after 65 was increased by 2%/year and the contributions abolished. Early retirement is discouraged by the reduction of contributions rates (50% at the age of 60, increasing by 10 p.p. by each additional year) and made possible only from the age 61 provided that contributions have been paid at least during 30 years and the person has been unemployed at least 6 months. Moreover, the pension is reduced by 6.0 8.0%/year, depending on the number of contribution years. Pensions have also been made compatible with part time work; the pension benefit is reduced according to the length of the working day. FR 2004 The main measures of the reform implemented as of 2004 include a prolongation of the contribution period for a full pension from 37.5 to 40 years for public sector employees and a further increase to 41 years for all employees between 2009 and 2012 and to 41.75 in 2020. Thereafter, further gains

Country Main features of the reforms implemented

in life expectancy (at 60) will prolong the contribution period by 2/3 of the increase in life expectancy. Moreover, retirement was made more flexible but bonus/malus adjustments will be applied to deferred/earlier retirement. In the case of postponement, the bonus is 3% per year. As of 2006, the amount of the penalty ("la décote"; applied if retired before 40 years of contributions) will decrease gradually from 10% to 5% of pension per year of anticipation in 2015 for the private sector and will increase from 0.5% to 5% for civil servants). Furthermore, pensions were indexed to prices only and the contribution rate will be increased by 0.2 of a percentage point as of 2006.

IE 1999 The National Pension Reserve fund was established in 1999 with the aim of pre funding in part the future Exchequer cost of social welfare and public service pensions. A statutory obligation has been placed on the Government to pay a sum equivalent to 1% of GNP from the Exchequer into the fund each year until at least 2055. A series of significant tax incentives have been introduced for the purpose of promoting pension provision amongst the self employed, employers in non pensionable employment and proprietary directors. These incentives aim at encouraging individuals to plan for the pension provision early on in their careers. Personal Retirement Savings Accounts which seek to promote supplementary pension coverage were introduced. Reforms of the public pension system implemented to date have allowed for the raising of the minimum pension age and the removal of a compulsory retirement age for most public servants. A cost neutral early retirement scheme with actuarially reduced benefits has been introduced. 2000

2003

IT 2004 As of 2008, regardless the regime (earnings related, mixed, contribution defined), the take up of early pensions will be tightened. To take up a pension at an age lower than 65 for men (60 for women) is allowed only to those with 40 or more years of contributions or to those with 35 years of contributions and the age of 60 for the employed (61 for the self employed), instead of the flexible age range 57 65 before the reform. Further, the age limits will be raised by one year in 2010 and 2014, thus reaching 62 for the employed and 63 for the self employed. A further postponement of pension is envisaged with respect to the moment at which the requirements are met through the so called `exit windows' (finestre). During the period 2008 2015, the take up of seniority pensions for those having met the requirements of the legislation before 2004 (at least 35 years of contributions and the age of 57 for the employed / 58 for the self employed) is limited to women who accept the pension calculation according to a less favourable contribution method. During the period 2004 2007, those employed in the private sector and having satisfied the requirements for a seniority pension may opt for a different regime providing: i) an additional pay corresponding to the whole pension contribution (32.7% of gross wages), ii) the total tax exemption of this additional income and iii) pension amount calculated according to the contribution years matured at the date of the option and indexed to inflation for the period until old age retirement. HU The standard retirement age for women will increase to 60 by 2005, 61 by 2007 and 62 by 2009 (before the reform it was 57). A funded tier was introduced in 1997, allowing to transfer a 8% contribution (26.5% of the total social security pension contribution) into private pension funds. This funded tier is mandatory to all new entrants to the labour market. In 2005, already 62% of the labou rforce have joined funded schemes. 1997

LV 1996 The Latvian social security pension system was reformed into a notional defined contribution scheme in 1996 and complemented with the introduction of a funded tier in 2001, allowing to transfer a part of the contribution into private pension fund; the contribution is currently 2% but to be raised to 10% (50% of the total contribution) by 2010. Furthermore, the standard age requirement for women (60.5 years until July 2006) will increase by 6 months each year to reach 62 by 2008. Those for men reached 62 in 2003. Early retirement up to two years before the standard retirement age remains possible until July 2008. LT 1995 The standard minimum retirement age for women (55 years in 1995, 58.5 years in 2003) will increase by 6 months each year to reach 60 years in 2006. The retirement age for men was gradually increased (2 months per year) from 60 years in 1995 up to 62.5 in 2003. A funded tier was introduced in 2004, allowing transfer a part of the statutory social security pension contribution (to raise to 5.5% in 2007) into private pension funds. The switch is voluntary to all. 2004

NL Decisions have been taken to reduce the incentives for the take up of early retirement pensions

Country Main features of the reforms implemented

2006 (VUT), mainly via the reduction of the favourable tax treatment of such pensions.

AT The minimum retirement age for men will increase from 61.5 years to 65 years; for women the age will rise from 56.5 to 60 years. The increase will be phased in gradually beginning in July 2004 and by 2017 early retirement will be eliminated. The statutory retirement age for women will be increased gradually between 2019 and 2034 to reach the retirement age for men at 65. The 2003 reform abolished early retirement schemes and linked benefits more closely to contributions. The 2004 reform introduced significant improvements for the financial sustainability of the pension system via a better transparency between contributions and benefits; bonus/malus adjustments (4.2%/year) are applied for deferred/earlier retirement and a longer contribution period (45 years) is required for a full pension (80%) at the age of 65. Also, a switch to the price indexation of pensions as of 2006 has already been decided. Furthermore, an alignment between different sectoral schemes has been undertaken. 2003, 2004

From January 2005, harmonised guaranteed

pension accounts will be established (Act on the harmonisation of pension system, approved in November 2004). In the new system, individual, transparent pension accounts will be kept to report of benefits accrued from contributions paid in and other credits acquired, such as from active child and elderly care.

PL 1999 The Polish general social security pension system was reformed into a notional defined contribution scheme in 1999, with the introduction of a funded tier at the same time, allowing to transfer a part of the contribution (7.3%) into private pension funds. The switch is mandatory to persons born after 1969. Those born before 1948 as well as partially the pensions of those born between 1949 1968 remain in the old defined benefit scheme. Farmers are not included in the reformed scheme. The standard retirement age remains 65 for male and 60 for female. There will be no early pension for those born after 1948 and retiring after 2006, with the exception of those who worked long enough (20 years) in special conditions. PT 2002 The general social security pension scheme was reformed in 2002, changing the calculation rules of pensions to be based on lifetime earnings (max. 40 years) instead of the best 10 years over the last 15 years' wages, however, being phased in over a long transition period. The 2005 reform aligned the public sector employees' pensions with the general pension scheme (previously aligned only to those who had entered the labour market after 1993), raising the statutory retirement age from 60 in 2005 to 65 by 2015, raising the length of the contribution period required for a full pension from 36 to 40 by 2013 and applying bonus/malus adjustments for deferred/earlier retirements. 2005

SK 2004 The standard retirement age will increase from 60 to 62 for men (9 month per year) by 2007 and from the former 57 (reduced by 1 year per child , to reach age 53) to 62 for women by 2016. A worker can still retire earlier if the combined benefit from the first and the newly introduced second pillar equal at least 60% of the minimum living standard determined by the government. In this case, the pension is reduced by 6% per year while a bonus of 6% is introduced for those postponing retirement. It is also possible to get pension benefit while working. A funded tier was introduced in 2005, which is mandatory to the new entrants to the labour market, allowing transfer half the statutory social security pension contribution (9) into private pension funds.

SI 2000 The standard retirement age has been increased. It is now possible to retire between 58 and 63 for men and 61 for women (the minimum retirement age was 53 for women and 58 for men before the reform). Women that worked before the age of 18 can retire earlier (but not before the age of 55). Special regulations reduce the age of retirement to 55 in certain cases (before the reform it was possible even below 50). The minimum retirement age is raised from 53 to 58 for women (the same as for men). The accrual rate was reduced from 2% to 1.5% since 2000. Later retirement has been encouraged: a person who fulfils the requirement for pension but continues to work beyond the age 63/61 will receive an additional pension increase (3.6% the first additional year, 2.4% the second year and 1.2% in the third, plus the normal rate of accrual, 1.5% per year). The indexation of pensions has varied from year to year. During the period of 2000 2004, it was 50% to wages and in 2005 80% to wages. Prices were taken in to account only when the result of the indexation was below the price increase in 2001 2005. As of 2006, it will be fully to wages. A new supplementary pre funded pension insurance was introduced. It is mandatory for early

Country Main features of the reforms implemented

pension in heavy and unhealthy work and voluntary for collectively agreed pension insurance.

FI 2003 2005 The 2003 2005 revisions of the pension scheme aim to raise the effective retirement age (by 2 years by 2025) by removing the unemployment pension scheme (between 2009 2014) and removing the individual disability (early retirement) scheme whilst allowing flexible retirement between 63 68 years and an early retirement at the age of 62. The accrual rate is increased to 4.5% for those continuing to work beyond the age of 63 (previously 2.5% for those working beyond 60) and an actuarial reduction of 0.6% per month is applied to those retiring prior to 63. The ceiling on the maximum pension is abolished. Pension benefits are calculated on the basis of life time earnings. Also, a life expectancy coefficient will be implemented in the system as of 2009, adjusting future old age and survivors' benefits to the increase in life expectancy. SE 1998 Under the new notional defined contribution system is possible to retire from age 61 onwards, with an actuarially fair compensation for those who stay on in the labour force. Every year of contributions is important for the pension benefit. A person with an average wage will increase his yearly pension benefit by nearly 60 per cent if he postpones his retirement decision till age 67 compared to leaving at age 61. Yearly "statement of account" informs the individual of costs and benefits of retirement. The new system is phased in gradually for generations born between 1938 and 1953, and will affect generations born after 1953 fully. UK 2002 2003 Between 2010 and 2020, women's pensionable age will gradually rise from 60 to 65, as for men. In 2002, the State Second Pension was introduced (replacing the earlier State Earnings related Pension), resulting in time in higher benefits. In 2003, the Pension Credit was introduced, increasing income related benefits to people over 60. Also, the basic State pension has been increased more than what the statutory indexation rule (with prices) requires.

3.

D ETAILED RESULTS OF THE P ENSION PROJECTIONS SENSITIVITY TESTS Table 3 1 High life expectancy scenario: gross public pension expenditure as a share of GDP between 2004 and 2050

P u b lic p en s io n s , g ro ss as % o f G D P C h an g e C h an g e C h an g e

C ou n try 2 0 04 2 0 10 20 15 20 20 20 25 20 30 20 40 20 50 2 00 4 -2 03 0 2 03 0 -2 05 0 2 00 4 -2 05 0 B E 1 0,4 1 0,5 1 1,1 1 2,2 1 3,6 1 4,8 1 6 ,1 1 6 ,1 4,4 1,2 5,7 C Z 8 ,5 8 ,2 8 ,2 8 ,5 8 ,9 9 ,6 1 2 ,4 1 4 ,4 1,2 4,8 5,9

D K 9 ,5 1 0,1 1 0,8 1 1,4 1 2,1 1 3,0 1 3 ,9 1 3 ,4 3,6 0,4 4,0

D E 1 1,4 1 0,5 1 0,5 1 1,0 1 1,7 1 2,4 1 2 ,9 1 3 ,3 1,0 1,0 2,0 E E 6 ,7 6 ,8 6 ,0 5 ,4 5 ,1 4 ,8 4 ,4 4,3 -1,9 -0,5 -2,4 G R

E S 8 ,6 8 ,9 8 ,8 9 ,3 1 0,4 1 1,9 1 5 ,2 1 5 ,8 3,3 3,9 7,2

F R 1 2,8 1 3,0 1 3,2 1 3,8 1 4,2 1 4,6 1 5 ,4 1 5 ,4 1,7 0,8 2,6 IE 4 ,7 5 ,2 5 ,9 6 ,5 7 ,3 8 ,0 9 ,5 1 1 ,5 3,2 3,5 6,7

IT 1 4,2 1 4,0 1 3,9 1 4,1 1 4,5 1 5,2 1 6 ,1 1 4 ,9 0,9 -0,2 0,7 C Y

L V 6 ,8 4 ,9 4 ,7 4 ,9 5 ,4 5 ,7 6 ,0 5,7 -1,1 0,1 -1,1 LT 7 ,2 6 ,8 6 ,9 7 ,4 8 ,0 8 ,5 8 ,9 9,5 1,3 1,0 2,3 L U

H U 1 0,4 1 1,0 1 1,4 1 2,4 1 2,8 1 3,2 1 5 ,7 1 6 ,8 2,8 3,6 6,4 M T 7 ,5 9 ,0 1 0,1 1 0,6 1 0,5 9 ,6 8 ,4 7,6 2,1 -2,1 0,1

N L 7 ,7 7 ,6 8 ,4 9 ,0 9 ,9 1 0,8 1 2 ,0 1 1 ,7 3,1 0,9 4,0

A T 1 3,4 1 2,9 1 2,7 1 2,9 1 3,7 1 4,2 1 3 ,8 1 2 ,6 0,8 -1,5 -0,8 P L 1 3,9 1 1,3 9 ,8 9 ,7 9 ,5 9 ,2 8 ,8 8,2 -4,6 -1,1 -5,7

P T 1 1,1 1 1,9 1 2,7 1 4,2 1 5,1 1 6,2 1 9 ,2 2 1 ,4 5,1 5,3 1 0 ,3 S I 1 0,9 1 0,9 1 1,4 1 2,2 1 3,2 1 4,4 1 7 ,0 1 8 ,8 3,5 4,4 7,9 S K 7 ,2 6 ,7 6 ,6 7 ,0 7 ,4 7 ,8 8 ,5 9,4 0,6 1,6 2,2

F I 1 0,7 1 1,2 1 2,1 1 2,9 1 3,6 1 4,1 1 4 ,0 1 3 ,9 3,4 -0,2 3,3 S E 1 0,6 1 0,1 1 0,3 1 0,5 1 0,8 1 1,2 1 1 ,8 1 1 ,6 0,6 0,4 1,0 U K 6 ,6 6 ,7 6 ,8 6 ,9 7 ,4 8 ,0 8 ,5 8,8 1,4 0,8 2,2

E U 15 1 ) 1 0,6 1 0,4 1 0,5 1 0,9 1 1,5 1 2,2 1 3 ,1 1 3 ,2 1,6 1,0 2,6 E U 10 1 ) 1 1,0 9 ,9 9 ,2 9 ,5 9 ,7 9 ,8 1 0 ,6 1 1 ,1 -1,2 1,2 0,1

E U 12 1 ) 1 1,5 1 1,3 1 1,4 1 1,9 1 2,6 1 3,3 1 4 ,4 1 4 ,4 1,8 1,1 2,9

E U 25 1 ) 1 0,6 1 0,3 1 0,4 1 0,8 1 1,4 1 2,0 1 3 ,0 1 3 ,0 1,4 1,0 2,4 1 ) exc lud in g c ou n trie s w hic h h a ve n ot prov id ed d ata

Table 3 2 High life expectancy scenario: gross total pension expenditure as a share of GDP between 2004 and 2050

Total pension expenditure, gross as % of GDP Change Change Change

Country 2004 2010 2015 2020 2025 2030 2040 2050 2004-2030 2030-2050 2004-2050 BE 10,4 10,5 11,1 12,2 13,6 14,8 16,1 16,1 4,4 1,2 5,7 CZ 8,5 8,2 8,2 8,5 8,9 9,6 12,4 14,4 1,2 4,8 5,9 DK

DE 11,4 10,5 10,5 11,0 11,7 12,4 12,9 13,3 1,0 1,0 2,0 EE 6,7 6,8 6,0 5,6 5,4 5,3 5,7 6,7 -1,3 1,4 0,0 GR

ES 8,6 8,9 8,8 9,3 10,4 11,9 15,2 15,8 3,3 3,9 7,2

FR 12,8 13,0 13,2 13,8 14,2 14,6 15,4 15,4 1,7 0,8 2,6 IE

IT 14,2 14,0 13,9 14,1 14,5 15,2 16,1 14,9 0,9 -0,2 0,7 CY

LV 6,8 4,9 4,7 5,0 5,6 6,1 7,2 8,4 -0,7 2,4 1,6 LT 7,2 6,8 6,9 7,5 8,2 8,8 9,8 11,3 1,7 2,4 4,1 LU

HU 10,4 11,0 11,5 12,5 13,1 13,7 17,4 20,0 3,3 6,2 9,6 MT 7,5 9,0 10,1 10,6 10,5 9,6 8,4 7,6 2,1 -2,1 0,1

NL 12,4 12,3 13,5 14,8 16,5 18,5 21,1 20,7 6,1 2,2 8,3

AT 13,4 12,9 12,7 12,9 13,7 14,2 13,8 12,6 0,8 -1,5 -0,8 PL 13,9 11,3 9,8 9,8 9,7 9,5 9,4 9,5 -4,4 0,0 -4,4

PT 11,1 11,9 12,7 14,2 15,1 16,2 19,2 21,4 5,1 5,3 10,3 SI 10,9 10,9 11,4 12,2 13,2 14,4 17,0 18,8 3,5 4,4 7,9 SK 7,2 6,7 6,7 7,3 7,9 8,5 9,9 11,7 1,3 3,2 4,5

FI 10,7 11,2 12,1 12,9 13,6 14,1 14,0 13,9 3,4 -0,2 3,3 SE 12,9 12,5 12,8 13,0 13,4 14,1 14,8 14,2 1,1 0,1 1,3 UK

EU15 1) 12,0 11,7 11,9 12,4 13,1 14,0 15,2 15,1 2,0 1,1 3,1 EU10 1) 11,0 9,9 9,3 9,6 9,8 10,1 11,4 12,5 -0,9 2,4 1,5

EU12 1) 12,0 11,7 11,9 12,4 13,1 14,0 15,2 15,2 2,0 1,2 3,2

EU25 1) 12,0 11,6 11,7 12,2 12,9 13,7 14,9 14,9 1,7 1,3 3,0 1) excluding countries which have not provided data

Table 3 3 High life expectancy scenario: total assets in pension schemes as a share of GDP between 2004 and 2050

All pensions, assets as % of GDP Change Change Change

Country 2004 2010 2015 2020 2025 2030 2040 2050 2004-2030 2030-2050 2004-2050 BE 4,4 7,4 13,5 16,2 12,9 0,5 -4,0 CZ 0,3 3,4 6,5 9,1 9,7 7,2 6,9 DK

DE 0,1 0,4 0,8

EE 2,8 9,4 15,9 26,0 38,4 51,3 77,4 100,8 48,5 49,5 98,0 GR

FR 1,2 2,0 2,9 4,0 3,5 2,8 1,5 1,6 IE

LV 0,3 12,9 25,9 38,0 48,2 57,3 68,0 70,2 57,0 12,8 69,8 LT 0,3 4,3 8,7 14,2 21,1 28,5 42,5 54,2 28,2 25,8 53,9 LU

HU 4,0 13,2 21,9 31,4 40,9 49,7 67,2 72,7 45,7 23,0 68,7 MT

NL 135,5 161,0 178,3 197,0 217,5 235,9 251,4 257,4 100,4 21,4 121,8 AT

PL 7,1 15,9 24,1 33,5 42,7 51,3 70,5 86,5 44,2 35,2 79,5 PT 4,3 4,0 SI

SK 7,0 12,8 19,0 25,2 31,7 46,2 59,1 31,7 27,4 59,1

FI 52,4 59,3 63,1 66,1 68,3 70,1 71,3 72,6 17,7 2,6 20,2

SE 38,6 53,2 60,2 65,3 68,7 71,1 66,1 57,9 32,4 -13,1 19,3 UK

Table 3 4 High life expectancy scenario: contributions to public pension schemes as a share of public pensions

Public pensions, contributions / gross pensions Change Change Change

Country 2004 2010 2015 2020 2025 2030 2040 2050 2004-2030 2030-2050 2004-2050 BE

CZ 105 108 108 104 98 91 71 61 -14 -30 -44 DK

DE 68 69 66 68 67 68 69 68 0 1 0

EE 98 97 109 118 124 130 137 143 32 12 44 GR

FR 100 99 97 93 91 88 84 84 -12 -5 -16 IE 76 65 57 51 46 42 35 29 -34 -13 -47 IT 72 74 75 74 72 68 65 71 -4 3 0 CY

LV 104 124 124 115 103 96 90 95 -8 -2 -9 LT 94 94 91 83 75 71 69 65 -23 -6 -29 LU

HU 74 61 58 53 51 50 43 40 -25 -10 -34 MT 95 76 64 56 51 50 47 44 -45 -6 -51 NL 88 84 77 71 66 60 56 57 -28 -3 -31 AT 67 71 71 69 64 61 62 68 -6 7 1

PL 55 70 82 83 84 87 92 98 32 12 43

PT 95 88 78 68 63 58 48 43 -37 -15 -51 SI 85 92 91 88 83 77 67 61 -8 -16 -24

SK 90 75 74 68 63 60 54 47 -30 -13 -43 FI 85 81 81 80 80 80 81 82 -6 2 -4 SE

UK 87 89 90 89 84 79 74 71 -8 -7 -15

EU15 1) 81 82 80 79 76 73 71 71 -7 -2 -9 EU10 1) 71 77 83 80 78 77 72 69 6 -8 -2 EU12 1) 80 81 79 77 75 73 70 71 -7 -1 -8

EU25 1) 80 81 80 79 76 74 71 71 -6 -3 -9 1) excluding countries which have not provided information

Table 3 5 Higher employment rate scenario: gross public pension expenditure as a share of GDP between 2004 and 2050

P u blic p en s ion s , g ro ss as % o f G D P C h an g e C h an g e C h an g e

C ou n try 2 0 04 2 0 10 20 15 20 20 20 25 20 30 20 40 20 50 2 00 4 -2 03 0 2 03 0 -2 05 0 2 00 4 -2 05 0 B E 1 0,4 1 0,4 1 1,0 1 2,0 1 3,3 1 4,5 1 5 ,6 1 5 ,4 4,1 0,9 4,9 C Z 8 ,5 8 ,2 8 ,1 8 ,3 8 ,8 9 ,4 1 2 ,0 1 3 ,8 0,9 4,4 5,3

D K 9 ,5 1 0,1 1 0,8 1 1,3 1 2,0 1 2,8 1 3 ,5 1 2 ,8 3,3 0,0 3,3

D E 1 1,4 1 0,4 1 0,4 1 0,9 1 1,5 1 2,2 1 2 ,7 1 3 ,0 0,8 0,8 1,7 E E 6 ,6 6 ,8 5 ,9 5 ,4 5 ,1 4 ,7 4 ,4 4,2 -1,9 -0,5 -2,4 G R

E S 8 ,6 8 ,9 8 ,8 9 ,3 1 0,3 1 1,8 1 5 ,1 1 5 ,6 3,2 3,8 7,1

FR 1 2,8 1 2,9 1 3,1 1 3,6 1 3,9 1 4,2 1 4 ,9 1 4 ,7 1,4 0,5 1,9 IE 4 ,7 5 ,2 5 ,9 6 ,5 7 ,2 7 ,8 9 ,3 1 1 ,1 3,1 3,2 6,3

IT 1 4,2 1 3,9 1 3,7 1 3,9 1 4,3 1 4,9 1 5 ,8 1 4 ,7 0,7 -0,3 0,4 C Y 6 ,9 7 ,9 8 ,8 9 ,8 1 0,8 1 2,1 1 4 ,9 1 9 ,7 5,2 7,6 1 2 ,8 L V 6 ,8 4 ,9 4 ,6 4 ,9 5 ,3 5 ,6 5 ,9 5,6 -1,2 -0,1 -1,3 LT 7 ,0 6 ,6 6 ,6 7 ,0 7 ,6 7 ,9 8 ,2 8,6 1,0 0,6 1,6 L U

H U 1 0,4 1 1,0 1 1,3 1 2,2 1 2,7 1 3,0 1 5 ,4 1 6 ,4 2,6 3,4 6,0 M T 7 ,4 8 ,7 9 ,7 1 0,1 9 ,9 9 ,1 7 ,8 7,0 1,6 -2,1 -0,5

N L 7 ,7 7 ,6 8 ,3 8 ,9 9 ,7 1 0,6 1 1 ,6 1 1 ,1 2,9 0,5 3,4

A T 1 3,4 1 2,8 1 2,6 1 2,7 1 3,4 1 3,8 1 3 ,2 1 2 ,0 0,4 -1,8 -1,4 P L 1 3,9 1 1,3 9 ,7 9 ,6 9 ,4 9 ,1 8 ,5 7,9 -4,9 -1,2 -6,1

P T 1 1,1 1 1,8 1 2,5 1 4,0 1 4,9 1 5,8 1 8 ,7 2 0 ,6 4,8 4,8 9,5 S I 1 1,0 1 1,0 1 1,4 1 2,1 1 3,0 1 4,1 1 6 ,4 1 7 ,8 3,1 3,8 6,9 S K 7 ,2 6 ,7 6 ,5 6 ,9 7 ,3 7 ,6 8 ,2 8,9 0,4 1,3 1,7

F I 1 0,7 1 1,2 1 1,9 1 2,8 1 3,5 1 3,9 1 3 ,8 1 3 ,8 3,3 -0,2 3,1 S E 1 0,6 1 0,1 1 0,2 1 0,3 1 0,6 1 1,0 1 1 ,5 1 1 ,2 0,4 0,2 0,6 U K 6 ,6 6 ,6 6 ,7 6 ,8 7 ,2 7 ,8 8 ,3 8,5 1,2 0,7 1,9

E U 15 1 ) 1 0,6 1 0,3 1 0,4 1 0,7 1 1,3 1 2,0 1 2 ,8 1 2 ,8 1,4 0,8 2,2 E U 10 1 ) 1 0,9 9 ,8 9 ,1 9 ,4 9 ,5 9 ,7 1 0 ,4 1 0 ,9 -1,2 1,2 0,0

E U 12 1 ) 1 1,5 1 1,2 1 1,3 1 1,7 1 2,4 1 3,1 1 4 ,1 1 4 ,0 1,5 0,9 2,5

E U 25 1 ) 1 0,6 1 0,3 1 0,3 1 0,7 1 1,2 1 1,8 1 2 ,7 1 2 ,7 1,2 0,8 2,0 1 ) exclud in g c ou n trie s w hic h h a ve n ot provid ed d ata

Table 3 6 Higher employment rate scenario: gross total pension expenditure as a share of GDP between 2004 and 2050

Total pension expenditure, gross as % of GDP Change Change Change

Country 2004 2010 2015 2020 2025 2030 2040 2050 2004-2030 2030-2050 2004-2050 BE 10,4 10,4 11,0 12,0 13,3 14,5 15,6 15,4 4,1 0,9 4,9 CZ 8,5 8,2 8,1 8,3 8,8 9,4 12,0 13,8 0,9 4,4 5,3 DK

DE 11,4 10,4 10,4 10,9 11,5 12,2 12,7 13,0 0,8 0,8 1,7 EE 6,6 6,8 6,0 5,6 5,4 5,3 5,6 6,6 -1,4 1,3 -0,1 GR

ES 8,6 8,9 8,8 9,3 10,3 11,8 15,1 15,6 3,2 3,8 7,1

FR 12,8 12,9 13,1 13,6 13,9 14,2 14,9 14,7 1,4 0,5 1,9 IE

IT 14,2 13,9 13,7 13,9 14,3 14,9 15,8 14,7 0,7 -0,3 0,4 CY 6,9 7,9 8,8 9,8 10,8 12,1 14,9 19,7 5,2 7,6 12,8 LV 6,8 4,9 4,6 5,0 5,5 6,0 7,0 8,2 -0,8 2,2 1,4 LT 7,0 6,6 6,6 7,1 7,8 8,3 9,2 10,4 1,4 2,1 3,4 LU

HU 10,4 11,0 11,3 12,3 12,9 13,5 17,0 19,5 3,1 6,0 9,1 MT 7,4 8,7 9,7 10,1 9,9 9,1 7,8 7,0 1,6 -2,1 -0,5

NL 12,4 12,3 13,5 14,7 16,3 18,3 20,5 19,9 5,9 1,6 7,5

AT 13,4 12,8 12,6 12,7 13,4 13,8 13,2 12,0 0,4 -1,8 -1,4 PL 13,9 11,3 9,7 9,7 9,6 9,3 9,2 9,2 -4,6 -0,2 -4,8

PT 11,1 11,8 12,5 14,0 14,9 15,8 18,7 20,6 4,8 4,8 9,5 SI 11,0 11,0 11,4 12,1 13,0 14,1 16,4 17,8 3,1 3,8 6,9 SK 7,2 6,7 6,6 7,2 7,7 8,3 9,6 11,2 1,1 2,9 4,0

FI 10,7 11,2 11,9 12,8 13,5 13,9 13,8 13,8 3,3 -0,2 3,1 SE 12,9 12,4 12,7 12,9 13,3 13,8 14,4 13,8 0,9 -0,1 0,8 UK

EU15 1) 12,0 11,7 11,8 12,3 13,0 13,7 14,8 14,7 1,7 0,9 2,7 EU10 1) 10,9 9,8 9,1 9,5 9,7 10,0 11,2 12,3 -1,0 2,4 1,4

EU12 1) 12,0 11,7 11,8 12,3 12,9 13,7 14,9 14,7 1,8 1,0 2,7

EU25 1) 11,9 11,6 11,6 12,1 12,7 13,4 14,5 14,5 1,5 1,1 2,5 1) excluding countries which have not provided data

Table 3 7 Higher employment rate scenario: total assets in pension schemes as a share of GDP between 2004 and 2050

All pensions, assets as % of GDP Change Change Change

Country 2004 2010 2015 2020 2025 2030 2040 2050 2004-2030 2030-2050 2004-2050 BE 4,4 7,3 13,5 16,5 13,9 2,5 -1,9 CZ 0,3 3,5 7,0 10,3 11,7 10,5 10,2 DK

DE 0,1 0,4 0,8

EE 2,8 9,3 15,9 26,6 39,4 52,7 80,2 105,5 49,9 52,8 102,7 GR

FR 1,2 2,0 2,9 4,0 3,4 2,8 1,5 0,0 1,6 -2,8 -1,2 IE

CY 39,3 40,0 40,5 39,0 34,4 26,2 2,7 -13,1

LV 0,3 13,0 26,0 38,1 48,4 57,6 69,0 71,8 57,3 14,2 71,4 LT 0,3 4,3 8,6 14,0 20,8 28,1 41,6 52,9 27,7 24,8 52,6 LU

HU 4,0 13,2 21,9 31,5 41,0 49,9 67,6 73,7 45,9 23,8 69,7 MT

NL 135,5 160,1 176,3 194,4 213,6 229,7 241,5 244,7 94,1 15,0 109,2 AT

PL 7,1 15,9 24,1 33,5 42,5 51,0 69,6 84,5 44,0 33,5 77,5 PT 4,3 4,4 0,3 SI

SK 7,0 12,8 19,0 25,2 31,6 45,9 58,3 31,6 26,6 58,3

FI 52,4 59,3 62,9 66,0 68,4 70,3 71,8 73,5 17,9 3,2 21,1

SE 38,6 53,1 60,3 65,8 69,4 72,1 68,1 61,4 33,5 -10,8 22,8 UK

Table 3 8 Higher employment rate scenario: contributions to public pension schemes as a share of public pensions

Public pensions, contributions / gross pensions Change Change Change

Country 2004 2010 2015 2020 2025 2030 2040 2050 2004-2030 2030-2050 2004-2050 BE

CZ 105 108 109 106 100 93 73 64 -11 -30 -41 DK

DE 68 69 66 67 68 68 68 68 0 0 0

EE 98 97 110 119 126 133 140 143 34 10 44 GR

FR 100 100 98 95 92 90 87 88 -9 -3 -12 IE 76 65 57 52 47 43 36 30 -34 -12 -46 IT 72 74 75 75 73 69 66 73 -3 4 1

CY 80 82 80 73 67 60 49 36 -21 -24 -45

LV 104 124 125 116 104 97 92 98 -7 1 -6 LT 97 96 94 87 78 75 75 72 -22 -4 -26 LU

HU 74 62 59 54 52 50 44 41 -24 -9 -33 MT 96 77 66 58 54 53 51 48 -43 -5 -47 NL 88 84 78 72 67 62 58 60 -26 -2 -28 AT 67 71 72 70 65 63 65 71 -4 9 5

PL 55 70 82 83 84 87 93 100 32 13 45

PT 95 88 79 69 64 59 49 45 -35 -14 -50 SI 85 92 92 87 82 76 65 59 -9 -17 -25

SK 90 76 76 69 65 62 57 50 -28 -12 -40 FI 85 81 82 81 80 80 82 82 -5 2 -3

SE 72 74 72 71 69 67 63 65 -6 -2 -8

UK 87 90 92 91 86 81 77 74 -6 -7 -13

EU15 1) 80 82 81 79 77 74 72 73 -6 -2 -8 EU10 1) 71 78 83 81 79 77 72 68 6 -9 -3 EU12 1) 80 81 79 78 76 74 71 73 -6 -1 -7

EU25 1) 80 82 81 79 77 75 72 72 -5 -2 -7 1) excluding countries which have not provided data

Table 3 9 Higher employment rate of older workers scenario: gross public pension expenditure as a share of GDP between 2004 and 2050

P u blic p en s ion s , g ro ss as % o f G D P C h an g e C h an g e C h an g e

C ou n try 2 0 04 2 0 10 20 15 20 20 20 25 20 30 20 40 20 50 2 00 4 -2 03 0 2 03 0 -2 05 0 2 00 4 -2 05 0 B E 1 0,4 1 0,4 1 1,0 1 1,9 1 3,2 1 4,4 1 5 ,5 1 5 ,3 4,0 0,9 4,9 C Z 8 ,5 8 ,2 8 ,1 8 ,3 8 ,8 9 ,4 1 1 ,9 1 3 ,7 0,9 4,3 5,2

D K 9 ,5 1 0,0 1 0,6 1 1,1 1 1,6 1 2,4 1 3 ,1 1 2 ,5 3,0 0,0 3,0

D E 1 1,4 1 0,4 1 0,5 1 0,9 1 1,5 1 2,2 1 2 ,7 1 3 ,0 0,8 0,9 1,7 E E 7 ,4 7 ,6 6 ,7 6 ,0 5 ,6 5 ,2 4 ,8 4,6 -2,2 -0,6 -2,8 G R

E S 8 ,6 8 ,8 8 ,8 9 ,2 1 0,3 1 1,7 1 5 ,0 1 5 ,6 3,1 3,8 7,0

FR 1 2,8 1 2,8 1 2,9 1 3,3 1 3,6 1 3,9 1 4 ,6 1 4 ,4 1,1 0,5 1,6 IE 4 ,7 5 ,2 5 ,9 6 ,5 7 ,2 7 ,8 9 ,3 1 1 ,0 3,1 3,2 6,3

IT 1 4,2 1 3,9 1 3,7 1 3,8 1 4,2 1 4,9 1 6 ,0 1 4 ,8 0,7 -0,1 0,6 C Y

L V 6 ,8 4 ,9 4 ,6 4 ,9 5 ,3 5 ,6 5 ,9 5,5 -1,2 -0,1 -1,3 LT 7 ,0 6 ,6 6 ,5 7 ,0 7 ,5 7 ,9 8 ,1 8,5 0,9 0,6 1,5 L U

H U 1 0,4 1 0,9 1 1,2 1 1,9 1 2,3 1 2,7 1 5 ,0 1 6 ,0 2,3 3,3 5,6 M T 7 ,4 8 ,8 9 ,7 1 0,2 1 0,0 9 ,1 7 ,9 7,1 1,7 -2,1 -0,4

N L 7 ,7 7 ,6 8 ,3 8 ,9 9 ,6 1 0,6 1 1 ,6 1 1 ,1 2,8 0,6 3,4

A T 1 3,4 1 2,8 1 2,6 1 2,6 1 3,2 1 3,6 1 3 ,1 1 1 ,8 0,2 -1,8 -1,6 P L 1 3,9 1 1,3 9 ,7 9 ,7 9 ,5 9 ,2 8 ,6 8,0 -4,7 -1,2 -5,9

P T 1 1,1 1 1,9 1 2,6 1 4,0 1 4,8 1 5,8 1 8 ,6 2 0 ,5 4,7 4,7 9,5 S I 1 1,0 1 1,0 1 1,2 1 1,8 1 2,6 1 3,6 1 5 ,9 1 7 ,4 2,6 3,8 6,4 S K 7 ,2 6 ,7 6 ,5 6 ,9 7 ,3 7 ,6 8 ,2 9,0 0,4 1,4 1,8

F I 1 0,7 1 1,1 1 1,8 1 2,6 1 3,2 1 3,7 1 3 ,6 1 3 ,5 3,0 -0,2 2,8 S E

U K 6 ,6 6 ,6 6 ,7 6 ,8 7 ,2 7 ,8 8 ,3 8,5 1,2 0,7 1,9

E U 15 1 ) 1 0,6 1 0,3 1 0,4 1 0,7 1 1,2 1 1,9 1 2 ,8 1 2 ,8 1,3 0,8 2,2 E U 10 1 ) 1 1,0 9 ,8 9 ,1 9 ,4 9 ,5 9 ,6 1 0 ,2 1 0 ,6 -1,4 1,0 -0,4

E U 12 1 ) 1 1,5 1 1,2 1 1,3 1 1,7 1 2,3 1 3,0 1 4 ,0 1 4 ,0 1,4 1,0 2,4

E U 25 1 ) 1 0,6 1 0,3 1 0,3 1 0,6 1 1,1 1 1,8 1 2 ,7 1 2 ,6 1,2 0,9 2,0 1 ) exclud in g c ou n trie s w hic h h a ve n ot provid ed d ata

Table 3 10 Higher employment rate of older workers scenario: gross total pension expenditure as a share of GDP between 2004 and 2050

Total pension expenditure, gross as % of GDP Change Change Change

Country 2004 2010 2015 2020 2025 2030 2040 2050 2004-2030 2030-2050 2004-2050 BE 10,4 10,4 11,0 11,9 13,2 14,4 15,5 15,3 4,0 0,9 4,9 CZ 8,5 8,2 8,1 8,3 8,8 9,4 11,9 13,7 0,9 4,3 5,2 DK

DE 11,4 10,4 10,5 10,9 11,5 12,2 12,7 13,0 0,8 0,9 1,7 EE 7,4 7,6 6,7 6,2 6,0 5,8 6,1 6,9 -1,6 1,2 -0,5 GR

ES 8,6 8,8 8,8 9,2 10,3 11,7 15,0 15,6 3,1 3,8 7,0

FR 12,8 12,8 12,9 13,3 13,6 13,9 14,6 14,4 1,1 0,5 1,6 IE

IT 14,2 13,9 13,7 13,8 14,2 14,9 16,0 14,8 0,7 -0,1 0,6 CY

LV 6,8 4,9 4,6 5,0 5,5 6,0 7,0 8,2 -0,8 2,2 1,4 LT 7,0 6,6 6,6 7,1 7,8 8,3 9,2 10,2 1,4 1,9 3,3 LU

HU 10,4 10,9 11,2 12,0 12,6 13,2 16,6 19,0 2,8 5,8 8,6 MT 7,4 8,8 9,7 10,2 10,0 9,1 7,9 7,1 1,7 -2,1 -0,4

NL 12,4 12,3 13,5 14,7 16,3 18,3 20,6 19,9 5,9 1,6 7,6

AT 13,4 12,8 12,6 12,6 13,2 13,6 13,1 11,8 0,2 -1,8 -1,6 PL 13,9 11,3 9,8 9,8 9,7 9,4 9,3 9,3 -4,4 -0,1 -4,6

PT 11,1 11,9 12,6 14,0 14,8 15,8 18,6 20,5 4,7 4,7 9,5 SI 11,0 11,0 11,2 11,8 12,6 13,6 15,9 17,4 2,6 3,8 6,4 SK 7,2 6,7 6,6 7,1 7,7 8,3 9,6 11,3 1,1 3,0 4,1

FI 10,7 11,1 11,8 12,6 13,2 13,7 13,6 13,5 3,0 -0,2 2,8 SE

EU15 1) 12,0 11,6 11,8 12,2 12,8 13,6 14,8 14,7 1,7 1,0 2,7 EU10 1) 11,0 9,8 9,2 9,4 9,7 9,9 11,0 12,0 -1,1 2,2 1,0

EU12 1) 12,0 11,6 11,8 12,2 12,8 13,6 14,8 14,7 1,7 1,0 2,7

EU25 1) 11,9 11,5 11,6 12,0 12,6 13,3 14,5 14,4 1,4 1,1 2,5 1) excluding countries which have not provided data

Table 3 11 Higher employment rate of older workers scenario: total assets in pension schemes as a share of GDP between 2004 and 2050

All pensions, assets as % of GDP Change Change Change

Country 2004 2010 2015 2020 2025 2030 2040 2050 2004-2030 2030-2050 2004-2050 BE 4,4 7,3 13,5 16,5 14,1 3,1 -1,4 CZ 0,3 3,5 6,9 10,0 11,4 10,2 9,9 DK

DE 0,1 0,4 0,8

EE 2,8 9,3 15,8 25,8 38,1 51,2 78,0 102,6 48,4 51,4 99,8 GR

FR 1,2 2,0 2,9 4,0 3,4 2,8 1,5 0,0 1,6 -2,8 -1,2 IE

CY 39,3 42,1 44,0 42,6 35,0 17,3 -22,0

LV 0,3 12,9 25,9 37,8 47,9 57,0 68,2 70,7 56,7 13,7 70,3 LT 0,3 4,3 8,6 14,0 20,7 27,9 41,4 52,5 27,6 24,6 52,2 LU

HU 4,0 13,2 21,8 31,2 40,6 49,2 66,6 73,0 45,3 23,8 69,0 MT

NL 135,5 160,3 176,9 194,6 213,4 229,7 241,7 244,3 94,2 14,6 108,8 AT

PL 7,1 16,1 24,4 33,9 43,1 51,8 70,4 85,1 44,7 33,4 78,0 PT 4,3 4,0 SI

SK 7,0 12,7 18,9 25,1 31,5 45,7 58,1 31,5 26,6 58,1

FI 52,4 59,0 62,5 65,1 67,1 68,9 70,2 71,6 16,5 2,7 19,2 SE

Table 3 12 Higher employment rate of older workers scenario: contributions to public pension schemes as a share of public pensions

Public pensions, contributions / gross pensions Change Change Change

Country 2004 2010 2015 2020 2025 2030 2040 2050 2004-2030 2030-2050 2004-2050 BE

CZ 105 108 109 106 100 94 74 64 -11 -30 -41 DK

DE 68 70 66 67 67 68 68 68 0 0 0

EE 88 86 97 106 112 118 125 129 30 11 41 GR

FR 100 100 99 96 95 93 88 89 -7 -3 -11 IE 76 65 57 52 47 43 36 30 -34 -12 -46 IT 72 74 76 75 74 69 66 72 -2 2 0 CY

LV 104 124 125 115 104 97 91 97 -7 1 -7 LT 97 96 95 87 78 76 75 72 -22 -3 -25 LU

HU 74 62 60 55 53 52 45 42 -22 -10 -32 MT 96 77 66 58 54 53 51 48 -43 -5 -48 NL 88 84 78 72 67 62 58 60 -26 -2 -28 AT 67 71 72 70 66 63 65 73 -3 9 6

PL 55 71 83 84 85 87 93 100 32 13 45

PT 95 88 78 69 64 59 49 45 -35 -14 -50 SI 85 92 93 90 85 79 67 61 -6 -18 -23

SK 90 76 76 70 65 62 57 49 -28 -13 -41 FI 85 81 81 81 80 80 82 82 -5 2 -3 SE

UK 87 90 92 91 86 81 76 74 -6 -7 -13

EU15 1) 81 82 81 80 78 75 72 73 -5 -2 -7 EU10 1) 71 78 84 82 80 79 74 71 8 -8 0

EU12 1) 80 81 79 78 76 74 72 73 -5 -1 -6

EU25 1) 80 82 81 80 78 75 73 73 -5 -2 -7 1) excluding countries which have not provided data

Table 3 13 Higher labour productivity scenario: gross public pension expenditure as a share of GDP between 2004 and 2050

P u blic p en sion s, g ro ss as % o f G D P C hange C hange C hange

C ountry 2004 2010 2015 2020 2025 2030 2040 2050 2004-2030 2030-2050 2 004-2050 B E 10,4 10,4 11,1 12,1 13,3 14,5 15,4 15,2 4,1 0,7 4,7 C Z 8,5 8,2 8,1 8,3 8,7 9,3 11,9 13,7 0,9 4,3 5,2

D K 9,5 10,1 10,8 11,3 12,0 12,8 13,5 12,8 3,3 0,0 3,3

D E 11,4 10,5 10,5 11,0 11,6 12,3 12,8 13,1 0,9 0,8 1,7 E E 6,7 6,8 5,9 5,3 5,0 4,6 4,2 4,0 -2,1 -0,6 -2,7 G R

E S 8,6 8,9 8,7 9,1 10,1 11,5 14,5 14,8 2,9 3,4 6,3

FR 12,8 13,0 13,1 13,5 13,8 14,0 14,6 14,4 1,2 0,4 1,6 IE 4,7 5,2 5,9 6,5 7,3 7,9 9,4 11,2 3,2 3,3 6,4

IT 14,2 14,0 13,7 13,7 14,0 14,6 15,4 14,1 0,4 -0,5 -0,1 C Y 6,9 8,0 8,8 9,7 10,6 11,7 14,1 18,4 4,9 6,6 11,5 LV 6,8 4,9 4,6 4,8 5,3 5,5 5,8 5,4 -1,3 -0,1 -1,4 LT 7,0 6,6 6,6 7,0 7,6 7,9 8,1 8,5 1,0 0,6 1,5

LU 10,0 9,8 10,8 11,8 13,6 14,9 16,9 17,3 4,9 2,4 7,3

H U 10,4 11,1 11,5 12,4 12,8 13,2 15,7 16,7 2,8 3,5 6,3 M T 7,5 8,8 9,7 10,1 9,7 8,8 7,4 6,4 1,3 -2,4 -1,1 N L 7,7 7,7 8,3 9,0 9,7 10,7 11,6 11,2 2,9 0,5 3,4

A T 13,4 12,8 12,6 12,6 13,2 13,5 12,8 11,4 0,2 -2,1 -1,9 P L 13,9 11,3 9,7 9,5 9,2 8,9 8,2 7,6 -5,0 -1,3 -6,3

P T 11,1 11,9 12,5 13,9 14,6 15,4 17,9 19,6 4,3 4,1 8,5 S I 11,0 11,1 11,5 12,3 13,2 14,3 16,7 18,1 3,3 3,8 7,2 S K 7,2 6,7 6,5 6,9 7,3 7,6 8,1 8,8 0,4 1,2 1,6

F I 10,7 11,2 12,0 12,7 13,3 13,6 13,4 13,3 3,0 -0,3 2,6 S E 10,6 10,1 10,3 10,3 10,6 10,9 11,4 11,0 0,3 0,1 0,4 U K 6,6 6,6 6,7 6,7 7,1 7,7 8,0 8,2 1,0 0,6 1,6

E U 15 1 ) 10,6 10,4 10,4 10,7 11,2 11,9 12,6 12,5 1,3 0,7 1,9 E U 10 1 ) 10,9 9,8 9,2 9,4 9,5 9,6 10,3 10,8 -1,3 1,2 -0,1

E U 12 1 ) 11,5 11,3 11,3 11,7 12,3 13,0 13,9 13,8 1,4 0,8 2,2

E U 25 1 ) 10,6 10,3 10,3 10,6 11,1 11,7 12,5 12,4 1,1 0,7 1,8 1) excluding G reece

Table 3 14 Higher labour productivity scenario: gross total pension expenditure as a share of GDP between 2004 and 2050

Total pension expenditure, gross as % of GDP Change Change Change

Country 2004 2010 2015 2020 2025 2030 2040 2050 2004-2030 2030-2050 2004-2050 BE 10,4 10,4 11,1 12,1 13,3 14,5 15,4 15,2 4,1 0,7 4,7 CZ 8,5 8,2 8,1 8,3 8,7 9,3 11,9 13,6 0,9 4,3 5,2 DK

DE 11,4 10,5 10,5 11,0 11,6 12,3 12,8 13,1 0,9 0,8 1,7 EE 6,7 6,8 5,9 5,5 5,3 5,1 5,4 6,2 -1,5 1,1 -0,5 GR

ES 8,6 8,9 8,7 9,1 10,1 11,5 14,5 14,8 2,9 3,4 6,3

FR 12,8 13,0 13,1 13,5 13,8 14,0 14,6 14,4 1,2 0,4 1,6 IE

IT 14,2 14,0 13,7 13,7 14,0 14,6 15,4 14,1 0,4 -0,5 -0,1 CY 6,9 8,0 8,8 9,7 10,6 11,7 14,1 18,4 4,9 6,6 11,5 LV 6,8 4,9 4,6 4,9 5,5 5,9 6,9 8,0 -0,9 2,1 1,2 LT 7,0 6,6 6,6 7,1 7,8 8,3 9,1 10,3 1,4 2,0 3,3

LU 10,0 9,8 10,8 11,8 13,6 14,9 16,9 17,3 4,9 2,4 7,3

HU 10,4 11,1 11,5 12,5 13,1 13,7 17,2 19,6 3,3 6,0 9,2 MT 7,5 8,8 9,7 10,1 9,7 8,8 7,4 6,4 1,3 -2,4 -1,1

NL 12,4 12,3 13,6 14,7 16,3 18,2 20,4 19,6 5,9 1,4 7,3

AT 13,4 12,8 12,6 12,6 13,2 13,5 12,8 11,4 0,2 -2,1 -1,9 PL 13,9 11,3 9,7 9,6 9,4 9,1 8,9 8,8 -4,8 -0,3 -5,1

PT 11,1 11,9 12,5 13,9 14,6 15,4 17,9 19,6 4,3 4,1 8,5 SI 11,0 11,1 11,5 12,3 13,2 14,3 16,7 18,1 3,3 3,8 7,2 SK 7,2 6,7 6,7 7,2 7,7 8,3 9,5 10,9 1,1 2,7 3,7

FI 10,7 11,2 12,0 12,7 13,3 13,6 13,4 13,3 3,0 -0,3 2,6 SE 12,9 12,4 12,7 12,8 13,1 13,7 14,1 13,5 0,7 -0,2 0,5 UK

EU15 1) 12,0 11,7 11,8 12,3 12,9 13,6 14,6 14,4 1,6 0,8 2,4 EU10 1) 10,9 9,8 9,2 9,4 9,7 9,9 11,0 12,1 -1,0 2,2 1,2

EU12 1) 12,0 11,7 11,8 12,2 12,9 13,6 14,6 14,4 1,6 0,8 2,5

EU25 1) 11,9 11,6 11,6 12,0 12,6 13,3 14,3 14,2 1,3 0,9 2,3 1) excluding countries which have not provided data

Table 3 15 Higher labour productivity scenario: total assets in pension schemes as a share of GDP between 2004 and 2050

All pensions, assets as % of GDP Change Change Change

Country 2004 2010 2015 2020 2025 2030 2040 2050 2004-2030 2030-2050 2004-2050 BE 4,4 7,3 13,4 16,2 13,5 2,4 -2,1 CZ 0,3 3,4 6,7 9,8 11,2 10,1 9,8 DK

DE 0,1 0,4 0,8

EE 2,9 9,3 15,7 25,8 38,3 51,3 77,9 102,3 48,4 51,0 99,4 GR : : : : : : : : ES

FR 1,2 2,0 2,9 4,0 3,4 2,8 1,5 0,0 1,6 -2,8 -1,2 IE

CY 39,3 39,5 39,1 36,8 32,1 24,2 3,4 -15,1

LV 0,3 12,9 25,8 37,8 47,9 56,9 68,1 71,4 56,5 14,5 71,0 LT 0,3 4,3 8,6 14,0 20,8 28,1 41,6 53,0 27,8 24,9 52,7 LU 23,6 31,6 37,2 38,9 32,4 17,4 -6,3

HU 4,0 13,2 21,8 31,0 40,2 48,6 65,2 70,5 44,6 22,0 66,6 MT

NL 135,5 160,5 176,1 192,2 210,1 225,4 236,3 239,3 89,9 13,9 103,7 AT

PL 7,1 15,8 23,8 32,7 41,3 49,2 66,5 80,4 42,1 31,2 73,4 PT 4,3 4,0 SI

SK 7,0 12,7 18,7 24,6 30,8 44,2 55,8 30,8 25,0 55,8

FI 52,4 59,3 62,5 64,6 66,1 67,2 67,6 68,4 14,8 1,2 16,0

SE 38,6 53,4 60,2 65,0 68,1 70,3 65,9 59,3 31,7 -11,1 20,7 UK

Table 3 16 Higher labour productivity scenario: contributions to public pension schemes as a share of public pensions

P u blic p en s ion s , c on tribu tio n s / gros s pe ns io ns C h an g e C h an g e C h an g e

C ou n try 2 0 04 2 0 10 20 15 20 20 20 25 20 30 20 40 20 50 2 00 4 -2 03 0 2 03 0 -2 05 0 2 00 4 -2 05 0 B E

C Z 10 5 10 8 10 9 10 6 10 1 9 4 7 4 6 4 -1 1 -30 -41 D K

D E 6 8 6 9 6 6 6 7 6 7 6 8 6 8 6 8 0 0 0

E E 9 8 9 7 10 9 12 0 12 7 13 5 14 4 14 9 3 6 1 4 5 0 G R

E S

FR 10 0 9 9 9 8 9 5 9 3 9 2 8 8 9 0 -8 -2 -10

IE 7 6 6 5 5 7 5 2 4 6 4 2 3 6 3 0 -3 4 -12 -46 IT 7 2 7 4 7 6 7 6 7 4 7 0 6 8 7 5 -1 5 4

C Y 8 0 8 0 7 8 7 3 6 7 6 1 5 1 3 8 -2 0 -22 -42

L V 10 4 12 4 12 5 11 7 10 5 9 8 9 3 10 0 -5 1 -4 LT 9 7 9 6 9 4 8 7 7 8 7 6 7 5 7 3 -2 2 -3 -25

L U 9 9 10 2 9 3 8 6 7 4 6 7 5 9 5 8 -3 1 -9 -41 H U 7 4 6 1 5 8 5 3 5 1 5 0 4 3 4 0 -2 5 -10 -34 M T 9 6 7 7 6 6 5 8 5 3 5 2 5 0 4 7 -4 4 -5 -48 N L 8 8 8 4 7 7 7 1 6 6 6 1 5 7 5 9 -2 7 -2 -29 A T 6 7 7 1 7 3 7 2 6 8 6 5 6 8 7 6 -2 1 1 9

P L 5 5 7 0 8 2 8 4 8 6 8 9 9 6 10 4 3 4 1 5 4 9 P T 9 5 8 8 7 8 6 9 6 5 6 0 5 1 4 7 -3 4 -13 -47 S I 8 5 9 1 9 0 8 6 8 0 7 4 6 3 5 8 -1 0 -16 -27 S K 9 0 7 5 7 5 6 9 6 5 6 2 5 7 5 0 -2 8 -12 -40 F I 8 5 8 1 8 1 8 1 8 0 8 0 8 2 8 3 -5 3 -2

S E 7 2 7 4 7 2 7 2 7 0 6 7 6 4 6 6 -5 -1 -6

U K 8 7 9 0 9 2 9 2 8 8 8 2 7 8 7 5 -5 -7 -11

E U 15 1 ) 8 0 8 2 8 1 8 0 7 8 7 5 7 3 7 4 -5 -1 -6 E U 10 1 ) 7 1 7 7 8 3 8 1 7 9 7 8 7 3 6 9 7 -9 -2 E U 12 1 ) 8 0 8 1 7 9 7 8 7 6 7 4 7 2 7 4 -5 0 -6

E U 25 1 ) 8 0 8 1 8 1 8 0 7 8 7 5 7 3 7 4 -4 -2 -6 1 ) exclud in g c ou n trie s w hic h h a ve n ot provid ed d ata

Table 3 17 Lower labour productivity scenario: gross public pension expenditure as a share of GDP between 2004 and 2050

Public pensions, gross as % of GDP Change Change Change

Country 2004 2010 2015 2020 2025 2030 2040 2050 2004-2030 2030-2050 2004-2050 BE 10,4 10,4 11,1 12,2 13,5 14,8 16,0 15,9 4,4 1,1 5,5 CZ 8,5 8,2 8,2 8,5 9,0 9,6 12,3 14,2 1,2 4,5 5,7

DK 9,5 10,1 10,8 11,3 12,0 12,8 13,5 12,8 3,3 0,0 3,3

DE 11,4 10,4 10,5 11,0 11,6 12,3 12,8 13,1 0,9 0,8 1,7 EE 6,7 6,8 6,0 5,4 5,1 4,8 4,5 4,4 -1,9 -0,4 -2,3 GR

ES 8,6 8,9 8,9 9,5 10,6 12,3 15,9 16,7 3,7 4,4 8,1

FR 12,8 13,0 13,3 13,9 14,3 14,7 15,4 15,3 1,9 0,6 2,5 IE 4,7 5,2 5,9 6,5 7,2 7,9 9,3 11,1 3,1 3,3 6,4

IT 14,2 14,0 13,9 14,2 14,7 15,5 16,5 15,2 1,2 -0,2 1,0 CY 6,9 8,0 8,9 10,0 11,1 12,6 15,8 21,4 5,7 8,8 14,5 LV 6,8 4,9 4,6 4,9 5,4 5,7 6,0 5,7 -1,1 0,0 -1,1 LT 7,0 6,6 6,6 7,0 7,6 8,0 8,3 8,7 1,0 0,8 1,8

LU 10,0 9,8 10,9 12,0 13,8 15,1 17,1 17,5 5,1 2,4 7,5

HU 10,4 11,1 11,6 12,6 13,2 13,6 16,2 17,3 3,2 3,7 6,9 MT 7,4 8,8 9,8 10,4 10,3 9,6 8,5 7,7 2,1 -1,8 0,3 NL 7,7 7,6 8,3 8,9 9,7 10,7 11,7 11,3 2,9 0,6 3,5

AT 13,4 12,8 12,8 13,1 13,9 14,5 14,2 13,2 1,1 -1,3 -0,2 PL 13,9 11,3 9,8 9,8 9,7 9,4 8,9 8,3 -4,6 -1,1 -5,7

PT 11,1 11,9 12,7 14,4 15,4 16,6 19,8 22,1 5,5 5,6 11,1 SI 11,0 11,1 11,5 12,3 13,2 14,3 16,7 18,1 3,3 3,8 7,1 SK 7,2 6,7 6,6 7,0 7,4 7,7 8,4 9,2 0,6 1,4 2,0

FI 10,7 11,2 12,1 13,1 13,8 14,4 14,3 14,2 3,7 -0,2 3,5 SE 10,6 10,1 10,4 10,5 10,8 11,3 11,8 11,5 0,6 0,3 0,9 UK 6,6 6,6 6,7 7,0 7,5 8,1 8,7 8,9 1,5 0,8 2,3

EU15 1) 10,6 10,4 10,5 10,9 11,6 12,3 13,3 13,2 1,7 0,9 2,6 EU10 1) 10,9 9,8 9,3 9,6 9,8 10,0 10,8 11,4 -0,9 1,4 0,5

EU12 1) 11,5 11,3 11,4 12,0 12,6 13,4 14,6 14,5 1,9 1,1 3,0

EU25 1) 10,6 10,3 10,4 10,9 11,5 12,2 13,1 13,1 1,5 1,0 2,5 1) excluding Greece

Table 3 18 Lower labour productivity scenario: gross total pension expenditure as a share of GDP between 2004 and 2050

Total pension expenditure, gross as % of GDP Change Change Change

Country 2004 2010 2015 2020 2025 2030 2040 2050 2004-2030 2030-2050 2004-2050 BE 10,4 10,4 11,1 12,2 13,5 14,8 16,0 15,9 4,4 1,1 5,5 CZ 8,5 8,2 8,2 8,5 9,0 9,6 12,3 14,2 1,2 4,5 5,7 DK

DE 11,4 10,4 10,5 11,0 11,6 12,3 12,8 13,1 0,9 0,8 1,7 EE 6,7 6,8 6,0 5,6 5,5 5,4 5,8 6,9 -1,3 1,5 0,2 GR

ES 8,6 8,9 8,9 9,5 10,6 12,3 15,9 16,7 3,7 4,4 8,1

FR 12,8 13,0 13,3 13,9 14,3 14,7 15,4 15,3 1,9 0,6 2,5 IE

IT 14,2 14,0 13,9 14,2 14,7 15,5 16,5 15,2 1,2 -0,2 1,0 CY 6,9 8,0 8,9 10,0 11,1 12,6 15,8 21,4 5,7 8,8 14,5 LV 6,8 4,9 4,6 5,0 5,6 6,1 7,2 8,6 -0,7 2,5 1,8 LT 7,0 6,6 6,6 7,1 7,8 8,4 9,3 10,6 1,4 2,2 3,6

LU 10,0 9,8 10,9 12,0 13,8 15,1 17,1 17,5 5,1 2,4 7,5

HU 10,4 11,1 11,6 12,7 13,4 14,1 17,9 20,7 3,7 6,5 10,3 MT 7,4 8,8 9,8 10,4 10,3 9,6 8,5 7,7 2,1 -1,8 0,3

NL 12,4 12,3 13,6 14,8 16,5 18,6 20,9 20,3 6,2 1,7 7,9

AT 13,4 12,8 12,8 13,1 13,9 14,5 14,2 13,2 1,1 -1,3 -0,2 PL 13,9 11,3 9,8 9,9 9,8 9,6 9,6 9,7 -4,3 0,0 -4,3

PT 11,1 11,9 12,7 14,4 15,4 16,6 19,8 22,1 5,5 5,6 11,1 SI 11,0 11,1 11,5 12,3 13,2 14,3 16,7 18,1 3,3 3,8 7,1 SK 7,2 6,7 6,7 7,3 7,9 8,5 9,9 11,6 1,3 3,1 4,4

FI 10,7 11,2 12,1 13,1 13,8 14,4 14,3 14,2 3,7 -0,2 3,5 SE 12,9 12,4 12,9 13,1 13,5 14,2 14,9 14,3 1,3 0,1 1,3 UK

EU15 1) 12,0 11,7 11,9 12,5 13,3 14,1 15,3 15,2 2,1 1,1 3,2 EU10 1) 10,9 9,8 9,3 9,7 10,0 10,3 11,6 12,9 -0,6 2,6 2,0

EU12 1) 12,0 11,7 11,9 12,5 13,2 14,1 15,3 15,3 2,1 1,1 3,3

EU25 1) 11,9 11,6 11,8 12,3 13,0 13,8 15,0 15,0 1,8 1,2 3,1 1) excluding countries which have not provided data

Table 3 19 Lower labour productivity scenario: total assets in pension schemes as a share of GDP between 2004 and 2050

All pensions, assets as % of GDP Change Change Change

Country 2004 2010 2015 2020 2025 2030 2040 2050 2004-2030 2030-2050 2004-2050 BE 4,4 7,4 13,6 16,5 13,6 1,4 -3,0 CZ 0,3 3,4 6,6 9,2 9,9 7,5 7,2 DK

DE 0,1 0,4 0,8

EE 2,8 9,3 15,9 25,4 37,7 50,6 76,9 100,6 47,8 50,1 97,8 GR

FR 1,2 2,0 2,9 4,1 3,5 2,9 1,6 0,0 1,7 -2,9 -1,2 IE

CY 39,3 39,5 39,6 37,4 32,1 22,6 -16,7

LV 0,3 12,9 26,0 38,3 48,7 58,1 69,7 72,4 57,8 14,3 72,1 LT 0,3 4,3 8,6 14,0 20,8 28,0 41,5 53,0 27,7 24,9 52,6 LU 23,6 31,7 37,6 39,6 33,4 18,3 -5,3

HU 4,0 13,2 22,1 31,9 41,8 51,1 69,7 76,0 47,1 24,9 72,0 MT

NL 135,5 160,7 178,9 198,6 218,0 234,1 245,3 247,8 98,5 13,7 112,3 AT

PL 7,1 15,8 24,1 33,7 43,0 51,9 71,5 87,6 44,8 35,7 80,5 PT 4,3 4,1 SI

SK 7,0 12,8 19,2 25,6 32,4 47,4 60,6 32,4 28,3 60,6

FI 52,4 59,4 63,6 67,3 70,3 72,6 74,9 77,2 20,2 4,6 24,8

SE 38,6 53,5 61,1 67,2 71,6 74,9 71,3 63,7 36,3 -11,2 25,1 UK

Table 3 20 Lower labour productivity scenario: contributions to public pension schemes as a share of public pensions

Public pensions, contributions / gross pensions Change Change Change

Country 2004 2010 2015 2020 2025 2030 2040 2050 2004-2030 2030-2050 2004-2050 BE

CZ 105 108 108 104 98 91 72 62 -14 -29 -43 DK

DE 68 70 66 68 67 68 69 68 0 1 0

EE 98 96 108 116 122 128 133 135 29 7 37 GR

FR 100 99 97 93 90 88 83 84 -12 -3 -16 IE 76 65 57 52 46 43 36 30 -34 -12 -46 IT 72 74 74 73 71 66 64 70 -5 3 -2

CY 80 80 77 71 64 56 46 33 -24 -24 -47

LV 104 124 124 114 102 95 89 95 -9 0 -9 LT 97 96 94 87 78 75 74 70 -23 -4 -27

LU 99 102 92 84 73 66 58 57 -32 -9 -41 HU 74 61 57 52 50 48 42 39 -26 -9 -35 MT 96 77 66 58 53 52 50 47 -43 -5 -48 NL 88 84 77 71 66 61 57 59 -27 -2 -29 AT 67 71 71 68 63 60 60 65 -7 5 -2

PL 55 70 81 81 82 84 89 95 29 11 40

PT 95 88 78 68 63 58 47 42 -37 -15 -52 SI 85 91 90 86 80 74 63 58 -10 -16 -27 SK 90 75 74 68 64 61 56 48 -29 -12 -42 FI 85 81 81 80 79 79 80 81 -6 2 -5

SE 72 74 72 71 69 66 62 64 -7 -2 -9

UK 87 89 90 89 84 78 74 71 -9 -7 -16

EU15 1) 80 82 80 78 75 73 70 71 -8 -2 -10 EU10 1) 71 77 82 79 76 75 69 65 4 -10 -6 EU12 1) 80 81 79 77 74 72 70 71 -8 -1 -9

EU25 1) 80 81 80 78 76 73 70 70 -7 -2 -10 1) excluding countries which have not provided data

Table 3 21 Higher interest rate scenario: gross public pension expenditure as a share of GDP between 2004 and 2050

P u blic p en sion s, g ro ss as % o f G D P C hange C hange C hange

C ountry 2004 2010 2015 2020 2025 2030 2040 2050 2004-2030 2030-2050 2 004-2050 B E 10,4 10,4 11,0 12,1 13,4 14,7 15,7 15,5 4,3 0,8 5,1 C Z 8,5 8,2 8,2 8,4 8,9 9,6 12,2 14,0 1,1 4,5 5,6

D K 9,5 10,1 10,8 11,3 12,0 12,8 13,5 12,8 3,3 0,0 3,3

D E 11,4 10,5 10,5 11,0 11,6 12,3 12,8 13,1 0,9 0,8 1,7 E E 6,7 6,8 6,0 5,4 5,1 4,7 4,4 4,2 -1,9 -0,5 -2,5 G R

E S 8,6 8,9 8,8 9,3 10,4 11,8 15,2 15,7 3,3 3,9 7,1

FR 12,8 12,9 13,2 13,7 14,0 14,3 15,0 14,8 1,5 0,5 2,0 IE 4,7 5,2 5,9 6,5 7,2 7,9 9,3 11,1 3,1 3,2 6,4

IT 14,2 14,0 13,8 14,0 14,4 15,0 15,9 14,7 0,8 -0,4 0,4 C Y 6,9 8,0 8,8 9,9 10,8 12,2 15,0 19,8 5,3 7,6 12,9 LV 6,8 4,9 4,6 4,9 5,3 5,6 5,9 5,6 -1,2 -0,1 -1,2 LT 6,7 6,6 6,6 7,0 7,6 7,9 8,2 8,6 1,2 0,7 1,8

LU 10,0 9,8 10,9 11,9 13,7 15,0 17,0 17,4 5,0 2,4 7,4

H U 10,4 11,1 11,6 12,5 13,0 13,5 16,0 17,1 3,1 3,7 6,7 M T 7,4 8,8 9,8 10,2 10,0 9,1 7,9 7,0 1,7 -2,1 -0,4 N L 7,7 7,6 8,3 9,0 9,7 10,7 11,7 11,2 2,9 0,6 3,5

A T 13,4 12,8 12,7 12,8 13,5 14,0 13,4 12,2 0,6 -1,7 -1,2 P L 13,9 11,3 9,8 9,7 9,5 9,2 8,7 8,0 -4,7 -1,2 -5,9

P T 11,1 11,9 12,6 14,1 15,0 16,0 18,8 20,8 4,9 4,8 9,7 S I 11,0 11,1 11,6 12,3 13,3 14,4 16,8 18,3 3,4 3,9 7,3 S K 7,2 6,7 6,6 7,0 7,3 7,7 8,2 9,0 0,5 1,3 1,8

F I 10,7 11,2 12,0 12,9 13,6 14,0 13,9 13,8 3,4 -0,2 3,2 S E 10,6 10,1 10,3 10,5 10,7 11,2 11,8 11,6 0,5 0,4 1,0 U K 6,6 6,6 6,7 6,9 7,3 7,9 8,4 8,6 1,3 0,7 2,0

E U 15 1 ) 10,6 10,4 10,5 10,8 11,4 12,1 12,9 12,9 1,5 0,8 2,3 E U 10 1 ) 10,9 9,8 9,2 9,5 9,7 9,8 10,6 11,2 -1,1 1,3 0,3

E U 12 1 ) 11,5 11,3 11,4 11,8 12,5 13,2 14,2 14,1 1,6 0,9 2,6

E U 25 1 ) 10,6 10,3 10,4 10,7 11,3 11,9 12,8 12,8 1,3 0,8 2,2 1) excluding G reece

Table 3 22 Higher interest rate scenario: gross total pension expenditure as a share of GDP between 2004 and 2050

Total pension expenditure, gross as % of GDP Change Change Change

Country 2004 2010 2015 2020 2025 2030 2040 2050 2004-2030 2030-2050 2004-2050 BE 10,4 10,4 11,0 12,1 13,4 14,7 15,7 15,5 4,3 0,8 5,1 CZ 8,5 8,2 8,2 8,4 8,9 9,6 12,2 14,0 1,1 4,5 5,6 DK

DE 11,4 10,5 10,5 11,0 11,6 12,3 12,8 13,1 0,9 0,8 1,7 EE 6,7 6,8 6,0 5,6 5,4 5,4 5,9 7,3 -1,3 1,9 0,6 GR

ES 8,6 8,9 8,8 9,3 10,4 11,8 15,2 15,7 3,3 3,9 7,1

FR 12,8 12,9 13,2 13,7 14,0 14,3 15,0 14,8 1,5 0,5 2,0 IE

IT 14,2 14,0 13,8 14,0 14,4 15,0 15,9 14,7 0,8 -0,4 0,4 CY 6,9 8,0 8,8 9,9 10,8 12,2 15,0 19,8 5,3 7,6 12,9 LV 6,8 4,9 4,6 5,0 5,6 6,1 7,3 9,0 -0,7 3,0 2,2 LT 6,7 6,6 6,6 7,1 7,8 8,4 9,4 10,9 1,7 2,5 4,2

LU 10,0 9,8 10,9 11,9 13,7 15,0 17,0 17,4 5,0 2,4 7,4

HU 10,4 11,1 11,6 12,7 13,3 14,1 18,1 21,3 3,7 7,3 11,0 MT 7,4 8,8 9,8 10,2 10,0 9,1 7,9 7,0 1,7 -2,1 -0,4

NL 12,4 12,5 13,9 15,2 16,9 18,9 21,1 20,2 6,6 1,3 7,8

AT 13,4 12,8 12,7 12,8 13,5 14,0 13,4 12,2 0,6 -1,7 -1,2 PL 13,9 11,3 9,8 9,8 9,7 9,5 9,4 9,6 -4,4 0,1 -4,3

PT 11,1 11,9 12,6 14,1 15,0 16,0 18,8 20,8 4,9 4,8 9,7 SI 11,0 11,1 11,6 12,4 13,5 14,7 17,5 19,3 3,7 4,6 8,3 SK 7,2 6,7 6,7 7,3 7,8 8,5 10,0 11,9 1,3 3,4 4,7

FI 10,7 11,2 12,0 12,9 13,6 14,0 13,9 13,8 3,4 -0,2 3,2 SE 12,9 12,5 12,9 13,1 13,5 14,2 15,1 14,6 1,3 0,4 1,7 UK

EU15 1) 12,0 11,7 11,9 12,4 13,1 13,9 15,0 14,8 1,9 0,9 2,8 EU10 1) 10,9 9,8 9,3 9,6 9,9 10,2 11,6 13,0 -0,7 2,8 2,1

EU12 1) 12,0 11,7 11,9 12,4 13,1 13,9 15,0 14,8 1,9 1,0 2,9

EU25 1) 11,9 11,6 11,7 12,2 12,8 13,6 14,7 14,7 1,6 1,1 2,7 1) excluding countries which have not provided information

Table 3 23 Higher interest rate scenario: total assets in pension schemes as a share of GDP between 2004 and 2050

All pensions, assets as % of GDP Change Change Change

Country 2004 2010 2015 2020 2025 2030 2040 2050 2004-2030 2030-2050 2004-2050 BE 4,4 7,5 14,2 17,9 16,2 5,4 1,0

CZ 0,3 3,6 7,2 10,6 12,4 11,4 11,1 DK

DE 0,1 0,4 0,9

EE 2,8 9,4 16,5 26,8 40,3 54,7 84,6 111,9 51,9 57,2 109,1 GR

FR 1,2 2,1 3,1 4,5 3,9 3,3 1,8 0,0 2,1 -3,3 -1,2 IE

LV 0,3 13,1 26,6 39,8 51,6 62,8 78,7 83,5 62,4 20,7 83,2 LT 0,3 4,4 9,0 14,9 22,4 30,8 47,1 61,1 30,5 30,4 60,8 LU 23,6 33,2 40,7 44,6 40,5 27,2 3,5

HU 4,0 13,7 23,3 34,1 45,3 55,9 77,6 84,4 52,0 28,5 80,4 MT

NL 135,5 152,1 165,6 180,8 196,1 208,1 212,9 211,2 72,5 3,1 75,7 AT

PL 7,2 16,6 25,8 36,6 47,3 57,8 81,4 101,0 50,6 43,2 93,8 PT 4,3 4,2

SI 1,4 5,5 9,6 13,9 18,3 22,6 30,1 35,9 21,3 13,3 34,5 SK 7,2 13,3 20,2 27,2 34,8 52,0 67,3 34,8 32,5 67,3

FI 52,4 62,1 67,8 72,8 77,0 80,5 84,9 88,8 28,1 8,3 36,4

SE 38,7 55,5 65,1 73,0 79,2 84,5 84,1 78,2 45,8 -6,3 39,5 UK

Table 3 24 Higher interest rate scenario: contributions to public pension schemes as a share of public pensions

Public pensions, contributions / gross pensions Change Change Change

Country 2004 2010 2015 2020 2025 2030 2040 2050 2004-2030 2030-2050 2004-2050 BE

CZ 105 108 109 105 100 93 73 63 -12 -30 -42 DK

DE 68 69 66 67 68 68 68 68 0 0 0

EE 98 97 109 119 125 132 139 146 33 14 47 GR

FR 100 99 98 94 92 90 86 87 -10 -3 -13 IE 76 65 57 52 46 43 36 30 -34 -12 -46 IT 72 74 75 74 72 68 66 72 -3 4 1

CY 80 80 79 73 67 59 49 36 -21 -23 -44

LV 104 124 125 115 104 97 91 97 -7 1 -7 LT 101 96 94 87 78 75 75 72 -25 -3 -29 LU 99 102 93 85 74 67 59 58 -32 -9 -41 HU 74 61 58 52 51 50 43 40 -25 -9 -34 MT 96 77 66 58 53 52 50 47 -43 -5 -48 NL 88 84 77 71 66 61 57 59 -27 -2 -29 AT 67 71 71 69 65 62 64 70 -5 8 3

PL 55 70 82 83 84 87 93 100 32 13 45

PT 95 88 78 68 64 59 49 44 -36 -14 -50 SI 85 91 90 86 80 74 63 58 -10 -16 -27 SK 90 75 75 69 64 61 56 49 -29 -12 -41 FI 85 79 78 77 76 75 76 75 -10 0 -10 SE 72 74 72 71 69 66 61 63 -6 -3 -10 UK 87 90 91 90 86 80 76 73 -7 -7 -14

EU15 1) 80 82 80 79 76 74 71 72 -7 -2 -8 EU10 1)

71 78 83 80 78 77 71 68 6 -9 -3

EU12 1) 80 81 79 77 75 73 71 72 -7 -1 -8

EU25 1) 80 81 80 79 77 74 71 72 -6 -2 -8 1) excluding countries which have not provided data

Table 3 25 Lower interest rate scenario: gross public pension expenditure as a share of GDP between 2004 and 2050

Public pensions, gross as % of GDP Change Change Change

Country 2004 2010 2015 2020 2025 2030 2040 2050 2004-2030 2030-2050 2004-2050 BE 10,4 10,4 11,0 12,1 13,4 14,7 15,7 15,5 4,3 0,8 5,1 CZ 8,5 8,2 8,2 8,4 8,9 9,6 12,2 14,0 1,1 4,5 5,6

DK 9,5 10,1 10,8 11,3 12,0 12,8 13,5 12,8 3,3 0,0 3,3

DE 11,4 10,5 10,5 11,0 11,6 12,3 12,8 13,1 0,9 0,8 1,7 EE 6,7 6,8 6,0 5,4 5,1 4,7 4,4 4,2 -1,9 -0,5 -2,5 GR : : : : : : : : : : :

ES 8,6 8,9 8,8 9,3 10,4 11,8 15,2 15,7 3,3 3,9 7,1

FR 12,8 12,9 13,2 13,7 14,0 14,3 15,0 14,8 1,5 0,5 2,0 IE 4,7 5,2 5,9 6,5 7,2 7,9 9,3 11,1 3,1 3,2 6,4

IT 14,2 14,0 13,8 14,0 14,4 15,0 15,9 14,7 0,8 -0,4 0,4 CY 6,9 8,0 8,8 9,9 10,8 12,2 15,0 19,8 5,3 7,6 12,9 LV 6,8 4,9 4,6 4,9 5,3 5,6 5,9 5,6 -1,2 -0,1 -1,2 LT 6,7 6,6 6,6 7,0 7,6 7,9 8,2 8,6 1,2 0,7 1,8

LU 10,0 9,8 10,9 11,9 13,7 15,0 17,0 17,4 5,0 2,4 7,4

HU 10,4 11,1 11,6 12,5 13,0 13,5 16,0 17,1 3,1 3,7 6,7 MT 7,4 8,8 9,8 10,2 10,0 9,1 7,9 7,0 1,7 -2,1 -0,4 NL 7,7 7,6 8,3 9,0 9,7 10,7 11,7 11,2 2,9 0,6 3,5

AT 13,4 12,8 12,7 12,8 13,5 14,0 13,4 12,2 0,6 -1,7 -1,2 PL 13,9 11,3 9,8 9,7 9,5 9,2 8,7 8,0 -4,7 -1,2 -5,9

PT 11,1 11,9 12,6 14,1 15,0 16,0 18,8 20,8 4,9 4,8 9,7 SI 11,0 11,1 11,6 12,3 13,3 14,4 16,8 18,3 3,4 3,9 7,3 SK 7,2 6,7 6,6 7,0 7,3 7,7 8,2 9,0 0,5 1,3 1,8

FI 10,7 11,2 12,0 12,9 13,5 13,9 13,8 13,6 3,3 -0,3 3,0 SE 10,6 10,1 10,3 10,4 10,6 11,0 11,4 11,0 0,3 0,0 0,3 UK 6,6 6,6 6,7 6,9 7,3 7,9 8,4 8,6 1,3 0,7 2,0

EU15 1) 10,6 10,4 10,5 10,8 11,4 12,1 12,9 12,9 1,5 0,8 2,3 EU10 1) 10,9 9,8 9,2 9,5 9,7 9,8 10,6 11,2 -1,1 1,3 0,3

EU12 1) 11,5 11,3 11,4 11,8 12,5 13,2 14,2 14,1 1,6 0,9 2,6

EU25 1) 10,6 10,3 10,4 10,7 11,3 11,9 12,8 12,7 1,3 0,8 2,1 1) excluding Greece

Table 3 26 Lower interest rate scenario: gross total pension expenditure as a share of GDP between 2004 and 2050

Total pension expenditure, gross as % of GDP Change Change Change

Country 2004 2010 2015 2020 2025 2030 2040 2050 2004-2030 2030-2050 2004-2050 BE 10,4 10,4 11,0 12,1 13,4 14,7 15,7 15,5 4,3 0,8 5,1 CZ 8,5 8,2 8,2 8,4 8,9 9,6 12,2 14,0 1,1 4,5 5,6 DK

DE 11,4 10,5 10,5 11,0 11,6 12,3 12,8 13,1 0,9 0,8 1,7 EE 6,7 6,8 6,0 5,6 5,4 5,2 5,4 6,0 -1,5 0,9 -0,6 GR

ES 8,6 8,9 8,8 9,3 10,4 11,8 15,2 15,7 3,3 3,9 7,1

FR 12,8 12,9 13,2 13,7 14,0 14,3 15,0 14,8 1,5 0,5 2,0 IE

IT 14,2 14,0 13,8 14,0 14,4 15,0 15,9 14,7 0,8 -0,4 0,4 CY 6,9 8,0 8,8 9,9 10,8 12,2 15,0 19,8 5,3 7,6 12,9 LV 6,8 4,9 4,6 5,0 5,5 6,0 6,8 7,7 -0,9 1,7 0,9 LT 6,7 6,6 6,6 7,1 7,7 8,2 9,0 10,0 1,5 1,7 3,2

LU 10,0 9,8 10,9 11,9 13,7 15,0 17,0 17,4 5,0 2,4 7,4

HU 10,4 11,1 11,6 12,6 13,2 13,8 17,2 19,4 3,5 5,6 9,1 MT 7,4 8,8 9,8 10,2 10,0 9,1 7,9 7,0 1,7 -2,1 -0,4

NL 12,4 12,2 13,2 14,3 15,8 17,8 20,1 19,7 5,4 1,9 7,3

AT 13,4 12,8 12,7 12,8 13,5 14,0 13,4 12,2 0,6 -1,7 -1,2 PL 13,9 11,3 9,8 9,8 9,7 9,5 9,3 9,3 -4,5 -0,1 -4,6

PT 11,1 11,9 12,6 14,1 15,0 16,0 18,8 20,8 4,9 4,8 9,7 SI 11,0 11,1 11,6 12,4 13,5 14,7 17,5 19,3 3,7 4,6 8,3 SK 7,2 6,7 6,7 7,2 7,7 8,3 9,4 10,8 1,1 2,5 3,6

FI 10,7 11,2 12,0 12,9 13,5 13,9 13,8 13,6 3,3 -0,3 3,0 SE 12,9 12,4 12,7 12,9 13,1 13,6 14,0 13,2 0,6 -0,3 0,3 UK

EU15 1) 12,0 11,7 11,9 12,3 13,0 13,8 14,9 14,7 1,8 0,9 2,7 EU10 1) 10,9 9,8 9,3 9,6 9,9 10,1 11,3 12,4 -0,8 2,3 1,5

EU12 1) 12,0 11,7 11,8 12,3 13,0 13,8 14,9 14,8 1,8 1,0 2,8

EU25 1) 11,9 11,6 11,7 12,1 12,8 13,5 14,6 14,5 1,5 1,1 2,6 1) excluding countries which have not provided data

Table 3 27 Lower interest rate scenario: total assets in pension schemes as a share of GDP between 2004 and 2050

All pensions, assets as % of GDP Change Change Change

Country 2004 2010 2015 2020 2025 2030 2040 2050 2004-2030 2030-2050 2004-2050 BE 4,4 7,1 12,8 14,9 11,3

CZ 0,3 3,4 6,5 9,2 9,8 7,7 7,4 DK

DE 0,1 0,4 0,8

EE 2,8 9,3 15,2 23,9 35,1 46,8 70,3 92,2 44,0 45,4 89,4 GR

FR 1,2 1,9 2,7 3,7 3,1 2,5 1,3 0,0 1,3 -2,5 -1,2 IE

LV 0,3 12,7 25,2 36,3 45,3 52,7 60,4 61,4 52,3 8,7 61,1 LT 0,3 4,2 8,3 13,2 19,2 25,4 36,6 45,6 25,1 20,3 45,3 LU 23,6 30,2 34,4 34,5 26,6 10,5

HU 4,0 12,7 20,7 29,2 37,4 44,8 59,5 64,6 40,9 19,8 60,6 MT

NL 135,5 166,9 189,2 211,4 235,2 256,1 275,9 284,3 120,6 28,2 148,8 AT

PL 6,9 15,1 22,5 30,7 38,4 45,4 60,4 72,3 38,4 27,0 65,4 PT 4,3 3,8

SI 1,4 5,5 9,6 13,9 18,3 22,6 30,1 35,9 21,3 13,3 34,5 SK 6,8 12,2 17,8 23,2 28,7 40,4 50,4 28,7 21,7 50,4

FI 52,4 56,6 58,2 59,3 60,1 60,4 59,9 60,0 8,0 -0,4 7,6

SE 38,6 51,5 56,6 59,8 61,4 62,3 56,2 49,4 23,7 -12,8 10,9 UK

Table 3 28 Lower interest rate scenario: contributions to public pension schemes as a share of public pensions

Public pensions, contributions / gross pensions Change Change Change

Country 2004 2010 2015 2020 2025 2030 2040 2050 2004-2030 2030-2050 2004-2050 BE

CZ 105 108 109 105 100 93 73 63 -12 -30 -42 DK

DE 68 69 66 67 68 68 68 68 0 0 0

EE 98 97 109 119 125 132 139 146 33 14 47 GR

FR 100 99 98 94 92 90 86 87 -10 -3 -13 IE 76 65 57 52 46 43 36 30 -34 -12 -46 IT 72 74 75 74 72 68 66 72 -3 4 1

CY 80 80 79 73 67 59 49 36 -21 -23 -44

LV 104 124 125 115 104 97 91 97 -7 1 -7 LT 101 96 94 87 78 75 74 71 -26 -4 -29 LU 99 102 93 85 74 67 59 58 -32 -9 -41 HU 74 61 57 52 50 48 41 39 -26 -10 -36 MT 96 77 66 58 53 52 50 47 -43 -5 -48 NL 88 84 77 71 66 61 57 59 -27 -2 -29 AT 67 71 71 69 65 62 64 70 -5 8 3

PL 55 70 82 83 84 87 93 100 32 13 45

PT 95 88 78 68 64 59 49 44 -36 -14 -50 SI 85 91 90 86 80 74 63 58 -10 -16 -27 SK 90 75 75 69 64 61 56 49 -29 -12 -41 FI 85 81 83 83 83 83 86 87 -2 4 2

SE 72 74 72 71 70 67 64 67 -5 -1 -6

UK 87 90 91 90 86 80 76 73 -7 -7 -14

EU15 1) 80 82 80 79 77 74 71 72 -6 -2 -8 EU10 1) 72 78 83 80 78 77 71 67 5 -9 -4 EU12 1) 80 81 79 77 75 73 71 72 -7 -1 -7

EU25 1) 80 81 80 79 77 74 71 72 -6 -2 -8 1) excluding countries which have not provided information

4.

M ETHODOLOGIES USED TO PROJECT HEALTH CARE SPENDING 4.1. Projection methodology for pure ageing scenario

The pure ageing scenario based on the expansion of morbidity hypothesis

In the pure ageing scenario, all gains in life expectancy are assumed to be spent in bad health while the number of years spent in good health remains constant. The extension of lifespan will not affect an average individual's health status at any given age, and consequently his or her age related expenditure on health care will not change over time. One can approximate this situation by assuming that health care cost per capita remains constant in GDP per capita adjusted terms over the whole projection period. Based on this assumption, the projection is then made in the following manner.

First, for the time horizon of the projection exercise (2004 50), the age related expenditure profiles (showing the average health care spending per capita for each year of age (from 0 to 100 or less, according to data availability) are assumed to grow in line with the same two cost assumptions as used in the 2001 exercise, i.e. GDP per capita and GDP per worker (based on the assumptions agreed by the AWG for the 2005 budgetary projection exercise). Therefore:

c ' c Ypc

g , a , n g , a n [1] where:

c' is cost per capita of a person of a given gender g and age a in a given year n of the g, a, n

projection period adjusted to the GDP per capita growth;

c is constant cost per capita of a person of a given gender g and age a; g, a

Ypc is GDP per capita rate growth in year n, n

Y Y Y

=

- - - Ypc n n 1 / n 1

[2] n

p p p

g , a , n g , a , n - 1 g , a , n - 1 Y is GDP in year n; n

p is the projected population of a given gender g and age a in a given year n. g, a, n

Second, this unit cost for each year is multiplied by the projected population of each year of age (using the baseline population projection outlined in chapter 1)

S c ' p

g , a , n g , a , n g , a , n [3] where:

S is spending on health care realised by people of a given gender g and age a in a given g, a, n year n.

Next, the resulting total health care spending is divided by the GDP projected using the rates of change agreed by the Ageing Working Group in order to obtain share of health care expenditure in GDP:

=

g , a , n T

n [4] Y

where:

T is the share of total health care spending in GDP in a given year n. n

4.2. Projection methodology for scenarios on health status

To capture possible changes in the health care status (morbidity) of populations over time, an additional assumption is required to run the constant health scenario and the improved health scenario. This is achieved by `linking' changes in life expectancy to changes in morbidity (proxied by the age related expenditure profile). In other words, for each year and for each age/gender, the age related expenditure profile is shifted outwards i.e. providing modified values of cost per capita, which then applied in the same manner as the pure ageing scenario described above. As regards the scale of the outward shift in the age related expenditure profile:

· for the constant health scenario, it is directly proportional to the increase in life

expectancy for each cohort;

· for the improved health scenario, the same outward shift is assumed multiplied by a

factor of 2.

First, the change in life expectancy in relation to the base year is found for each year of the projections (for example, total life expectancy for a 50 year old man in Austria is expected to increase from 29.15 years in 2004 to 33.07 years in 2030, thus by 3.92 years)

= -

e e e [5]

g , a , n g , a , n g , a , 2004 where:

In the constant health scenario the total number of years spent in bad health during a person's life time is

assumed to remain the same while life expectancy increases, so the morbidity rate must evolve in line with mortality rate for each age cohort. Thus, if between time t and t+1, total life expectancy increases by n years for a cohort of age x, healthy life expectancy for that very same age cohort must also increase by n years in order for the dynamic equilibrium hypothesis to be valid. If healthy life expectancy increases by n years, then the health status (and consequently health care spending) of this cohort of age x at time t+1 will be the same as the health status (and health care spending) of cohort of age x n at time t.

e is life expectancy of an average person of a given gender g and age a in year n. g, a, n

Second, for each year of projection, the respective reference age on the original age profile curve is obtained by subtracting that change from the concerned age cohort

. This is done only

for those sections of the age profile where the cost per capita is growing (for example for the

age cohort of 50 years old, the value of cost per capita for that age in 2030 will be the same as the value of cost per capita for the age cohort of 50 3.92 = 46.08 46.1 years in 2004).

Thirdly, the precise value of cost per capita assigned to that reference age is picked up:

c c -

g , a , n g , a e , 2004 [6] g , a , n where:

c is cost per capita assigned to a person of a given gender g and age a in a given year n of g, a, n

the projection period;

c is cost per capita assigned to a person of a given gender and age a e g, a eg,a,n, 2004 g,a,n (specified with a precision to a decimal part of a year) in the base year (2004).

Fourthly, the resulting value of cost per capita serves then as an input value to the basic calculations presented earlier in equations [1] [4].

The procedure described above is also used to run the projections according to dynamic equilibrium scenario. In the morbidity compression scenario, the shift of the age profile is twice as large as in dynamic equilibrium scenario. Thus, equation [6] may be rewritten in the following way:

c c -

g , a , n g , a 2 e , 2004 [7] g , a , n 4.3. The projection methodology for the death-related costs scenario

The methodology to calculate spending on health care taking into account the number of remaining years if life is a further improvement of the methodology used in the pure demographic scenario. The difference lies in the way the unit cost of health care is calculated.

The changes in life expectancy and thus shifts in of the age profile from one year to another are sometimes very

small (in a range of a tenth part of a year). However, the data gathered by the Member States does not provide detailed information on costs per capita by single year of age (the most detailed item available is a 5 year average), so an additional calculation needs to be performed. To solve this problem, the intermediate values can be obtained by simple extrapolation/trend smoothening method from the existing average figures. This way it is possible to assign a concrete value of cost per capita to each tenth part of a year of age.

For the young and the oldest old the reference age remains the same over the whole projection period

In the death related costs scenario, the population of each gender and year of age is divided into subgroups according to the number of remaining years of life using mortality rate as a weighting factor (e.g. number of people aged n expected to die within two years from year t is calculated as population aged n in year t multiplied by the probability of dying within two years which is expressed as: probability of surviving year t by persons aged n times probability of surviving year t+1 by persons aged n+1 times probability of dying in year t+2 by persons aged n+2).

Each subgroup is assigned a different unit cost, being an adjustment of the `normal' unit cost

with the ratio of health care expenditure borne by a person of a given age and gender who is in her terminal phase of life to health care expenditure borne by a survivor. The number of people in each subgroup is thus multiplied by its respective cost per capita which gives total spending of each subgroup and the sum of total spending borne by the subgroups is total spending on health care in a given year.

In a formalised way, the methodology can be presented as follows.

First, the total population of each gender and age is divided into subgroups, according to the number of remaining years of life. Consequently, there are z subgroups of decedents (those who are going to die within 0, or 1, or 2, ..., or z years) and one group of survivors (those who are going to survive the z

year). In order to obtain the size of each subgroup, the

probability of dying in each gender, age and year of projection period are calculated.

The probability that a person of gender g and age a will die in the x year after a given year n can be expressed by an equation:

x 1

= -

d ( 1 M ) M + + + +

g , a , n , x g , a i , n i g , a x , n x [8]

i 0 where:

M th

+ , + is mortality rate of people of gender g aged a+i in the i year after given year n

g , a i n i and:

x ( 0 , 1 , 2 ... z ) where z is the highest number of years considered as time `close to death' and for which data on costs is available.

Analogically, the probability that a person of gender g and age a in a given year n will survive z

year can be expressed in a following way:

As in the age related expenditure profile used in approach I

= -

s ( 1 M ) + +

g , a , n g , a i , n i [9]

i 0 th

So, number of persons of a given gender g and age a who are going to die in x year from a given year n can be expressed in the following way:

Nd d p

g , a , n , x g , a , n , x g , a , n [10] where:

is projected population of a given gender g and age a in a given year n

g , a , n th

Analogically, the number of those who are going to survive x year: =

Ns s p

g , a , n g , a , n g , a , n [11] Second, the unit health care cost of each person in a population is calculated. Contrary to approach I, per capita cost is not the same for all the individuals, but varies depending on whether a person is in her terminal phase of life. One must find the cost per capita of a person of a given gender g and age a, who is going to die within x years' time from a given year n, as well as the cost per capita of a person of the same gender g and age a surviving the x

year.

The ratio between the two costs is taken as the input data from the background studies (see tables in annex 1) and may be expressed as:

=

g , a , x f

g , a , x cs [12]

g , a where:

is health care cost per capita of a person of a given gender g and age a dying in the

g , a , x th

x year from the current year; cs

is health care cost per capita of a person of the same gender g and age a surviving the

g , a period considered as time `close to death' from the current year.

To obtain the two costs, one must use the average cost per capita of a person of a given gender g and age a as given in the `age related expenditure profiles' provided to the AWG by the Member States. It may be defined as an average of the per capita costs borne by all the subgroups of decedents and survivors, weighted by the size of each subgroup:

cd Nd cs Ns

g , a , x g , a , x , 2004 g , a g , a , 2004 = x = 0 c

g , a [13] p

g , a , 2004

It must be borne in mind that the unit costs of decedents and survivors are calculated as for the base year 2004 (thus index 2004 used in the equations) and are kept constant over the whole projection period.

Substituting for using [12], one gets:

g , a , x z

f cs Nd cs Ns

g , a , x g , a g , a , x , 2004 g , a g , a , 2004 = x = 0 c

g , a [14] p

g , a , 2004 or:

cs f Nd Ns

g , a g , a , x g , a , x , 2004 g , a , 2004

=

= x 0 c

g , a [14a] p

g , a , 2004 cs cd

This way, both and coming back to equation [12] can be calculated:

g , a g , a , x

c p

=

g , a g , a , 2004 cs

g , a z

+ [15] f Nd Ns

g , a , x g , a , x , 2004 g , a , 2004 x = 0

c p

=

g , a g , a , 2004 cd f

g , a , x g , a , x z

+ [16]

f Nd Ns

g , a , x g , a , x , 2004 g , a , 2004 =

x 0

As in pure ageing scenario and scenarios on health status, for the time horizon of the projection exercise (2004 50) the age related expenditure profiles (showing the average health care spending per capita for each year of age (from 0 to 100 or less, according to data availability) are assumed to grow in line with the same two cost assumptions as used in the 2001 exercise, i.e. GDP per capita and GDP per worker (based on the assumptions agreed by the AWG for the 2005 budgetary projection exercise). Therefore:

cd ' cd rYpc

g , a , x , n g , a , x , n n [17] where:

cd' is cost per capita of a person of a given gender g and age a who is going to die g, a, x, n

within x years, in a given year n of the projection period adjusted to the GDP per capita growth;

rYpc is GDP per capita rate growth in year n, n

Y Y Y

= - - -

rYpc n n 1 / n 1 n [18]

p p p - -

g , a , n g , a , n 1 g , a , n 1 Y is GDP in year n; n

p is the projected population of a given gender g and age a in a given year n. g, a, n

The same procedure applies to construct cs' on the basis of cs , i.e. to adjust to the g ,a, n g, a ,n

growth of GDP per capita the per capita cost of the subgroup of survivors.

Third, by multiplying the size of each subgroup by its respective cost per capita, the total cost can be calculated. Total expenditure on health care borne by those of a given gender g and age a, who are going to die within x years' time from a given year n can be expressed in the following way:

ed Nd cd

g , a , x , n g , a , x , n g , a , x , n [19] th

and, analogically, total expenditure of those of gender g and age a who are going to survive z

year:

es Ns cs

g , a , n g , a , n g , a , n [20] Adding total expenditures of all the subgroups (those dying within 0,1,2,..., z years time plus those surviving z

year) gives total expenditure on health care borne by entire population of

gender g and age a in a given year n:

= +

E ed es

g , a , n g , a , n , x g , a , n [21] =

x 1

Finally, total expenditure on health care borne by entire population in a given year n expressed as a share of the country's GDP is calculated

as follows:

g , a , n = g a T

n [22] Y

4.4. The projection methodology for income elasticity scenario

The projections of health care spending follow similar methodology as the pure ageing scenario with a change in the way cost per capita is evolving over the projection period. Income elasticity is taken into account by replacing equation [1] by the following one:

c ' c Ypc [23]

g , a , n g , a n n where:

c' is cost per capita of a person of a given gender g and age a in a given year n of the g, a, n

projection period adjusted to the GDP per capita growth;

c is constant cost per capita of a person of a given gender g and age a; g, a

Ypc is GDP per capita rate growth in year n; n

is income elasticity of demand, converging from in the base year to in 2050. n 2004 2050 Therefore:

= - -

( n 2004 ) 2004 2050 [24]

n 2004 2050 2004

In the specific case where income elasticity of demand converges from 1.2 in 2004 to 1 in 2050, the value will be the following

- -

1 . 2 1 n 2004

= - - = -

1 . 2 ( n 2004 ) 1 . 2 [24a]

n -

2050 2004 230 After unit cost has been calculated the following equations [3] [4] do not change.

4.5. The projection methodology for unit costs scenario using GDP per worker

instead of GDP per capita.

The only difference between this scenario and pure ageing scenario is the change in the development pattern of unit costs. GDP per capita is replaced by GDP per worker, thus equation [1] takes the following form:

c ' c Ypw [25]

g , a , n g , a n where:

Ypw is GDP per worker rate growth in year n, n

Y Y Y

=

- - - Ypw n n 1 / n 1

[26] n

w w w

g , a , n g , a , n - 1 g , a , n - 1 w is the projected number of people employed of a given gender g and age a in a given g, a, n year n.

The following equations [3] [4] do not change.

4.6. The projection methodology for high life expectancy

The methodology to project health care expenditure is the same as in the pure ageing scenario, but the input data on population and macroeconomic variables change accordingly with the assumptions on high life expectancy.

4.7. The projection methodology for EU10 cost convergence scenario

The projections of health care spending follow similar methodology as the pure ageing scenario with a change in the way cost per capita is evolving over the projection period. Real convergence between EU15 and EU10 countries is assumed by replacing equation [1] by the following one:

c ' c Ypc f

g , a , n g , a n n [27] where:

c' is cost per capita of a person of a given gender g and age a in a given year n of the g, a, n

projection period adjusted to the GDP per capita growth;

c is constant cost per capita of a person of a given gender g and age a; g, a

Ypc is GDP per capita rate growth in year n; n

f is a hypothetical rate of growth of unweighted average EU10 unit cost (calculated in the n

base year) in a given year n with respect to the base year if it was to converge to unweighted average EU15 level by 2050 (calculated in the base year). Therefore:

c c

=

- g , a , EU 15 g , a , EU 10 f ( n 2004 ) n - [28] 2050 2004 where:

c is unweighted EU15 average cost per capita of a given gender g and age a calculated

g , a , EU 15 in the base year;

c is unweighted EU10 average cost per capita of a given gender g and age a calculated

g , a , EU 10 in the base year.

After unit cost has been calculated the following equations [3] [4] do not change.

4.8. The projection methodology for unit cost scenarios (fast growth and

extrapolation of past trends)

4.8.1. Decomposition of unit costs

First, cost per capita for each gender, year of age and year of projection period is divided into four parts attributable to four items of expenditure, according to the share of each respective item in total public health care spending: wages and salaries of the health care staff, investment in health care technology and infrastructure, spending on pharmaceuticals, and the other factors.

c c q

g , a , j g , a j [29] where:

c is part of cost per capita of a person of a given gender g and age a, attributable to the g, a, j

item j of health care expenditure;

j stands for w (wages and salaries), i (capital investment), ph (pharmaceuticals) or o (others),

or, formally: j (w, i, ph, o);

c is constant over time cost per capita of a person of a given gender g and age a; g, a

q is the share of each respective item j in total public health care expenditure. j

According to the initial assumptions:

+ + + =

q q q q 1 w i ph o

After the decomposition, each part of the unit cost develops according to a different pattern. The patterns differ across scenarios (a separate scenario for each driver of costs) and according to the chosen variant of unit cost evolution (the note presents three possible variants, although other ones are possible, depending on initial assumptions). The general rule is that in the broad framework of each variant of unit cost evolution, separate impact of a given evolution in wages, investment and pharmaceutical spending is calculated.

Calculations are run according to two different variants of the development of unit costs: fast growth variant and extrapolation variant.

4.8.2. Fast cost growth variant

The projections in the framework of the fast growth variant can be expressed as follows. The part attributable to the item whose impact on the health care spending is analysed (wages and salaries, capital investment and pharmaceutical spending

each component separately or all

together) evolves according to the following rule:

c c r -

g , a , j , n g , a , j , n 1 j , n [30] where:

c is part of cost per capita of a person of a given gender g and age a in a given year n of g, a, j, n

the projection period, attributable to the concrete item j of health care expenditure;

r is the rate of change in the part of cost per capita attributable to the concrete item j of j , n

health care expenditure in a given year n. It is calculated according to the following method:

+ <

rYpc 0 . 01 for 2005 n 2015 = n r

j , n [31]

rYpc for n 2015 n

where:

rYpc is GDP per capita rate of growth in year n n

At the same time, the parts attributable to the three remaining items (others than the one whose impact is analysed) follow simple GDP per capita development path:

c c rYpc -1

g , a , j , n g , a , j , n n [32] where:

c is part of cost per capita of a person of a given gender g and age a in a given year n of g, a, j, n

the projection period, attributable to the other items of health care expenditure, j (w, i, ph, o); rYpc is GDP per capita rate of growth in year n. n

4.8.3. The extrapolation of past trends variant

In the extrapolation variant, the three components of unit cost develop according to the same rule, but the rate of change in the base year differs according to the components.

The development pattern is the following:

c c r -

g , a , j , n g , a , j , n 1 j , n [33] where:

c is part of cost per capita of a person of a given gender g and age a in a given year n of g, a, j, n

the projection period, attributable to the concrete item j of health care expenditure;

r is the rate of change in the part of cost per capita attributable to the concrete item j of j , n

health care expenditure in a given year n. It is calculated according to the following method:

r for n 2005 j , 2004 ( )

= + - < <

r r rYpc r / 10 for 2005 n 2015 -

j , n j , n 1 2015 j , 2004 [34]

rYpc for n 2015 n

rYpc is GDP per capita rate of growth in year n; n

r is rate of growth of a specific component in the base year. It differs according to the j,2004

item and equals:

w , n = -

n g b = for j w b = =

r R for j i j , 2004 2004

[35] r

ph , n

n = h - c = for j ph

c where:

g is the year of the most recent past observation of rate of change in wages of health care sector staff;

b is the number of available past observations of rate of change in wages of health care sector staff;

R is the long term nominal interest rate in year 2004; 2004

h is the year of the most recent past observation of rate of change of pharmaceuticals' prices; c is the number of available past observations of rate of change of pharmaceuticals' prices.

While the item in question evolves according to the presented methodology, the part of per capita cost attributable to three remaining items of spending (others than the one whose impact is analysed) evolves in line with GDP per capita rate of growth:

c c rYpc -1 [36]

g , a , j , n g , a , j , n n where:

c is part of cost per capita of a person of a given gender g and age a in a given year n of g, a, j, n

the projection period, attributable to the other factors, j (w, i, ph, o);

rYpc is GDP per capita rate of growth in year n. n

4.8.4. Re aggregation of the unit cost and calculation of the total cost

After having calculated the value of each component for each year of the projection period, the four respective components are added to obtain re aggregated total unit cost, different for each of the three scenarios:

c ' c

g , a , n g , a , j , n [37] j ( w , i , ph , o ) c' is cost per capita of a person of a given gender g and age a in a given year n of the g, a, n

projection period, adjusted for a combination of different patterns of development in spending on three components of total cost.

This total unit cost is then multiplied by the population of each gender and year of age in each year of the projection period:

S c ' p

g , a , n g , a , n g , a , n [38] where:

S is spending on health care realised by people of a given gender g and age a in a given g, a, n year n;

p is the projected population of a given gender g and age a in a given year n. g, a, n

By adding spending for all genders and years of age total spending on health care in each year of the projection period is calculated which, may be further expressed as a share of GDP:

g , a , n = g , a T

n [39] Y

where:

T is the share of total health care spending in GDP in a given year n; n

Y is GDP in a given year n. n

5.

D ATA INPUTS TO THE HEALTH CARE PROJECTIONS 5.1. Age related expenditure profiles

Data comes from a variety of non-comparable national sources

Table 5 1 summarises the age related expenditure profiles which have been collected through the AWG on the basis of a questionnaire circulated by DG ECFIN. The main features of the data can be summarised as follows:

· 18 Member States have provided profiles as part of the 2005 budgetary projection

exercise. Most of the data reported for the 2005 budgetary projection exercise was collected since 2000;

· profiles are available for an additional 3 countries from the 2001 budgetary projection

exercise but who did not report data for this projection exercise. However, this data is quite old: EL 1995, FR 1997, PT 1999;

· profiles are not available for 4 countries;

For the most part, the age related expenditure profiles do not cover all areas of public spending on health care, but rather acute health care. More detailed information on the coverage of data is generally not available.

A breakdown of data by gender is available for all countries but MT and the UK;

The data for most countries is grouped into 5 year cohorts. Some countries have provided the data on spending disaggregated into 1 year cohorts.

When making budgetary projections based on age related expenditure profiles, the following data has been used:

· profiles reported for the 2005 exercise have been used for 18 Member States (BE, CZ,

DE, DK, ES, IT, LV, LT, LU, MT, NL, AT, PL, SI, SK, FI, SE, UK);

· profiles reported for the 2001 exercise have been used for 3 Member States (FR, EL,

PT);

· for 4 countries where no profiles exist, an average EU10 or EU15 profile was used

(EE, IE, CY, HU)

Table 5 1 Overview of available age related expenditure profiles on health care

Year when

Gender and

Availability of most recent

Country Description of data cohort Source data data was collected classification

2001 2005

Estimates of per capita public spending on Gender, single year of age, 5 Alliance Nationale des

acute health care based on a sample

Mutualités Chrétiennes (ANMC)

BE yes yes 2001 covering most public acute care year cohorts, and Federal Planning Bureau

expenditures and approximately 50% of the decedent/survivor (FPB).

insured population status Gender, 5 year

cohorts, General Health Insurance

CZ no yes 2003 Average health care costs decedent/survivor Company of the Czech Republic status

Gender, single

year of age,

DK yes yes 2003 Individual register based data Ministry of Finance, Denmark decedent/survivor

status

Empirical data on the breakdown of acute

health care expenditure by age and sex are Gender, 5 year

DE yes no 2000 ? gathered (since 1998) for all those covered cohorts by statutory health insurance

EE no no

Annual amount of the hospital days for the Gender, age

people that are insured under IKA scheme cohorts: 0 14, 15

EL yes no 1995 ? used as a proxy variable for the estimation 19, 20 54, 55 64, of the age related profiles 65 79, 80+

Gender, 5 year

ES yes yes 2003 Per capita health expenditure on acute care Instituto de Estudios Fiscales age cohorts

Household survey on health and

Gender, 10 years health care consumption and

FR yes no 1997 Per capita health expenditure on acute care age cohorts administrative files from the three main sickness funds

IE no no Istat Popolazione residente al

2004; Ministero della Salute

Public spending on acute health care Gender, 5 year

IT yes yes 2004 Rapporto annuale sulle attività divided by resident population. age cohorts di ricovero ospedaliero 2003;

et al.

CY no no Central Statistical Bureau, Health Compulsory Insurance

Gender, single year of age, 5

Per capita public spending on acute health State Agency, Directorate of

LV no yes 2003 care Social Services of the Ministry year cohorts

of Welfare, estimations of the

Ministry of Finances

Estimates of per capita public spending on Gender, single State Patient Fund, State Social LT no yes 2004 acute health care year of age Insurance Fund Board Inspection Générale de la

Public expenditure per capita by social

Gender, 5 year Securité Sociale

LU no yes 2003 security and government: health insurance cohorts

and accident insurance

HU no no

MT no yes 2003 5 year cohorts Per capita public spending on acute health Ministry of Health, the Elderly

care and Community Care (MHEC) Gender, single

NL yes yes 1999 Per capita expenditure on acute health care RIVM (Johan Polder) year of age

Total public expenditure on acute care

Gender, single year of age, 5

including: acute care in public hospitals and

private hospitals; and social health

AT yes yes 2003 year age groups, ? insurance expenditure on physician services,

decedent/survivor

dental treatment, pharmaceuticals medical

status

appliances and other items

Public expenditure on health care in Euro Gender, single per insured person, including ambulatory year of age,

PL no yes 2004 National Health Fund specialist care, hospital care, and other decedent/survivor items status Gouveia, M. (2001),

Gender, age "Financiamento e Regras para

cohorts: 0, 1 4, 5 Acordos do Ministério da Saúde

PT yes no 1999 Per capita health expenditure on acute care 11, 12 19, 20 29, com Subsistemas", Relatório 30 39, 40 54, 55 Final, Centro de Estudos Aplicados, Universidade 64, 65 74, 75+

Católica Portuguesa

Total public expenditure per capita

including: primary care, specialist

ambulatory care, hospital care, drugs and

Gender, 5 year

SI no yes 2004 medical instruments, aministrative costs, ? age cohorts

sickness benefits, other expenditures, capital

expenditures, other programs and spending

at municipalities level

Average annual expenditure per insured Gender, 5 year Statistical Office of the Slovak SK no yes 2004 person age cohorts Republic

Hujanen, Mikkola, Pekurinen,

Häkkinen, Teitto (2004),

"Terveydenhuollonmenot ikä ja

Per capita public spending on acute health Gender, 5 year

FI yes yes 2003 sukupuoliryhmittäin vuonna care age cohorts 2002", National research and

development centre for welfare

and health

Per capita public spending on acute health Gender, single

SE yes yes 2003 ? care year of age Age cohorts: 0 4,

5 15, 16 44, 45

Estimated per capita expenditure on acute

UK yes yes 2002/03 64, 65 69, 70 74, National Health Service health care

75 79, 80 84,

85+

5.2. Projected changes in life expectancy

Scenario II assesses the impact of potential changes in the health care status of elderly citizens. Changes in the health care status of the elderly over the projection time horizon will be linked to the projected changes in life expectancy by age and gender. In the constant health scenario (II) the age related expenditure profile will be shifted outwards in a one to one proportion with the projected age and gender specific change in life expectancy.

Table 5 2 and Table 5 3 below present the projected increase in life expectancy persons at 65, 70, 75 and 80 between 2004 and 2025 and 2050 based on the baseline AWG population scenario for males and females respectively. There are significant gains in life expectancy at older ages. Not surprisingly, they are slightly higher for males than females, and also for EU10 compared with EU15 countries.

Table 5 2 Projected changes in life expectancy for elderly cohorts males

Age 65 75 85 Life Life Life

expectancy Change by Change by % change expectancy Change by Change by % change expectancy Change by Change by % change in 2004 2025 2050 2004-2050 in 2004 2025 2050 2004-2050 in 2004 2025 2050 2004-2050

BE 15,8 2,8 4,5 28,2 9,2 1,8 2,8 30,3 4,7 0,6 0,9 19,1 CZ 13,8 2,7 4,6 33,2 8,2 1,7 3,0 37,3 4,3 0,5 1,2 28,1 DK 15,2 2,2 4,1 26,8 9,0 1,5 2,9 32,5 4,8 0,9 1,8 37,9 DE 16,1 2,3 4,0 24,6 9,8 1,7 2,8 29,0 5,4 0,7 1,2 21,2 EE 12,4 2,3 4,9 39,2 8,0 1,7 3,4 43,0 4,7 0,8 1,6 33,6 EL 16,4 1,7 3,3 20,0 9,6 1,1 2,2 23,5 4,6 0,6 1,4 30,6

ES 16,7 2,1 3,3 20,0 10,0 1,4 2,2 21,8 5,3 0,5 0,7 13,7 FR 17,0 2,2 3,6 21,0 10,4 1,5 2,3 22,2 5,4 0,4 0,6 10,6 IE 15,4 2,8 4,8 31,4 9,0 2,0 3,4 38,5 5,0 1,3 2,4 47,6

IT 16,7 2,1 3,7 22,2 10,0 1,3 2,4 24,1 5,3 0,5 1,1 20,6 CY 16,2 2,2 3,7 23,1 9,7 1,6 2,8 28,7 5,3 0,7 1,3 24,3 LV 12,3 2,6 5,1 41,8 7,9 2,0 3,7 47,3 4,5 0,9 1,6 35,9 LT 13,3 2,1 4,6 34,9 8,4 1,5 3,2 38,5 4,9 0,6 1,4 27,7 LU 15,7 2,5 4,2 26,6 9,4 1,6 2,8 29,9 4,7 0,7 1,3 26,8 HU 13,1 3,1 5,5 42,4 8,2 2,1 3,9 47,4 4,7 1,0 1,7 36,6 MT 15,2 2,4 4,0 26,5 9,3 1,7 2,9 31,5 5,1 0,7 1,4 26,6 NL 15,4 1,8 3,5 22,7 8,9 1,2 2,6 28,7 4,6 0,7 1,8 38,3 AT 16,2 2,4 4,2 26,1 9,6 1,7 3,1 32,0 4,9 0,8 1,3 27,6 PL 13,7 2,9 5,1 36,8 8,6 1,9 3,5 40,4 4,8 0,8 1,5 30,4 PT 15,6 2,5 4,3 27,4 9,1 1,6 2,8 30,2 : : : :

SI 14,3 2,7 4,4 31,0 8,7 1,8 3,0 34,6 4,7 0,6 1,3 27,7 SK 12,9 2,5 4,6 35,9 7,9 1,5 3,0 38,0 4,5 0,5 1,3 28,3 FI 15,7 2,7 4,3 27,2 9,2 1,6 2,6 28,6 4,8 0,6 1,2 24,3 SE 16,7 1,9 3,3 19,7 9,8 1,3 2,4 24,9 4,8 0,6 1,4 29,5 UK 16,1 2,6 4,3 26,7 9,6 1,7 2,9 30,3 : : : :

EU15* 16,0 2,3 3,9 24,6 9,5 1,5 2,7 28,3 4,9 0,7 1,3 26,4 EU10* 13,7 2,5 4,7 34,0 8,5 1,7 3,2 38,3 4,8 0,7 1,4 29,8 EU25* 15,1 2,4 4,2 28,0 9,1 1,6 2,9 32,0 4,9 0,7 1,4 27,9 * unweighted average

Table 5 3 Projected changes in life expectancy for elderly cohorts females

Age 65 75 85 Life Life Life

BE 19,7 2,9 4,4 22,2 11,8 2,2 3,3 28,0 5,9 1,1 1,6 27,9 CZ 17,0 2,3 3,9 22,6 9,8 1,6 2,9 29,1 4,9 0,8 1,5 29,7

DK 18,0 2,0 3,9 21,7 11,1 1,7 3,4 30,7 5,8 1,3 2,7 45,7 DE 19,5 2,4 3,9 19,9 11,8 1,8 3,0 25,5 6,0 0,9 1,5 25,4 EE 16,9 2,2 4,1 24,1 9,9 1,5 3,0 30,2 5,1 0,8 1,6 31,6

EL 18,5 2,0 3,8 20,3 10,4 1,6 3,1 29,4 4,7 1,1 2,0 42,9 ES 20,7 2,1 3,0 14,8 12,4 1,6 2,3 18,6 6,2 0,7 1,0 16,1 FR 21,3 2,2 3,2 15,3 13,1 1,7 2,5 18,8 6,7 0,8 1,1 16,2 IE 18,6 2,8 4,8 25,9 11,2 2,2 3,8 33,9 6,1 1,6 2,9 47,3 IT 20,6 2,0 3,5 17,2 12,5 1,4 2,6 20,6 6,4 0,6 1,2 19,0 CY 18,3 1,9 3,3 18,0 10,8 1,5 2,6 24,5 5,8 0,8 1,5 25,1 LV 16,6 2,2 4,1 24,9 9,7 1,7 3,2 32,7 5,0 0,9 1,7 33,6

LT 17,4 2,1 4,0 23,0 10,3 1,7 3,1 30,4 5,2 0,9 1,7 31,9 LU 19,6 2,3 3,8 19,4 11,9 1,8 3,0 25,1 6,3 0,9 1,6 24,8 HU 16,7 2,5 4,4 26,5 9,8 1,8 3,3 33,8 5,0 1,0 1,8 34,8

MT 18,3 2,0 3,3 17,9 10,9 1,5 2,5 23,2 5,4 0,8 1,4 24,9 NL 19,0 1,5 3,1 16,3 11,4 1,2 2,5 21,5 5,7 0,6 1,4 25,3 AT 19,7 2,5 4,0 20,2 11,7 1,9 3,1 26,0 5,8 0,9 1,4 25,1 PL 17,4 2,4 4,1 23,5 10,3 1,8 3,1 30,4 5,2 0,9 1,6 31,6 PT 19,0 2,5 4,1 21,6 11,1 1,8 3,1 27,4 : : : :

SI 18,4 2,3 3,6 19,6 10,9 1,7 2,7 25,0 5,3 0,8 1,4 27,2 SK 16,5 2,2 3,9 23,6 9,6 1,5 2,9 29,9 4,9 0,7 1,4 29,2

FI 19,5 2,4 3,8 19,5 11,5 1,7 2,8 24,1 5,5 0,9 1,4 25,4 SE 19,8 1,9 3,2 16,3 12,0 1,4 2,6 21,3 5,9 0,8 1,5 25,5 UK 19,0 2,7 4,3 22,6 11,6 1,9 3,1 26,8 : : : :

EU15* 19,5 2,3 3,8 19,4 11,7 1,7 2,9 25,0 5,9 0,9 1,6 27,8 EU10* 17,4 2,2 3,9 22,3 10,2 1,6 2,9 28,8 5,2 0,8 1,5 29,8 EU25* 18,6 2,2 3,8 20,5 11,1 1,7 2,9 26,4 5,6 0,9 1,6 28,6 * unweighted average

5.3. Assumptions on the evolution of unit costs

Scenario I (and most other scenarios) assumes that unit costs evolve in line with GDP per capita. Scenario V, however, assumes that unit costs evolve in line with GDP per worker. Table 5 4 and Table 5 5 below present the evolution of GDP per capita and GDP per worker that emerges from the baseline underlying assumptions endorsed by the AWG.

Table 5 4 Assumptions on the evolution of unit costs average yearly rate of growth of GDP per capita

2004 09 2010 19 2020 29 2030 39 2040 50

BE 2,1 1,9 1,2 1,4 1,7 CZ 3,7 3,2 2,5 1,4 1,1 DK 1,8 1,9 1,3 1,4 2,0 DE 1,6 1,8 1,0 1,2 1,6 EE 6,7 4,4 2,8 2,0 1,2 EL 2,6 1,5 1,1 1,0 1,2 ES 2,1 2,4 1,5 0,7 1,0 FR 1,7 1,6 1,5 1,4 1,6 IE 4,3 3,3 2,0 1,3 1,1 IT 1,6 1,8 1,4 0,9 1,4 CY 3,2 3,2 2,3 2,0 1,3 LV 8,6 5,2 2,9 2,0 1,0 LT 7,2 5,0 2,6 1,8 1,2 LU 3,1 2,2 2,0 2,3 2,5 HU 4,0 3,2 2,6 1,5 1,3 MT 1,3 2,1 2,4 1,9 1,4 NL 1,3 1,6 1,2 1,5 1,9 AT 2,0 1,9 1,1 1,3 1,5 PL 5,0 4,2 2,9 1,6 1,0 PT 1,5 1,8 1,4 1,1 1,2 SI 3,6 2,9 2,2 1,5 1,3 SK 4,9 4,6 2,8 1,3 0,8 FI 2,5 1,8 1,5 1,7 1,7 SE 2,5 2,3 1,8 1,6 1,8 UK 2,5 2,3 1,5 1,4 1,6 Table 5 5 Assumptions on the evolution of unit costs average yearly rate of growth of GDP per worker

2004 09 2010 19 2020 29 2030 39 2040 50

BE 1,5 1,9 1,8 1,7 1,7 CZ 3,4 3,3 2,9 2,1 1,8 DK 1,9 2,0 1,8 1,7 1,7 DE 0,9 1,6 1,8 1,7 1,7 EE 5,4 4,3 3,1 2,1 1,8 EL 2,1 1,4 1,6 1,7 1,7 ES 1,1 2,1 1,9 1,7 1,7 FR 1,4 1,8 1,7 1,7 1,7 IE 3,4 3,2 1,9 1,7 1,7 IT 0,8 1,7 1,8 1,7 1,7 CY 2,4 3,0 2,8 2,1 1,8 LV 6,7 5,1 3,3 2,1 1,8 LT 5,9 4,2 3,2 2,1 1,8 LU 1,9 2,1 1,8 1,7 1,7 HU 3,2 3,1 2,8 2,1 1,8 MT 1,0 1,9 2,5 2,1 1,8 NL 1,1 1,7 1,8 1,7 1,7 AT 1,5 1,8 1,8 1,7 1,7 PL 4,0 3,5 3,0 2,1 1,8 PT 1,1 2,0 1,8 1,7 1,7 SI 3,3 3,2 2,8 2,1 1,8 SK 4,0 3,7 3,0 2,1 1,8 FI 2,1 2,2 1,9 1,7 1,7 SE 2,1 2,6 2,1 1,7 1,7 UK 2,2 2,4 1,9 1,7 1,7

5.4. Additional on death related costs from academic studies

Table 5 6 summarise the general characteristics of available data, from national sources, on death related costs, and Table 5 7 provides information on ratio between cost borne by a person with n remaining years of life and a survivor (decomposed

where available by

gender and age cohort). The data used in the preliminary projections were taken from separate scientific papers.

Given the lack of common methodology, there are considerable differences as regards technique of measurement, the degree of precision, sample size, time and space coverage, definition of decedent and survivor status, and other characteristics. Moreover, no study provided an estimate of death related costs covering total health care spending (inpatient care + outpatient care + day care + home care). Instead, most studies provide data only on inpatient hospital care expenditure per capita which is then taken as a proxy for total health care expenditure per capita. Differences in input data arise across countries and the following issues are worth noting:

· the data available lacks one or more dimensions. This is the case for most countries:

Danish, German, Spanish, French data are not decomposed by gender, and the Swedish data is not decomposed by age cohort. Moreover, the notion a decedent differs across studies. In Spanish, Italian and Austrian data, it covers persons dying within the same year, while in the Swedish study up to six years prior to death are taken into account.

· given the purpose of the research (analysis of the ageing process and its economic

consequences) the studies tend to concentrate on the elderly cohorts. In some cases (DK, FR), data is reported only for the elderly cohorts. In such cases, either younger cohorts must be omitted in the calculations, or the data concerning them must be approximated or substituted by a proxy.

· there is a clear correlation between the age and the ratio between decedents' and

survivors' costs. A general trend can be observed whereby the ratio grows sharply from birth to the age of 10 20, and slowly declines thereafter. However, it is not reflected in all the studies, e.g. in the case of Sweden where one aggregate ratio is calculated for all the age cohorts. Moreover, the ratio differs considerably across the countries. Taking as an example the ratio of spending between people aged 60 65 who die within one year and the survivors of the same age, one can find as different results as: 8.0 in Denmark, 17.7 in Germany (55 64), 15.8 in Spain, 3.3 in France (55 64), 12.2 (males) and 16.9 (females) in Italy, and 20.8 (males) and 26.2 (females) in Austria. The differences are even higher when younger cohorts are compared. Such differences obviously have a large impact on the results of the projections and must be taken into account when comparing them.

Table 5 6 Overview of studies with data on death related costs for particular EU

Member States

Reference Measured value Data source Status distinguished Age groups Gender

DK Madsen M. (2004), Average expenditures on Danish individual register based data Persons with 0 1 years 50 59; 60 69; 70 79; 80 89; 90+; all age groups No Methodologies to hospitals of

incorporate `death distributed by age remaining life; related' costs in and years of persons with 1 2 years projections of health and long term care based on Danish data, Ministry of Finance, Denmark remaining life of remaining life; persons with 2 3 years

remaining life; persons with 3+ years

remaining life

DE Busse R., Krauth C., Average number of hospital days/ year according to survival status Cohort study using a sample of persons insured by a sickness fund, Germany, 19891995 Survivors; persons in their 3rd last year of life; persons in their 024; 2534; 3544; 4554; 5564; 6574; 7584; 85+ No Schwartz F. (2002), Use of acute Hospital Beds does not increase as the Population Ages: Results for a Seven Year Cohort Study

2nd last

year of life;

in Germany, persons in their last year of life Journal of Epidemiology and Community Health, vol. 56, pp. 289 293.

ES Ahn N., García J.R., Public Hospital Care Costs Individual register based Decedents, survivors 5 year cohorts from 1 85, 86+ No Hercé J.A. (2005), by Survival Demographic Uncertainty and Health Care Status data, Spain, 1999

Expenditure in Spain, FEDEA,

Documento de trabajo 2005 07

FR Caisse Nationale de Average medical Sample of Persons in their last year of life; persons 1 year before 35 44; 45 54; 55 64; 65 74; 75 84; 85+ No l'Assurance Maladie des Travailleurs consumption of individuals insured by a social insurance fund, 1996 2002 Salariés persons in their last years of life by age at death

(2003), Le vieillissement de la population et son incidence sur l'évolution des dépenses de santé, Point death; (approximate persons 2 years before values, precise data not death;

quoted in the persons 3 years before de conjoncture article) death; n°15 juillet 2003 persons 4 years before death

IT Gabriele S., Cislaghi C., Costantini F., Innocenti F., Lepore V., Tediosi F., Valerio M., Zocchetti C. (2005), Per capita hospital Individual register based Decedents (within 5 year cohorts from1 89, 90+ Yes expenditure ratio one

deceased/survivors by age and gender data calendar year); from four survivors Demographic Italian regions: Lombardy,

factors and health expenditure profiles by

age: the case of Italy. A deliverable Tuscany, Apulia for the and

ENEPRI AHEAD Abruzzi, 2000 (Ageing, Health Status and

Determinants of

Health Expenditure) project

AT Riedel M., Hofmarcher M.M., Average expenditure on Sample of Decedents, survivors 5 year Yes Buchegger R., hospital care individuals insured by a social insurance fund, 2000 cohorts from 1 84; 85+ Brunner J. (2002), under assumption Nachfragemodell Gesundheitswesen. Endbericht, that expenditure on all fatal cases is the same as in hospital care Teil II. Studie im Auftrag des Bundesministeriums

für

Soziale Sicherheit und Generationen, Institut für Höhere Studien (IHS), Wien

SE Batljan I., Lagergren M. (2004), Inpatient/outpatient health care costs and remaining years of life effect Average per capita cost Individual register based 0, 1, 2, 3, 4, 5, 6, 6+ remaining years None Yes of inpatient

health care per capita in data of life,

the population from the whole population depending on Skåne region, 1997

of decreasing remaining years of life mortality on future acute health (approximate

care demand, values, precise data not

Social Science & quoted in the Medicine, 59, pp.2459 2466 article)

Table 5 7 The ratio between cost borne by a person with N remaining years of life and a

survivor, by age cohort

Denmark

N 0 1 1 2 2 3 3+ Age cohort

1 42,6 26,6 22,0 1 0 49

50 59 10,6 6,7 5,5 1 60 69 8,0 4,3 3,4 1 70 79 4,8 2,7 2,0 1 80 89 2,4 1,9 1,6 1 90+ 1,8 1,7 1,0 1 Germany

N 0 1 2 2+ Age cohort

0 24 30,3 14,0 11,6 1

25 34 31,8 13,3 14,9 1 35 44 31,6 20,5 12,5 1 45 54 20,6 8,2 5,8 1 55 64 17,7 5,4 3,0 1 65 74 12,1 4,1 3,0 1 75 84 6,6 2,4 1,8 1 85+ 4,3 1,2 0,9 1 Spain

N 0 0+ Age cohort

0 7,6 1

1 5 71,1 1

6 10 82,1 1

11 15 92,7 1 16 20 96,5 1 21 25 75,6 1 26 30 48,9 1 31 35 40,7 1 36 40 43,7 1 41 45 43,5 1 46 50 35,0 1 51 55 26,9 1 56 60 21,7 1 61 65 15,8 1 66 70 11,9 1 71 75 9,4 1 76 80 7,4 1 81 85 6,3 1 86+ 5,0 1

France

N 0 1 2 3 3+ Age cohort

0 34 2 6,5 5,5 3,0 2,0 1 35 44 6,5 5,5 3,0 2,0 1 45 54 8,8 6,8 2,5 1,5 1 55 64 3,3 2,3 1,5 1,0 1 65 74 2,6 2,3 1,3 1,0 1 75 84 2,8 2,4 1,5 1,2 1 85+ 1,8 1,7 1,2 1,0 1 Italy

males females

N 0 0+ 0 0+ Age cohort

0 3 67,0 1 84,9 1 1 4 67,0 1 84,9 1

5 9 78,6 1 159,1 1

10 14 70,9 1 108,4 1 15 19 40,5 1 46,3 1 20 24 26,4 1 33,8 1 25 29 29,9 1 26,5 1 30 34 30,9 1 27,6 1 35 39 40,8 1 37,9 1 40 44 35,6 1 41,9 1 45 49 31,7 1 32,3 1 50 54 21,4 1 27,5 1 55 59 17,2 1 24,0 1 60 64 12,2 1 16,9 1 65 69 8,5 1 12,1 1 70 74 6,2 1 8,3 1 75 79 4,5 1 5,4 1 80 84 3,3 1 3,7 1 85 89 2,4 1 2,6 1 90+ 1,7 1 1,6 1 Austria

males females

N 0 0+ 0 0+ Age cohort

0 4 50,9 1 67,0 1

5 9 156,6 1 240,0 1

10 14 173,9 1 205,1 1 15 19 135,2 1 113,1 1 20 24 136,6 1 77,2 1 25 29 131,9 1 63,1 1 30 34 128,1 1 70,5 1

35 39 103,2 1 84,4 1 40 44 77,7 1 59,7 1 45 49 48,1 1 52,1 1 50 54 32,4 1 35,0 1 55 59 25,6 1 30,0 1 60 64 20,8 1 26,2 1 65 69 13,6 1 17,1 1 70 74 10,5 1 11,8 1 75 79 7,8 1 8,6 1 80 84 6,7 1 7,2 1 85+ 6,2 1 5,4 1 Sweden

N 0 1 2 3 4 5 6 6+ All age

cohorts 15,86 10,14 6,00 4,57 4,14 3,29 2,71 1 males

All age

cohorts 13,71 9,57 6,00 4,71 4,00 3,14 2,57 1 females

Note: DK Cost per capita of decedents (0 1, 1 2, 2 3 remaining years of life) and survivors (more than 3 remaining years of life) aged 0 49 is missing in the database. It is therefore assumed to be twice the cost of a decedent aged 50 59 and half the cost of a survivor aged 50 59. FR Cost per capita of people aged 0 34 is missing in the database. It is therefore assumed to be the same as the cost per capita of people aged 35 44. IT Cost per capita of people aged 0 is missing in the database. It is therefore assumed to be the same as the cost per capita of people aged 1 4.

6.

A DDITIONAL SCENARIOS FOR PUBLIC SPENDING ON HEALTH CARE

Table 6 1 presents the overview of additional scenarios (sensitivity tests) that complement the analysis of factors affecting public health care spending presented in section 4.4 of the report.

Table 6 1 Overview of additional scenarios for public spending on health care

Extrapolation of

costs for each

High life EU10 cost component on

expectancy Improved health convergence Fast cost growth health spending A-I A-II A-III A-IV A-V AWG scenario -

Population projection AWG scenario - AWG scenario - AWG scenario - AWG scenario - high life

baseline baseline baseline baseline expectancy

Improved health

For EU10, the

scenario whereby

2004 profiles

Age-related expenditure profiles 2004 profiles held 2004 age profile 2004 profiles held 2004 profiles held converge to

constant over shifts by double the constant over constant over average age-profile

projection period change in age- projection period projection period for EU15 countries

specific life

by 2050

expectancy

Different assumptions

GDP per capita + 1

for each component

Unit cost development p.p. during the period 2004 to

GDP per capita GDP per capita GDP per capita of spending (wages, pharmaceuticals,

2015

capital investment)

Income elasticity of demand

1 1 1 1 1 6.1. High life expectancy scenario

Scenario A I examines the impact of higher life expectancy on health care spending. It is based on the same assumptions as the pure ageing scenario (I) presented in chapter 4 of the report, except that it uses the high life expectancy population projection rather than AWG population scenario: for more details, see chapter 2 in EPC and European Commission (2005a).

On average, public expenditure on health care is projected to increase by 2% of GDP over the period 2004 2050. This increase is somewhat (0.3% of GDP) stronger than in pure ageing scenario in all but one (LU) country. Such results show clearly that the demographic effect of higher life expectancy, whereby people live longer and therefore require more health care services outweighs the economic effect, whereby GDP increases faster and the share of health care spending in GDP automatically falls.

Table 6 2 Projection results for high life expectancy scenario (A I)

Projected spending as % of GDP Difference as % of GDP compared to pure ageing scenario

change

2004 2010 2030 2050 2004-2050 2010 2030 2050

BE 6,2 6,4 7,3 8,0 1,8 0,0 0,1 0,3 DK 6,9 7,0 7,8 8,2 1,4 0,0 0,1 0,2 DE 6,0 6,3 7,1 7,7 1,7 0,0 0,2 0,4 GR 5,1 5,3 6,0 7,2 2,1 0,0 0,1 0,3 ES 6,1 6,3 7,4 8,6 2,5 0,0 0,1 0,3 FR 7,7 8,0 9,1 9,8 2,1 0,0 0,1 0,3 IE 5,3 5,5 6,5 7,5 2,2 0,0 0,1 0,2 IT 5,8 6,0 6,8 7,4 1,6 0,0 0,1 0,2 LU 5,1 5,3 5,9 5,5 0,4 0,1 0,1 0,7 NL 6,1 6,3 7,2 7,7 1,6 0,0 0,1 0,2 AT 5,3 5,5 6,4 7,2 1,9 0,0 0,1 0,2 PT 6,7 6,8 6,7 7,5 0,8 0,0 0,1 0,2 FI 5,6 5,8 6,8 7,3 1,8 0,0 0,1 0,3 SE 6,7 6,8 7,6 8,0 1,3 0,0 0,1 0,2 UK 7,0 7,2 8,4 9,7 2,6 0,0 0,1 0,4 CY 2,9 3,1 3,6 4,1 1,2 0,0 0,0 0,1 CZ 6,4 6,7 7,8 8,6 2,1 0,0 0,1 0,3 EE 5,4 5,6 6,1 6,5 1,1 0,0 0,1 0,2 HU 5,5 5,7 6,3 6,7 1,2 0,0 0,1 0,2 LT 3,7 3,8 4,2 4,5 0,8 0,0 0,0 0,1 LV 5,1 5,3 5,7 6,1 0,9 0,0 0,1 0,2 MT 4,2 4,5 5,7 6,5 2,3 0,0 0,1 0,3 PL 4,1 4,3 5,0 5,5 1,4 0,0 0,1 0,2 SK 4,4 4,6 5,6 6,3 2,0 0,0 0,1 0,2 SI 6,4 6,6 7,5 8,1 1,6 0,0 0,1 0,2

EU25 6,4 6,6 7,5 8,4 2,0 0,0 0,1 0,3 EU15 6,4 6,7 7,6 8,5 2,0 0,0 0,1 0,3 EU12 6,3 6,5 7,4 8,2 1,9 0,0 0,1 0,3 EU10 4,9 5,1 5,8 6,3 1,4 0,0 0,1 0,2 Note: EU25, EU15, EU12 and EU10 average weighted by GDP

6.2. Improved health scenario

Scenario A II is labelled the improved health scenario and is inspired by the compression of morbidity hypothesis. It assumes that the number of years spent in bad health during a life time in 2050 actually falls compared to that in 2004, i.e. it involves a shortening of the share of one's lifespan spent in bad health, so that the morbidity rate falls faster than the mortality rate. The future gains in healthy life expectancy exceed the projected gains total life expectancy. The stylised picture of such process is achieved by progressively shifting the age related expenditure profile of the base year along the age axis by more (by a stylised factor) than the projected gains in age and gender specific life expectancy. It is illustrated by dotted line on graph 4 1 in section 4.2 of the report.

Table 6 3 presents the projection results. If healthy life expectancy is assumed to increase twice as fast as total life expectancy, practically all the effects of an ageing population on public spending will be offset by positive developments in health status. Public health care spending is projected to increase by mere 0.3% of GDP in EU15 countries and remain broadly constant in the EU10 countries.

Table 6 3 Projection results for improved health scenario (A II)

Projected spending as % of GDP Difference as % of GDP compared to pure ageing scenario

change

2004 2010 2030 2050 2004-2050 2010 2030 2050

BE 6,2 6,1 6,1 6,3 0,1 0,3 1,2 1,4 DK 6,9 6,7 6,6 6,4 0,4 0,3 1,1 1,5 DE 6,0 6,0 6,0 6,1 0,1 0,3 1,0 1,2 GR 5,1 5,2 5,2 5,8 0,7 0,2 0,8 1,2 ES 6,1 6,0 6,3 7,1 1,0 0,3 1,0 1,2 FR 7,7 7,7 7,9 8,2 0,5 0,3 1,1 1,4 IE 5,3 5,2 5,3 5,7 0,4 0,3 1,1 1,5 IT 5,8 5,7 5,9 6,1 0,4 0,2 0,8 1,0 LU 5,1 5,0 5,0 5,1 0,0 0,2 0,8 1,0 NL 6,1 6,1 6,4 6,4 0,3 0,1 0,7 1,0 AT 5,3 5,2 5,4 5,7 0,4 0,3 1,0 1,3 PT 6,7 6,5 5,7 6,0 0,7 0,3 0,9 1,3 FI 5,6 5,5 5,8 5,9 0,4 0,2 0,9 1,1 SE 6,7 6,5 6,5 6,4 0,3 0,3 1,0 1,4 UK 7,0 6,8 6,8 7,2 0,2 0,4 1,5 2,1 CY 2,9 2,9 3,1 3,3 0,4 0,1 0,4 0,7 CZ 6,4 6,4 6,5 6,7 0,3 0,3 1,2 1,6 EE 5,4 5,5 5,1 5,1 0,3 0,1 0,8 1,2 HU 5,5 5,4 5,2 5,2 0,3 0,2 1,0 1,3 LT 3,7 3,8 3,7 3,7 0,0 0,1 0,5 0,7 LV 5,1 5,2 4,9 4,9 0,3 0,1 0,7 1,0 MT 4,2 4,3 4,7 4,8 0,6 0,3 0,9 1,4 PL 4,1 4,1 4,2 4,3 0,2 0,2 0,8 1,1 SK 4,4 4,4 4,6 4,9 0,5 0,2 0,9 1,2 SI 6,4 6,5 6,7 6,9 0,5 0,2 0,7 0,9

EU25 6,4 6,3 6,4 6,7 0,3 0,3 1,1 1,4 EU15 6,4 6,4 6,5 6,8 0,3 0,3 1,1 1,4 EU12 6,3 6,3 6,4 6,7 0,4 0,3 1,0 1,2 EU10 4,9 4,9 4,8 5,0 0,0 0,2 0,9 1,2 Note: EU25, EU15, EU12 and EU10 average weighted by GDP

6.3. EU10 cost convergence

Scenario A III only covers the EU10 countries (excluding CY and MT) and is meant to

capture the possible effect of a convergence in real living standards (which emerges from the macroeconomic assumptions described in section 2.2 and 2.3) on health care spending. Spending on health care in EU10 (both in nominal terms and as a % of GDP per capita) is well below the levels observed in EU15 countries. By taking the flatter 2004 age related expenditure profiles as the basis of the health care projections, the projected budgetary impact of ageing will be less evident in the EU10 countries compared to EU15. Scenario A III assumes that the average age related expenditure of EU10 countries in the base year 2004 progressively shifts to the average age related expenditure profile of EU15 countries by 2050.

Table 6 4 presents the projection results. As expected, this scenario would result in a strong convergence in spending on health care as a share of GDP towards the levels observed in the EU15 countries. Average health care spending of the eight EU10 countries would reach 6.7% of GDP in 2050, which is closer to the EU15 average of 8.2% of GDP compared with the projected level of 6.1% of GDP which emerges on the basis of their flatter national age related expenditure profiles (see graph 4 3 in section 4.2 of the report). On average, spending on health care is projected to increase by 1.7 p.p. of GDP above what is projected using national

As shown on graph 4 2 in section 4.2 of the report, the shape of Maltese age related expenditure profile is more

similar to EU15 than EU10 countries. Consequently, Malta and Cyprus (whose age profile has not been provided) are not included in this simulation.

age related expenditure profiles, with most of the increase occurring at the end of the projection period. This result suggests that effective managing of expectations regarding health care services in EU10 could play a significant role in controlling health care spending in these countries.

Table 6 4 Projection results for the EU10 cost convergence scenario (A III)

Projected spending as % of GDP Difference as % of GDP compared to pure ageing scenario

change

2004 2010 2030 2050 2004-2050 2010 2030 2050

CZ 6,4 6,7 7,8 8,8 2,4 0,0 0,0 0,5 EE 5,4 5,6 6,1 6,8 1,4 0,0 0,2 0,5 HU 5,5 5,7 6,4 7,1 1,6 0,0 0,2 0,6 LT 3,7 3,9 4,3 4,9 1,2 0,0 0,2 0,6 LV 5,1 5,3 5,8 6,5 1,4 0,0 0,2 0,6 PL 4,1 4,3 5,1 5,8 1,7 0,0 0,1 0,4 SK 4,4 4,6 5,4 6,3 1,9 0,1 0,1 0,1 SI 6,4 6,8 8,1 9,3 2,8 0,1 0,7 1,4

Weighted average 5,0 5,1 5,9 6,7 1,7 0,0 0,1 0,5 Note: Average weighted by GDP

6.4. Fast cost growth scenarios

Scenario A IV focuses on unit costs. Public spending on health care depends not only on demographic and health factors driving demand, but also on the supply side factors. Public spending on health care includes inputs such as salaries/wages (from highly educated to unskilled people), investment in capital which is subject of various depreciation schedules (from slowly depreciating buildings and transport infrastructure to fast developing modern IT and medical technologies) and pharmaceuticals. The evolution of total health care spending is in part driven by the evolution of prices for these inputs relative to the evolution of prices for the economy as a whole. In considering the evolution of prices and unit costs for these items, it is important to bear in mind that the health care sector is highly regulated and only to a limited extent subject to the free market competition. For example, pharmaceutical prices are often subject to administrative regulation, and wage developments of health care staff in the public sector may be subject to specific wage bargaining arrangements.

Scenario A IV is run for all 25 Member States based on an assumption of the fast evolution of unit costs in the entire health care sector. The methodology is identical to the pure ageing scenario (I). The only difference concerns evolution of unit costs, which are no longer assumed to evolve in line with GDP per capita. Instead, they are assumed to grow by 1 percentage point above GDP per capita for the first ten years of the projection exercise (2005 14) and thereafter, between 2015 and 2050, again according to the `normal' GDP per capita growth rate.

Table 6 5 presents the results for the fast cost growth scenario. Health care spending does appear to be sensitive as regards the assumptions on unit costs. Assuming costs grow by 1 p.p. above GDP per capita, public sending on health care is projected to increase by an additional average of 0.8% of GDP in the EU15 and 0.6% in the EU10.

Table 6 5 Projection results for fast growth scenario (A IV) unit costs evolve 1% faster than GDP per capita between 2005 and 2014

Projected spending as % of GDP Difference as % of GDP compared to pure ageing scenario

change

2004 2010 2030 2050 2004-2050 2010 2030 2050

BE 6,2 6,8 8,0 8,5 2,3 0,4 0,7 0,8 DK 6,9 7,4 8,5 8,8 1,9 0,4 0,8 0,8 DE 6,0 6,7 7,7 8,1 2,1 0,4 0,7 0,8 GR 5,1 5,7 6,5 7,6 2,5 0,3 0,6 0,7 ES 6,1 6,7 8,0 9,2 3,1 0,4 0,7 0,9

FR 7,7 8,5 9,9 10,5 2,8 0,5 0,9 1,0 IE 5,3 5,8 7,0 8,0 2,7 0,3 0,6 0,7 IT 5,8 6,3 7,4 7,9 2,1 0,4 0,7 0,7 LU 5,1 5,6 6,4 6,8 1,7 0,3 0,6 0,6 NL 6,1 6,6 7,8 8,2 2,1 0,4 0,7 0,8 AT 5,3 5,8 7,0 7,7 2,4 0,3 0,6 0,7 PT 6,7 7,2 7,4 8,0 1,3 0,4 0,7 0,7 FI 5,6 6,1 7,3 7,8 2,2 0,3 0,7 0,7 SE 6,7 7,2 8,2 8,6 1,8 0,4 0,8 0,8

UK 7,0 7,6 9,2 10,2 3,2 0,4 0,8 0,9 CY 2,9 3,2 3,9 4,4 1,5 0,2 0,4 0,4 CZ 6,4 7,1 8,5 9,2 2,7 0,4 0,8 0,8 EE 5,4 5,9 6,6 6,9 1,5 0,3 0,6 0,6 HU 5,5 6,0 6,8 7,2 1,7 0,3 0,6 0,7 LT 3,7 4,1 4,5 4,8 1,1 0,2 0,4 0,4 LV 5,1 5,6 6,1 6,5 1,3 0,3 0,5 0,6 MT 4,2 4,8 6,2 6,8 2,6 0,3 0,6 0,6 PL 4,1 4,6 5,5 5,9 1,8 0,3 0,5 0,5 SK 4,4 4,9 6,1 6,8 2,4 0,3 0,5 0,6 SI 6,4 7,0 8,2 8,6 2,2 0,4 0,7 0,8

EU25 6,4 7,0 8,2 8,9 2,5 0,4 0,8 0,8 EU15 6,4 7,1 8,3 9,0 2,6 0,4 0,8 0,8 EU12 6,3 6,9 8,1 8,7 2,4 0,4 0,8 0,8 EU10 4,9 5,4 6,3 6,7 1,8 0,3 0,6 0,6 Note: EU25, EU15, EU12 and EU10 average weighted by GDP

6.5. Extrapolation of costs scenarios

Scenario A V is run for twelve Member States for which sufficient information is available on the share in total health expenditure of different components (i.e. wages/salaries, capital investment, pharmaceuticals and other items) and on the evolution of unit costs for each of these components. Budgetary projection are run for each component of health care spending under two settings:

· a fast growth variant where unit costs grow by 1 percentage point above GDP per capita for

the first ten years of the projection exercise (2005 14) and thereafter in line with GDP per capita until 2050;

· an extrapolation of past trends variant where in the base year unit costs grow in line with

the annual average growth rate observed in recent years, then during first ten years of the projection exercise (2005 14) converges to GDP per capita rate of growth, and continues evolving at this rate until 2050.

Table 6 6 provides a summary of the available data on the composition of health care spending, and on the recent evolution of unit costs. Twelve Member States (BE, ES, IE, IT, PT, SE, CZ, CY, LV, LT, MT, PL) provided data to the AWG which allows to split total spending on health care into at least three different components. For six other countries (DK,

GR, NL, EE, HU, SI), similar data is available in the international WHO database . A word of caution is warranted, and the data used differs considerably among the Member States.

Table 6 6 also reports the assumptions which have been used in the extrapolation variant of scenario A V as regards the recent evolution of unit costs for each component of health care spending. In brief, the growth of spending on wages and salaries in the health care sector in the base year 2004 is based on recent developments of gap between growth rate of wages in the health care sector and in the whole economy reported in the OECD STAN database. The rate of growth of investment spending in 2004 is assumed to equal long term nominal interest rates in the economy in the base year, whose values have been taken from internal DG ECFIN databases. Initial rate of growth of pharmaceutical spending is assumed to equal price index of pharmaceuticals based on the average price index of pharmaceuticals in the recent years provided by twelve Member States (GR, ES, FR, IE, IT, PT, SE, UK, CY, LV, LT, PL): for the other countries the data has been taken from the WHO European health for all database.

Fast growth variant of scenario A V has not been run for DE, FR, LU, AT, FI, UK, SK due to insufficient information on the composition of health care spending. Extrapolation variant has not been run for the same countries as above plus EE, CY, LV, LT, MT, SI for which no data on the recent development in wages and salaries in the health care sector is available. For CZ and HU price index of pharmaceuticals in the first ten years of projection period has been substituted with GDP per capita rate of growth.

European health for all database (HFA DB), World Health Organization Regional Office for Europe.

Table 6 6 Available data on the composition of health care spending and on the recent evolution of unit costs

share of respective components in total public health care

spending in % initial rate of change in % spending on spending on

wages and investment pharmaceutical wages and investment pharmaceutical

salaries spending spending others** salaries spending spending

BE 41 0 20 40 2,0 4,2 3,1 DK 68 3 5 24 3,1 4,3 1,2

GR 30 2 22 46 6,5 4,3 0,3 ES 62 3 22 13 3,1 4,1 0,8 IE 66 5 11 18 6,6 4,1 3,9 IT 36 3 15 46 3,8 4,3 0,1 NL 59 0 11 30 0,7 4,1 0,3 PT 35 3 9 53 3,4 4,1 0,4 SE 56 3 7 34 2,7 4,4 1,9 CY 44 11 15 30 : 5,8 5,2

CZ 18 5 20 57 3,8 4,8 3,0* EE 37 3 14 45 : 4,4 :

HU 32 9 23 37 6,9 8,2 4,1* LT 43 0 17 40 : 4,5 6,9 LV 39 2 9 50 : 4,9 8,3 MT 41 32 24 3 : 4,7 :

PL 29 0 17 55 1,9 6,9 7,5 SI 44 1 14 41 : 4,7 : *due to lack of data on recent pharmaceutical price developments, GDP per capita rate of growth has been applied ** item 'others' calculated as complement to 100% of three other items

Source: national sources (columns 1 3 and 7), European health for all database (HFA DB), World Health Organisation Regional Office for Europe (columns 1 3 and 7, where national data not available), OECD STAN database (column 5), ECFIN database (column 6), own calculations (column 4)

Table 6 7 and Table 6 8 present the results for the scenarios which are based on the decomposition of total health care spending into four different components, using the data presented in Table 6 6. They show how much total health care spending will change as a result of different assumptions on the initial growth rate of unit cost of respective components of health care spending. Table 6 7 presents the effect of applying to each respective component rate of growth 1 p.p. above GDP per capita during first ten years of projection period. Table 6 8 presents the results of the scenario which is an attempt to capture current trends in the health care costs, by applying current growth rates in unitary costs of each component of health care.

Unsurprisingly, total spending on health care is the most sensitive to changes in the assumptions concerning the growth rate of wages and salaries. As shown in the left panel of Table 6 7, 1% faster growth during first ten years of the projection period is expected to add by 2050 an extra 0.2 0.5% of GDP to total expenditure projected under pure ageing scenario. The same change in the rate of growth of pharmaceutical spending is expected to add only 0.1 0.2% of GDP (see central panel of Table 6 7), whereas practically no effect is expected of the similar change in the rate of change of investment spending (see right panel of Table 6 7).

The effect of changes in the growth rate of wages and salaries on total spending is also the strongest in case of extrapolation variant (see Table 6 8). However, given different current developments in the unit costs results vary considerably across countries. Applying current growth rates of wages adds an extra 0.2 0.5% of GDP to the increase projected under pure ageing scenario in seven countries for which projections can be run (EL, IE, DK, ES, IT, HU, PT). It is the consequence of fast growth in wages and salaries in health care sector as compared to the general economic developments. At the same time, other five countries (PL, NL, BE, SE, CZ) may expect slower or similar growth in health care expenditure as compared

to pure demographic scenario, as their current growth rates of wages are lower than GDP per capita.

Using current price index of pharmaceuticals as a driver of pharmaceutical spending over the first ten years of projection period results in a slight decrease in total spending as compared to the pure ageing scenario. In six countries expenditure is projected to grow by less than when spending develops in line with GDP per capita, four should not expect a significant difference, and in two (BE, PL) price developments are projected to contribute to higher grow in health care spending.

As in case of the fast growth variant, changes in the rate of change of investment spending have practically no impact on total health care spending due to the very small share of public expenditure devoted to this item.

Table 6 7 Projection results for scenario A V, fast cost growth variant (respective components increasing 1 p.p. above GDP per capita between 2005 and 2014)

Wages* Investment spending* Pharmaceutical spending*

Difference as % of Difference as % of Difference as % of GDP compared to GDP compared to GDP compared to

Projected spending as % of pure ageing Projected spending as % of pure ageing Projected spending as % of pure ageing GDP scenario GDP scenario GDP scenario change change change

2004 2030 2050 2004-2050 2030 2050 2030 2050 2004-2050 2030 2050 2030 2050 2004-2050 2030 2050

BE 6,2 7,6 8,1 1,9 0,3 0,3 7,3 7,7 1,5 0,0 0,0 7,4 7,9 1,7 0,1 0,2 DK 6,9 8,3 8,5 1,7 0,5 0,6 7,8 8,0 1,1 0,0 0,0 7,8 8,0 1,2 0,0 0,0 GR 5,1 6,1 7,1 2,0 0,2 0,2 5,9 6,9 1,8 0,0 0,0 6,1 7,1 2,0 0,1 0,2 ES 6,1 7,7 8,9 2,7 0,5 0,5 7,3 8,4 2,3 0,0 0,0 7,4 8,5 2,4 0,2 0,2 IE 5,3 6,8 7,7 2,4 0,4 0,5 6,4 7,3 2,0 0,0 0,0 6,5 7,3 2,0 0,1 0,1 IT 5,8 6,9 7,4 1,6 0,3 0,3 6,7 7,2 1,4 0,0 0,0 6,8 7,3 1,5 0,1 0,1 NL 6,1 7,5 7,9 1,8 0,4 0,5 7,1 7,4 1,3 0,0 0,0 7,2 7,5 1,4 0,1 0,1 PT 6,7 6,9 7,5 0,8 0,2 0,3 6,7 7,3 0,6 0,0 0,0 6,7 7,3 0,6 0,1 0,1 SE 6,7 7,9 8,2 1,5 0,4 0,4 7,5 7,8 1,1 0,0 0,0 7,5 7,8 1,1 0,1 0,1 CY 2,9 3,7 4,2 1,3 0,2 0,2 3,6 4,0 1,1 0,0 0,0 3,6 4,0 1,1 0,1 0,1 CZ 6,4 7,9 8,5 2,0 0,1 0,2 7,8 8,4 1,9 0,0 0,0 7,9 8,5 2,1 0,2 0,2 EE 5,4 6,2 6,6 1,1 0,2 0,2 6,0 6,3 0,9 0,0 0,0 6,0 6,4 1,0 0,1 0,1 HU 5,5 6,4 6,7 1,2 0,2 0,2 6,2 6,6 1,1 0,1 0,1 6,3 6,7 1,2 0,1 0,1 LT 3,7 4,3 4,5 0,8 0,2 0,2 4,1 4,4 0,7 0,0 0,0 4,2 4,4 0,7 0,1 0,1 LV 5,1 5,8 6,1 1,0 0,2 0,2 5,6 5,9 0,8 0,0 0,0 5,6 5,9 0,8 0,0 0,1 MT 4,2 5,8 6,4 2,2 0,2 0,3 5,8 6,4 2,2 0,2 0,2 5,7 6,3 2,1 0,1 0,2 PL 4,1 5,1 5,5 1,4 0,1 0,2 5,0 5,4 1,3 0,0 0,0 5,1 5,5 1,4 0,1 0,1 SI 6,4 7,7 8,2 1,7 0,3 0,3 7,4 7,9 1,4 0,0 0,0 7,5 8,0 1,5 0,1 0,1 * component increasing 1 p.p. faster than GDP per capita between 2005 and 2014 and in line with GDP per capita thereafter. Other components evolve in line with GDP per capita over the entire projection period

Table 6 8 Projection results for scenario A V, extrapolation of past trends variant (respective components following past trends between 2005 and 2014)

Wages* Investment spending* Pharmaceutical spending*

Difference as % of Difference as % of Difference as % of GDP compared to GDP compared to GDP compared to

Projected spending as % of pure ageing Projected spending as % of pure ageing Projected spending as % of pure ageing GDP scenario GDP scenario GDP scenario change change change

2004 2030 2050 2004-2050 2030 2050 2030 2050 2004-2050 2030 2050 2030 2050 2004-2050 2030 2050

BE 6,2 7,2 7,7 1,5 0,1 0,1 7,3 7,7 1,5 0,0 0,0 7,3 7,8 1,6 0,0 0,1 DK 6,9 8,1 8,3 1,5 0,4 0,4 7,8 8,0 1,1 0,0 0,0 7,7 7,9 1,0 0,1 0,1 GR 5,1 6,3 7,4 2,3 0,4 0,5 5,9 6,9 1,8 0,0 0,0 5,8 6,7 1,6 0,1 0,2 ES 6,1 7,5 8,6 2,5 0,2 0,3 7,3 8,4 2,3 0,0 0,0 7,2 8,2 2,1 0,1 0,1 IE 5,3 6,8 7,8 2,5 0,5 0,5 6,4 7,2 2,0 0,0 0,0 6,4 7,2 1,9 0,0 0,0 IT 5,8 7,0 7,5 1,7 0,3 0,3 6,7 7,2 1,4 0,0 0,0 6,6 7,1 1,3 0,1 0,1 NL 6,1 6,9 7,3 1,2 0,2 0,2 7,1 7,4 1,3 0,0 0,0 7,0 7,4 1,3 0,1 0,1 PT 6,7 6,9 7,5 0,8 0,2 0,2 6,7 7,3 0,6 0,0 0,0 6,6 7,2 0,5 0,0 0,0 SE 6,7 7,5 7,8 1,1 0,0 0,0 7,5 7,8 1,1 0,0 0,0 7,4 7,8 1,0 0,0 0,0 CZ 6,4 7,7 8,3 1,9 0,0 0,0 7,7 8,3 1,9 0,0 0,0 7,6 8,2 1,8 0,1 0,1 HU 5,5 6,5 6,8 1,3 0,3 0,3 6,3 6,7 1,2 0,1 0,1 6,2 6,5 1,0 0,0 0,0 PL 4,1 4,7 5,1 1,0 0,3 0,3 5,0 5,4 1,3 0,0 0,0 5,1 5,5 1,4 0,1 0,1 * component following the past trend between 2005 and 2014 and evolving in line with GDP per capita thereafter. Other components evolve in line with GDP per capita over the entire projection period

7.

D ETAILED RESULTS OF THE PROJECTIONS ON HEALTH CARE

Table 7 1 Pure ageing scenario (I) : projected spending on health care as % of GDP

Projected spending as % of GDP

change

2004 2010 2015 2020 2025 2030 2035 2040 2045 2050 2004-2050

BE 6,2 6,4 6,6 6,8 7,0 7,3 7,5 7,6 7,7 7,7 1,5 DK 6,9 7,0 7,2 7,4 7,6 7,7 7,8 7,9 7,9 8,0 1,1 DE 6,0 6,3 6,5 6,7 6,8 7,0 7,1 7,2 7,3 7,3 1,3 GR 5,1 5,3 5,5 5,5 5,7 5,9 6,2 6,5 6,7 6,9 1,8 ES 6,1 6,3 6,5 6,7 7,0 7,3 7,6 7,9 8,1 8,3 2,2 FR 7,7 8,0 8,2 8,4 8,7 9,0 9,2 9,4 9,5 9,5 1,8 IE 5,3 5,5 5,7 5,9 6,1 6,4 6,6 6,9 7,1 7,3 2,0 IT 5,8 6,0 6,1 6,3 6,5 6,7 6,9 7,0 7,1 7,2 1,4 LU 5,1 5,2 5,4 5,5 5,7 5,8 5,9 6,1 6,1 6,2 1,1 NL 6,1 6,3 6,5 6,7 6,9 7,1 7,3 7,4 7,4 7,4 1,3 AT 5,3 5,5 5,7 5,9 6,1 6,3 6,5 6,7 6,9 6,9 1,7 PT 6,7 6,8 6,8 6,7 6,6 6,7 6,9 7,0 7,2 7,3 0,6 FI 5,6 5,8 6,0 6,2 6,4 6,7 6,9 7,0 7,0 7,0 1,5 SE 6,7 6,8 7,0 7,2 7,3 7,5 7,6 7,7 7,7 7,8 1,0 UK 7,0 7,2 7,4 7,7 8,0 8,3 8,6 8,9 9,1 9,3 2,3 CY 2,9 3,1 3,2 3,3 3,5 3,6 3,7 3,8 3,9 4,0 1,1 CZ 6,4 6,7 7,0 7,3 7,5 7,7 7,9 8,1 8,2 8,3 1,9 EE 5,4 5,6 5,7 5,8 5,9 6,0 6,1 6,2 6,3 6,3 0,9 HU 5,5 5,7 5,8 5,9 6,1 6,2 6,3 6,4 6,5 6,5 1,0 LT 3,7 3,8 4,0 4,0 4,1 4,1 4,2 4,3 4,3 4,4 0,7 LV 5,1 5,3 5,4 5,5 5,5 5,6 5,7 5,8 5,9 5,9 0,7 MT 4,2 4,5 4,8 5,1 5,4 5,6 5,8 6,0 6,1 6,2 2,0 PL 4,1 4,3 4,5 4,7 4,8 5,0 5,1 5,2 5,3 5,4 1,3 SK 4,4 4,6 4,8 5,1 5,3 5,5 5,7 5,9 6,0 6,1 1,8 SI 6,4 6,6 6,8 7,0 7,2 7,4 7,6 7,7 7,8 7,8 1,4

EU25 6,4 6,6 6,8 7,0 7,2 7,4 7,7 7,8 8,0 8,1 1,7 EU15 6,4 6,7 6,9 7,1 7,3 7,5 7,8 8,0 8,1 8,2 1,7 EU12 6,3 6,5 6,7 6,9 7,1 7,3 7,6 7,7 7,9 7,9 1,6 EU10 4,9 5,1 5,2 5,4 5,6 5,7 5,8 5,9 6,0 6,1 1,2 Note: EU25, EU15, EU12 and EU10 averages weighted by GDP

Table 7 2 Constant health scenario (II) : projected spending on health care as % of GDP

Projected spending as % of GDP

change

2004 2010 2015 2020 2025 2030 2035 2040 2045 2050 2004-2050

BE 6,2 6,2 6,3 6,4 6,5 6,6 6,8 6,9 6,9 6,9 0,7 DK 6,9 6,8 6,9 7,0 7,1 7,2 7,2 7,2 7,1 7,1 0,3 DE 6,0 6,1 6,2 6,3 6,4 6,4 6,5 6,6 6,7 6,7 0,6 GR 5,1 5,3 5,3 5,3 5,3 5,5 5,7 6,0 6,2 6,3 1,2 ES 6,1 6,1 6,2 6,3 6,5 6,8 7,0 7,3 7,5 7,7 1,6 FR 7,7 7,8 7,9 8,0 8,2 8,4 8,6 8,7 8,8 8,8 1,1 IE 5,3 5,3 5,4 5,5 5,6 5,8 6,0 6,1 6,3 6,4 1,1 IT 5,8 5,8 5,9 6,0 6,1 6,3 6,4 6,5 6,6 6,6 0,8 LU 5,1 5,1 5,2 5,2 5,3 5,4 5,5 5,6 5,6 5,6 0,5 NL 6,1 6,2 6,3 6,5 6,6 6,8 6,9 6,9 6,9 6,9 0,8 AT 5,3 5,3 5,5 5,6 5,7 5,8 6,0 6,1 6,2 6,3 1,0 PT 6,7 6,7 6,5 6,4 6,2 6,2 6,3 6,4 6,5 6,6 0,1 FI 5,6 5,6 5,7 5,9 6,0 6,2 6,3 6,4 6,4 6,4 0,9 SE 6,7 6,7 6,7 6,8 6,9 6,9 7,0 7,0 7,0 7,0 0,3 UK 7,0 7,0 7,1 7,1 7,2 7,4 7,6 7,7 7,9 7,9 0,9 CY 2,9 3,0 3,1 3,2 3,3 3,3 3,4 3,5 3,6 3,6 0,7 CZ 6,4 6,6 6,7 6,8 7,0 7,1 7,2 7,3 7,4 7,5 1,0 EE 5,4 5,5 5,6 5,5 5,5 5,5 5,6 5,6 5,6 5,7 0,2 HU 5,5 5,5 5,6 5,6 5,6 5,6 5,7 5,7 5,7 5,8 0,3 LT 3,7 3,8 3,9 3,9 3,9 3,9 3,9 4,0 4,0 4,0 0,3 LV 5,1 5,3 5,3 5,3 5,2 5,2 5,2 5,3 5,3 5,3 0,2 MT 4,2 4,4 4,6 4,8 4,9 5,1 5,3 5,4 5,4 5,5 1,2 PL 4,1 4,2 4,3 4,4 4,5 4,5 4,6 4,7 4,7 4,8 0,7 SK 4,4 4,5 4,7 4,8 4,9 5,0 5,2 5,3 5,4 5,5 1,1 SI 6,4 6,6 6,6 6,8 6,9 7,0 7,2 7,2 7,3 7,3 0,9

EU25 6,4 6,4 6,5 6,6 6,7 6,8 7,0 7,1 7,2 7,3 0,9 EU15 6,4 6,5 6,6 6,7 6,8 6,9 7,1 7,2 7,3 7,4 0,9 EU12 6,3 6,4 6,5 6,6 6,7 6,8 7,0 7,1 7,2 7,2 0,9 EU10 4,9 5,0 5,0 5,1 5,2 5,2 5,3 5,4 5,4 5,5 0,6 Note: EU25, EU15, EU12 and EU10 averages weighted by GDP

Table 7 3 Death-related costs scenario (III) : projected spending on health care as % of GDP

Projected spending as % of GDP

change

2004 2010 2015 2020 2025 2030 2035 2040 2045 2050 2004-2050

BE 6,2 6,4 6,5 6,6 6,8 6,9 7,1 7,2 7,3 7,3 1,1 DK 6,9 6,9 7,1 7,2 7,4 7,5 7,5 7,5 7,6 7,6 0,7 DE 6,0 6,2 6,4 6,6 6,7 6,8 6,9 6,9 7,0 7,0 1,0 GR 5,1 5,3 5,4 5,4 5,5 5,7 6,0 6,2 6,4 6,5 1,4 ES 6,1 6,2 6,4 6,6 6,8 7,1 7,4 7,6 7,8 8,0 1,9 FR 7,7 7,9 8,1 8,3 8,5 8,7 8,9 9,0 9,1 9,1 1,4 IE 5,3 5,4 5,5 5,7 5,9 6,1 6,3 6,5 6,6 6,8 1,5 IT 5,8 5,9 6,0 6,2 6,3 6,5 6,7 6,8 6,8 6,8 1,1 LU 5,1 5,2 5,3 5,4 5,5 5,7 5,8 5,9 5,9 6,0 0,8 NL 6,1 6,2 6,4 6,6 6,8 6,9 7,0 7,1 7,1 7,1 1,0 AT 5,3 5,4 5,6 5,8 6,0 6,1 6,3 6,4 6,5 6,6 1,3 PT 6,7 6,8 6,7 6,6 6,4 6,5 6,6 6,7 6,9 6,9 0,2 FI 5,6 5,7 5,9 6,0 6,2 6,4 6,6 6,7 6,7 6,7 1,1 SE 6,7 6,8 6,9 7,0 7,1 7,2 7,3 7,4 7,5 7,5 0,7 UK 7,0 7,1 7,3 7,5 7,7 8,0 8,3 8,5 8,7 8,8 1,8 CY 2,9 3,0 3,2 3,3 3,3 3,4 3,5 3,6 3,7 3,8 0,9 CZ 6,4 6,6 6,8 7,0 7,2 7,4 7,5 7,6 7,7 7,8 1,4 EE 5,4 5,6 5,6 5,7 5,7 5,7 5,8 5,9 5,9 5,9 0,5 HU 5,5 5,6 5,6 5,7 5,8 5,8 5,9 5,9 5,9 6,0 0,5 LT 3,7 3,8 3,9 4,0 4,0 4,0 4,0 4,1 4,1 4,1 0,4 LV 5,1 5,3 5,4 5,4 5,4 5,4 5,4 5,5 5,5 5,5 0,4 MT 4,2 4,4 4,6 4,8 5,0 5,1 5,3 5,3 5,3 5,4 1,1 PL 4,1 4,3 4,4 4,5 4,6 4,8 4,8 4,9 5,0 5,0 0,9 SK 4,4 4,6 4,7 4,9 5,1 5,3 5,4 5,5 5,6 5,7 1,3 SI 6,4 6,6 6,7 6,8 7,0 7,1 7,2 7,3 7,4 7,4 1,0

EU25 6,4 6,5 6,7 6,8 7,0 7,2 7,4 7,5 7,6 7,7 1,3 EU15 6,4 6,6 6,8 6,9 7,1 7,3 7,5 7,6 7,8 7,8 1,4 EU12 6,3 6,5 6,6 6,8 6,9 7,1 7,3 7,4 7,5 7,6 1,3 EU10 4,9 5,0 5,1 5,2 5,4 5,4 5,5 5,6 5,7 5,7 0,8 Note: EU25, EU15, EU12 and EU10 averages weighted by GDP

Table 7 4 Scenario capturing income elasticity of demand exceeding unity (IV) : projected spending on health care as % of GDP

Projected spending as % of GDP

change

2004 2010 2015 2020 2025 2030 2035 2040 2045 2050 2004-2050

BE 6,2 6,5 6,8 7,0 7,2 7,5 7,7 7,9 8,0 8,0 1,8 DK 6,9 7,1 7,3 7,6 7,8 8,0 8,1 8,1 8,2 8,3 1,4 DE 6,0 6,3 6,6 6,9 7,0 7,2 7,3 7,5 7,6 7,6 1,6 GR 5,1 5,4 5,6 5,7 5,8 6,1 6,4 6,7 7,0 7,2 2,1 ES 6,1 6,3 6,6 6,9 7,2 7,6 7,9 8,2 8,5 8,7 2,6 FR 7,7 8,1 8,4 8,6 8,9 9,2 9,5 9,7 9,8 9,9 2,2 IE 5,3 5,6 5,9 6,1 6,4 6,8 7,1 7,3 7,5 7,7 2,4 IT 5,8 6,0 6,2 6,4 6,7 6,9 7,1 7,3 7,4 7,4 1,6 LU 5,1 5,4 5,6 5,8 6,0 6,2 6,4 6,5 6,6 6,7 1,5 NL 6,1 6,3 6,6 6,8 7,1 7,3 7,5 7,6 7,7 7,7 1,6 AT 5,3 5,5 5,8 6,1 6,3 6,5 6,8 7,0 7,1 7,2 1,9 PT 6,7 6,9 6,9 6,9 6,8 6,9 7,1 7,3 7,4 7,5 0,8 FI 5,6 5,8 6,1 6,4 6,6 6,9 7,1 7,3 7,3 7,3 1,8 SE 6,7 6,9 7,1 7,4 7,6 7,8 7,9 8,0 8,1 8,1 1,4 UK 7,0 7,3 7,6 7,9 8,3 8,6 9,0 9,3 9,6 9,7 2,7 CY 2,9 3,1 3,3 3,5 3,6 3,8 3,9 4,0 4,1 4,2 1,3 CZ 6,4 6,8 7,2 7,6 7,9 8,2 8,4 8,6 8,7 8,9 2,4 EE 5,4 5,8 6,0 6,2 6,3 6,5 6,6 6,8 6,9 6,9 1,5 HU 5,5 5,8 6,0 6,2 6,4 6,6 6,7 6,8 6,9 6,9 1,4 LT 3,7 4,0 4,2 4,3 4,4 4,5 4,6 4,7 4,8 4,8 1,1 LV 5,1 5,6 5,8 6,0 6,0 6,1 6,3 6,4 6,5 6,5 1,4 MT 4,2 4,6 4,9 5,2 5,5 5,8 6,0 6,2 6,4 6,5 2,2 PL 4,1 4,4 4,7 4,9 5,2 5,4 5,5 5,6 5,7 5,8 1,7 SK 4,4 4,7 5,1 5,4 5,7 6,0 6,2 6,4 6,5 6,7 2,3 SI 6,4 6,8 7,0 7,3 7,6 7,8 8,0 8,1 8,3 8,3 1,9

EU25 6,4 6,7 6,9 7,2 7,4 7,7 7,9 8,2 8,3 8,4 2,0 EU15 6,4 6,7 7,0 7,3 7,5 7,8 8,1 8,3 8,4 8,5 2,1 EU12 6,3 6,6 6,8 7,1 7,3 7,6 7,8 8,0 8,1 8,2 1,9 EU10 4,9 5,2 5,5 5,7 5,9 6,1 6,3 6,4 6,5 6,6 1,7 Note: EU25, EU15, EU12 and EU10 averages weighted by GDP

Table 7 5 Scenario where unit costs evolve in line with GDP per worker (V) : projected spending on health care as % of GDP

Projected spending as % of GDP

change

2004 2010 2015 2020 2025 2030 2035 2040 2045 2050 2004-2050

BE 6,2 6,2 6,3 6,6 7,0 7,4 7,8 8,0 8,1 8,1 1,9 DK 6,9 7,0 7,2 7,5 7,9 8,3 8,5 8,7 8,6 8,6 1,7 DE 6,0 6,0 6,0 6,3 6,6 7,0 7,4 7,6 7,8 7,8 1,8 GR 5,1 5,2 5,2 5,3 5,6 6,0 6,5 7,1 7,6 7,9 2,8 ES 6,1 5,9 6,0 6,2 6,5 7,0 7,6 8,3 9,0 9,4 3,3

FR 7,7 7,8 8,0 8,4 8,8 9,2 9,6 9,9 10,0 10,1 2,4 IE 5,3 5,2 5,4 5,6 5,8 6,1 6,4 6,8 7,3 7,7 2,4 IT 5,8 5,7 5,8 5,9 6,2 6,5 7,0 7,4 7,7 7,8 2,0 LU 5,1 4,9 5,0 5,1 5,2 5,2 5,2 5,2 5,1 4,9 0,2 NL 6,1 6,2 6,4 6,7 7,1 7,6 7,9 8,0 7,9 7,9 1,8 AT 5,3 5,3 5,5 5,7 6,1 6,6 7,0 7,3 7,5 7,6 2,4 PT 6,7 6,7 6,7 6,7 6,7 6,9 7,3 7,8 8,2 8,5 1,8 FI 5,6 5,7 6,0 6,3 6,7 7,1 7,4 7,5 7,5 7,5 2,0 SE 6,7 6,7 6,9 7,2 7,5 7,8 8,0 8,1 8,1 8,1 1,4

UK 7,0 7,0 7,3 7,6 8,1 8,6 9,2 9,5 9,8 10,0 3,0 CY 2,9 2,9 3,0 3,1 3,4 3,5 3,7 3,8 4,0 4,2 1,3 CZ 6,4 6,6 6,8 7,2 7,6 7,9 8,4 8,9 9,5 9,8 3,4 EE 5,4 5,2 5,2 5,4 5,6 5,7 5,8 6,0 6,2 6,5 1,1 HU 5,5 5,4 5,5 5,7 5,8 6,0 6,3 6,6 6,9 7,1 1,6 LT 3,7 3,5 3,4 3,5 3,6 3,8 3,9 4,1 4,2 4,4 0,7 LV 5,1 4,8 4,8 4,9 5,1 5,2 5,4 5,5 5,8 6,1 0,9 MT 4,2 4,4 4,6 4,9 5,2 5,5 5,7 6,0 6,2 6,4 2,2 PL 4,1 4,0 4,0 4,1 4,2 4,4 4,6 4,8 5,1 5,4 1,3 SK 4,4 4,4 4,3 4,5 4,7 5,0 5,3 5,7 6,2 6,6 2,2 SI 6,4 6,5 6,7 7,1 7,5 8,0 8,4 8,8 9,1 9,4 2,9

EU25 6,4 6,4 6,5 6,8 7,1 7,5 7,9 8,3 8,5 8,7 2,3 EU15 6,4 6,5 6,6 6,9 7,2 7,7 8,1 8,4 8,7 8,8 2,4 EU12 6,3 6,3 6,4 6,6 7,0 7,4 7,8 8,2 8,4 8,5 2,2 EU10 4,9 4,9 4,9 5,0 5,2 5,4 5,7 6,0 6,3 6,6 1,7 Note: EU25, EU15, EU12 and EU10 averages weighted by GDP

Table 7 6 AWG reference scenario (VI) : projected spending on health care as % of GDP

Projected spending as % of GDP

change

2004 2010 2015 2020 2025 2030 2035 2040 2045 2050 2004-2050

BE 6,2 6,4 6,6 6,8 6,9 7,1 7,3 7,5 7,6 7,6 1,4 DK 6,9 7,0 7,2 7,4 7,6 7,7 7,7 7,8 7,8 7,8 1,0 DE 6,0 6,3 6,5 6,7 6,8 6,9 7,0 7,1 7,2 7,2 1,2 GR 5,1 5,4 5,5 5,6 5,7 5,9 6,2 6,5 6,7 6,8 1,7 ES 6,1 6,3 6,5 6,7 7,0 7,3 7,6 7,9 8,1 8,3 2,2 FR 7,7 8,0 8,2 8,4 8,6 8,9 9,2 9,3 9,4 9,5 1,8 IE 5,3 5,5 5,7 5,9 6,2 6,4 6,7 6,9 7,1 7,3 2,0 IT 5,8 6,0 6,1 6,3 6,5 6,7 6,9 7,0 7,1 7,1 1,3 LU 5,1 5,3 5,4 5,6 5,7 5,9 6,1 6,2 6,3 6,3 1,2 NL 6,1 6,3 6,5 6,7 6,9 7,1 7,3 7,4 7,4 7,4 1,3 AT 5,3 5,5 5,7 5,9 6,1 6,3 6,5 6,7 6,8 6,8 1,6 PT 6,7 6,8 6,8 6,7 6,6 6,6 6,8 6,9 7,1 7,2 0,5 FI 5,6 5,8 6,0 6,2 6,4 6,6 6,9 7,0 7,0 7,0 1,4 SE 6,7 6,8 7,0 7,2 7,4 7,5 7,6 7,7 7,7 7,7 1,0 UK 7,0 7,2 7,4 7,6 7,9 8,1 8,4 8,7 8,8 8,9 1,9 CY 2,9 3,1 3,3 3,4 3,5 3,6 3,8 3,9 4,0 4,0 1,1 CZ 6,4 6,8 7,1 7,4 7,6 7,8 8,0 8,1 8,3 8,4 2,0 EE 5,4 5,8 6,0 6,1 6,1 6,2 6,3 6,4 6,5 6,5 1,1 HU 5,5 5,7 5,9 6,0 6,2 6,3 6,3 6,4 6,5 6,5 1,0 LT 3,7 4,0 4,2 4,3 4,3 4,4 4,4 4,5 4,6 4,6 0,9 LV 5,1 5,5 5,8 5,8 5,9 5,9 6,0 6,1 6,2 6,2 1,1 MT 4,2 4,5 4,8 5,0 5,3 5,5 5,7 5,9 6,0 6,1 1,8 PL 4,1 4,4 4,6 4,8 5,0 5,1 5,2 5,3 5,4 5,5 1,4 SK 4,4 4,7 5,0 5,2 5,5 5,7 5,9 6,0 6,2 6,3 1,9 SI 6,4 6,7 6,9 7,2 7,4 7,6 7,8 7,9 8,0 8,0 1,6

EU25 6,4 6,6 6,8 7,0 7,2 7,4 7,6 7,8 7,9 7,9 1,6 EU15 6,4 6,7 6,9 7,1 7,3 7,5 7,7 7,9 8,0 8,1 1,6 EU12 6,3 6,5 6,7 6,9 7,1 7,3 7,5 7,7 7,8 7,8 1,5 EU10 4,9 5,2 5,4 5,5 5,7 5,8 6,0 6,1 6,2 6,2 1,3 Note: EU25, EU15, EU12 and EU10 averages weighted by GDP

Table 7 7 High life expectancy scenario (A I) : projected spending on health care as % of GDP

Projected spending as % of GDP

change

2004 2010 2015 2020 2025 2030 2035 2040 2045 2050 2004-2050

BE 6,2 6,4 6,7 6,9 7,1 7,3 7,6 7,8 7,9 8,0 1,8 DK 6,9 7,0 7,2 7,5 7,7 7,8 7,9 8,0 8,1 8,2 1,4 DE 6,0 6,3 6,5 6,8 7,0 7,1 7,3 7,5 7,7 7,7 1,7 GR 5,1 5,3 5,5 5,6 5,7 6,0 6,4 6,7 7,0 7,2 2,1 ES 6,1 6,3 6,5 6,7 7,0 7,4 7,7 8,1 8,3 8,6 2,5 FR 7,7 8,0 8,2 8,5 8,7 9,1 9,4 9,6 9,7 9,8 2,1 IE 5,3 5,5 5,7 5,9 6,2 6,5 6,7 7,0 7,3 7,5 2,2 IT 5,8 6,0 6,1 6,3 6,5 6,8 7,0 7,2 7,3 7,4 1,6 LU 5,1 5,3 5,7 5,9 6,0 5,9 5,8 5,7 5,6 5,5 0,4 NL 6,1 6,3 6,5 6,7 7,0 7,2 7,4 7,5 7,6 7,7 1,6 AT 5,3 5,5 5,7 6,0 6,2 6,4 6,7 6,9 7,1 7,2 1,9 PT 6,7 6,8 6,8 6,7 6,7 6,7 7,0 7,2 7,3 7,5 0,8 FI 5,6 5,8 6,0 6,2 6,5 6,8 7,0 7,2 7,3 7,3 1,8 SE 6,7 6,8 7,0 7,2 7,4 7,6 7,7 7,9 8,0 8,0 1,3 UK 7,0 7,2 7,5 7,7 8,1 8,4 8,8 9,2 9,4 9,7 2,6 CY 2,9 3,1 3,2 3,4 3,5 3,6 3,8 3,9 4,0 4,1 1,2 CZ 6,4 6,7 7,0 7,3 7,6 7,8 8,0 8,2 8,4 8,6 2,1 EE 5,4 5,6 5,7 5,8 5,9 6,1 6,2 6,3 6,4 6,5 1,1 HU 5,5 5,7 5,8 6,0 6,1 6,3 6,4 6,5 6,6 6,7 1,2 LT 3,7 3,8 4,0 4,1 4,1 4,2 4,3 4,4 4,5 4,5 0,8 LV 5,1 5,3 5,5 5,5 5,6 5,7 5,8 5,9 6,0 6,1 0,9 MT 4,2 4,5 4,8 5,1 5,4 5,7 6,0 6,2 6,4 6,5 2,3 PL 4,1 4,3 4,5 4,7 4,9 5,0 5,2 5,3 5,4 5,5 1,4 SK 4,4 4,6 4,9 5,1 5,4 5,6 5,8 6,0 6,2 6,3 2,0 SI 6,4 6,6 6,8 7,0 7,3 7,5 7,7 7,8 8,0 8,1 1,6

EU25 6,4 6,6 6,8 7,0 7,3 7,5 7,8 8,0 8,2 8,4 2,0 EU15 6,4 6,7 6,9 7,1 7,4 7,6 7,9 8,2 8,4 8,5 2,0 EU12 6,3 6,5 6,7 7,0 7,2 7,4 7,7 7,9 8,1 8,2 1,9 EU10 4,9 5,1 5,3 5,4 5,6 5,8 5,9 6,1 6,2 6,3 1,4 Note: EU25, EU15, EU12 and EU10 averages weighted by GDP

Table 7 8 Improved health scenario (A II) : projected spending on health care as % of GDP

Projected spending as % of GDP

change

2004 2010 2015 2020 2025 2030 2035 2040 2045 2050 2004-2050

BE 6,2 6,1 6,0 6,0 6,0 6,1 6,2 6,3 6,3 6,3 0,1 DK 6,9 6,7 6,6 6,6 6,7 6,6 6,6 6,5 6,5 6,4 0,4 DE 6,0 6,0 6,0 6,0 6,0 6,0 6,0 6,1 6,1 6,1 0,1 GR 5,1 5,2 5,2 5,1 5,1 5,2 5,3 5,5 5,7 5,8 0,7 ES 6,1 6,0 6,0 6,0 6,1 6,3 6,5 6,8 7,0 7,1 1,0 FR 7,7 7,7 7,7 7,7 7,7 7,9 8,0 8,1 8,1 8,2 0,5 IE 5,3 5,2 5,2 5,2 5,2 5,3 5,4 5,5 5,6 5,7 0,4 IT 5,8 5,7 5,7 5,8 5,8 5,9 6,0 6,1 6,1 6,1 0,4 LU 5,1 5,0 5,0 5,0 5,0 5,0 5,1 5,1 5,1 5,1 0,0 NL 6,1 6,1 6,2 6,3 6,4 6,4 6,5 6,5 6,5 6,4 0,3 AT 5,3 5,2 5,2 5,2 5,3 5,4 5,5 5,6 5,7 5,7 0,4 PT 6,7 6,5 6,3 6,1 5,8 5,7 5,8 5,9 5,9 6,0 0,7 FI 5,6 5,5 5,5 5,6 5,7 5,8 5,9 6,0 6,0 5,9 0,4 SE 6,7 6,5 6,4 6,4 6,5 6,5 6,5 6,4 6,4 6,4 0,3 UK 7,0 6,8 6,7 6,7 6,7 6,8 6,9 7,1 7,2 7,2 0,2 CY 2,9 2,9 3,0 3,1 3,1 3,1 3,2 3,2 3,3 3,3 0,4 CZ 6,4 6,4 6,4 6,5 6,5 6,5 6,5 6,6 6,6 6,7 0,3 EE 5,4 5,5 5,4 5,3 5,2 5,1 5,1 5,1 5,1 5,1 0,3 HU 5,5 5,4 5,3 5,3 5,2 5,2 5,2 5,2 5,2 5,2 0,3 LT 3,7 3,8 3,8 3,8 3,7 3,7 3,7 3,7 3,7 3,7 0,0 LV 5,1 5,2 5,2 5,1 5,0 4,9 4,9 4,9 4,9 4,9 0,3 MT 4,2 4,3 4,4 4,5 4,6 4,7 4,8 4,8 4,8 4,8 0,6 PL 4,1 4,1 4,1 4,1 4,1 4,2 4,2 4,2 4,2 4,3 0,2 SK 4,4 4,4 4,5 4,6 4,6 4,6 4,7 4,8 4,8 4,9 0,5 SI 6,4 6,5 6,5 6,5 6,6 6,7 6,8 6,9 6,9 6,9 0,5

EU25 6,4 6,3 6,3 6,3 6,3 6,4 6,5 6,6 6,6 6,7 0,3 EU15 6,4 6,4 6,3 6,3 6,4 6,5 6,6 6,7 6,8 6,8 0,3 EU12 6,3 6,3 6,3 6,3 6,3 6,4 6,5 6,6 6,7 6,7 0,4 EU10 4,9 4,9 4,9 4,8 4,8 4,8 4,9 4,9 4,9 5,0 0,0 Note: EU25, EU15, EU12 and EU10 averages weighted by GDP

Table 7 9 EU10 cost convergence scenario (A III) : projected spending on health care as % of GDP

Projected spending as % of GDP

change

2004 2010 2015 2020 2025 2030 2035 2040 2045 2050 2004-2050

CZ 6,4 6,7 6,9 7,2 7,5 7,8 8,0 8,3 8,5 8,8 2,4 EE 5,4 5,6 5,7 5,9 6,0 6,1 6,3 6,5 6,7 6,8 1,4 HU 5,5 5,7 5,8 6,0 6,2 6,4 6,6 6,8 6,9 7,1 1,6 LT 3,7 3,9 4,0 4,1 4,2 4,3 4,5 4,7 4,8 4,9 1,2 LV 5,1 5,3 5,5 5,6 5,7 5,8 6,0 6,2 6,4 6,5 1,4 PL 4,1 4,3 4,5 4,7 4,9 5,1 5,3 5,5 5,6 5,8 1,7 SK 4,4 4,6 4,7 5,0 5,2 5,4 5,6 5,9 6,1 6,3 1,9 SI 6,4 6,8 7,1 7,4 7,7 8,1 8,4 8,8 9,0 9,3 2,8

Weighted average 5,0 5,1 5,3 5,5 5,7 5,9 6,1 6,3 6,5 6,7 1,7 Note: average weighted by GDP

Table 7 10 Fast cost growth scenario (unit costs growing 1 p.p. above GDP per capita between 2005 and 2014) (A IV) : projected spending on health care as % of GDP

Projected spending as % of GDP

change

2004 2010 2015 2020 2025 2030 2035 2040 2045 2050 2004-2050

BE 6,2 6,8 7,3 7,5 7,7 8,0 8,2 8,4 8,5 8,5 2,3 DK 6,9 7,4 7,9 8,2 8,4 8,5 8,6 8,7 8,7 8,8 1,9 DE 6,0 6,7 7,2 7,4 7,5 7,7 7,8 8,0 8,1 8,1 2,1 GR 5,1 5,7 6,0 6,1 6,3 6,5 6,9 7,2 7,4 7,6 2,5 ES 6,1 6,7 7,1 7,4 7,7 8,0 8,4 8,7 9,0 9,2 3,1

FR 7,7 8,5 9,1 9,3 9,6 9,9 10,2 10,3 10,4 10,5 2,8 IE 5,3 5,8 6,2 6,4 6,7 7,0 7,3 7,6 7,8 8,0 2,7 IT 5,8 6,3 6,7 6,9 7,2 7,4 7,6 7,8 7,9 7,9 2,1 LU 5,1 5,6 5,9 6,1 6,2 6,4 6,5 6,7 6,8 6,8 1,7 NL 6,1 6,6 7,1 7,4 7,6 7,8 8,0 8,1 8,2 8,2 2,1 AT 5,3 5,8 6,3 6,5 6,8 7,0 7,2 7,4 7,6 7,7 2,4 PT 6,7 7,2 7,5 7,4 7,3 7,4 7,6 7,8 7,9 8,0 1,3 FI 5,6 6,1 6,6 6,8 7,1 7,3 7,6 7,7 7,8 7,8 2,2 SE 6,7 7,2 7,7 7,9 8,1 8,2 8,4 8,5 8,5 8,6 1,8

UK 7,0 7,6 8,2 8,5 8,8 9,2 9,5 9,8 10,1 10,2 3,2 CY 2,9 3,2 3,5 3,7 3,8 3,9 4,1 4,2 4,3 4,4 1,5 CZ 6,4 7,1 7,7 8,0 8,3 8,5 8,7 8,9 9,0 9,2 2,7 EE 5,4 5,9 6,3 6,4 6,4 6,6 6,7 6,8 6,9 6,9 1,5 HU 5,5 6,0 6,4 6,5 6,7 6,8 6,9 7,0 7,1 7,2 1,7 LT 3,7 4,1 4,3 4,4 4,5 4,5 4,6 4,7 4,8 4,8 1,1 LV 5,1 5,6 6,0 6,0 6,0 6,1 6,2 6,4 6,4 6,5 1,3 MT 4,2 4,8 5,3 5,6 5,9 6,2 6,4 6,6 6,7 6,8 2,6 PL 4,1 4,6 4,9 5,1 5,3 5,5 5,6 5,7 5,8 5,9 1,8 SK 4,4 4,9 5,3 5,6 5,8 6,1 6,3 6,5 6,6 6,8 2,4 SI 6,4 7,0 7,5 7,7 7,9 8,2 8,3 8,5 8,6 8,6 2,2

EU25 6,4 7,0 7,5 7,7 7,9 8,2 8,4 8,6 8,8 8,9 2,5 EU15 6,4 7,1 7,6 7,8 8,0 8,3 8,6 8,8 8,9 9,0 2,6 EU12 6,3 6,9 7,4 7,6 7,8 8,1 8,3 8,5 8,7 8,7 2,4 EU10 4,9 5,4 5,8 5,9 6,1 6,3 6,4 6,5 6,7 6,7 1,8 Note: EU25, EU15, EU12 and EU10 averages weighted by GDP

Table 7 11 Extrapolation of past trends scenario (all components following past trends between 2005 and 2014) (A V) : projected spending on health care as % of GDP

Projected spending as % of GDP

change

2004 2010 2015 2020 2025 2030 2035 2040 2045 2050 2004-2050

BE 6,2 6,4 6,6 6,8 7,0 7,2 7,4 7,6 7,7 7,7 1,5 DK 6,9 7,2 7,5 7,7 7,9 8,1 8,1 8,2 8,2 8,3 1,4 DE 6,0 6,4 6,6 6,8 6,9 7,1 7,2 7,3 7,4 7,4 1,4 GR 5,1 5,5 5,7 5,8 5,9 6,2 6,5 6,8 7,1 7,2 2,1 ES 6,1 6,4 6,6 6,8 7,1 7,4 7,8 8,1 8,3 8,5 2,4 FR 7,7 7,9 8,1 8,3 8,5 8,8 9,1 9,2 9,3 9,4 1,7 IE 5,3 5,8 6,0 6,2 6,5 6,8 7,1 7,3 7,5 7,7 2,4 IT 5,8 6,1 6,3 6,5 6,7 7,0 7,2 7,3 7,4 7,4 1,6 LU 5,1 5,2 5,4 5,5 5,6 5,8 5,9 6,1 6,1 6,2 1,1 NL 6,1 6,1 6,2 6,5 6,7 6,9 7,0 7,1 7,2 7,2 1,1 AT 5,3 5,5 5,8 6,0 6,2 6,4 6,6 6,8 7,0 7,0 1,8 PT 6,7 7,0 7,0 6,9 6,8 6,9 7,1 7,2 7,4 7,5 0,8 FI 5,6 6,0 6,3 6,6 6,8 7,1 7,3 7,4 7,5 7,5 1,9 SE 6,7 6,8 7,0 7,2 7,3 7,5 7,6 7,7 7,8 7,8 1,1 UK 7,0 7,1 7,3 7,5 7,8 8,2 8,5 8,8 9,0 9,1 2,1 CY 2,9 2,9 3,0 3,1 3,2 3,4 3,5 3,6 3,7 3,7 0,8 CZ 6,4 6,7 6,9 7,2 7,4 7,6 7,8 8,0 8,1 8,2 1,8 EE 5,4 5,5 5,6 5,6 5,7 5,8 5,9 6,0 6,1 6,1 0,7 HU 5,5 6,0 6,2 6,3 6,5 6,6 6,7 6,8 6,9 7,0 1,5 LT 3,7 3,7 3,8 3,9 3,9 4,0 4,0 4,1 4,2 4,2 0,5 LV 5,1 5,1 5,2 5,2 5,2 5,3 5,4 5,5 5,6 5,6 0,5 MT 4,2 4,8 5,2 5,5 5,8 6,0 6,3 6,5 6,6 6,7 2,5 PL 4,1 4,2 4,3 4,5 4,7 4,8 4,9 5,0 5,1 5,2 1,1 SK 4,4 4,5 4,7 4,9 5,2 5,4 5,5 5,7 5,9 6,0 1,6 SI 6,4 6,6 6,7 6,9 7,1 7,3 7,5 7,6 7,7 7,7 1,3

EU25 6,4 6,6 6,8 7,0 7,2 7,4 7,7 7,9 8,0 8,1 1,7 EU15 6,4 6,7 6,9 7,1 7,3 7,6 7,8 8,0 8,1 8,2 1,8 EU12 6,3 6,6 6,8 7,0 7,2 7,4 7,6 7,8 7,9 8,0 1,7 EU10 4,9 5,1 5,2 5,3 5,5 5,6 5,8 5,9 6,0 6,1 1,1 Note: EU25, EU15, EU12 and EU10 averages weighted by GDP

8.

D ATA USED TO MAKE THE PROJECTIONS ON L ONG TERM CARE In order to run the projections on long term care, the following data inputs are needed for each year of the projection exercise:

· Population by age group and gender: the AWG scenario population projection is used;

· Prevalence rates of dependency by age and gender: for the countries for which it is

available, the model currently uses age and gender specific rates from the SHARE project. The prevalence rates can be either kept constant or assumed to change over time to reflect expected changes;

· Probability of receiving different types of long term care by age and gender: this is

calculated in the base year, using estimates on the numbers of people with dependency and data on the numbers of people receiving formal care at home and the numbers of dependent people in long term care institutions. It is proposed to assume that the difference between the total number of dependent people and the total number of people receiving formal care (at home or in institutions) is the number of people who rely exclusively on informal care, or no care. This assumption was also used in the European Study of Long Term Care Expenditure (see Pickard 2003, page 187, for a discussion);

· Average public expenditure per individual (for formal care at home and institutional care):

these figures are obtained by dividing total public expenditure on formal care at home/institutional care by the total number of users of formal care at home and the total number of dependent residents in institutions, respectively;

· Public expenditure in disability related benefits: this is obtained from estimates from each

country.

In order to calculate these variables, AWG members were asked to provide data on national sources on:

· age specific public long term care expenditure profiles;

· total public long term care expenditure;

· total public expenditure on institutional care;

· total public expenditure on home care;

· total public expenditure on long term care cash benefits;

· number of dependent users of institutional care, by five year age group and gender;

· number of dependent users of home care, by five year age group and gender.

· number of recipients of cash benefits, by five year age group and gender.

Table 8 1 provides a detailed description of data received from Member States.

Table 8 1 Detailed description of data received on long term care

I n d ic a to r P o s s ib l e s p li t A v a ila b ili ty

B E D K D E G R E S F R I E I T L U T o ta l p u b lic s p e n d in g o n lo n g te r m c a r e

in e u r o s 2 0 0 3 2 0 0 3 2 0 0 4 X 2 0 0 3 2 0 0 4 2 0 0 4 2 0 0 4 2 0 0 4 P e r c a p ita p u b lic s p e n d in g o n lo n g te rm c a r e

M a le , F e m a le 2 0 0 1 m /f 2 0 0 3 m /f 2 0 0 4 to ta l X X X X 2 0 0 4 2 0 0 3 m /f S in g le y e a r 0 , ... , 1 0 0 + 0 , ... , 1 0 0 5 0 5 4 , ... , 0 1 4 , 1 5 1 9 ,

5 y e a r c o h o r ts 0 4 , ... , 9 5 + 0 4 , ... , 9 5 + 1 0 0 + ... , 9 0 +

T o ta l n u m b e r o f d e p e n d e n t p e o p le r e c e iv in g lo n g te rm c a r e in in s titu tio n s

M a le , F e m a le 2 0 0 3 m /f 2 0 0 5 to ta l 2 0 0 4 to ta l X 2 0 0 3 m /f X 2 0 0 4 2 0 0 4 2 0 0 4 S in g le y e a r X X < 6 4 , 6 5 + X 0 1 8 , 1 9 3 9 ,

< 4 0 , 4 0 6 4 ,

< 6 0 , 6 0 6 4 ; 0 1 4 , 1 5 1 9 , 3 9 5 9 , 6 0

5 y e a r c o h o r ts X < 6 5 , > 8 0 X 6 5 6 9 , ... 9 5 + 0 4 , ... , 9 0 + ... , 9 5 + ... , 9 0 + 6 9 , 7 0 7 9 , 8 0 8 9 , 9 0 +

T o ta l n u m b e r o f d e p e n d e n t p e o p le r e c e iv in g lo n g te rm c a r e a t h o m e

M a le , F e m a le 2 0 0 3 m /f 2 0 0 5 2 0 0 4 to ta l X 2 0 0 3 m /f X X 2 0 0 4 2 0 0 4 S in g le y e a r X X X X < 6 0 , 6 0 6 4 ; < 6 5 , 6 5 6 6 , 0 1 4 , 1 5 1 9 ,

5 y e a r c o h o r ts X < 8 0 , > 8 0 X X 0 4 , ... , 9 0 + X ... , 9 5 + 6 7 7 9 , 8 0 + ... , 9 0 + T o ta l p u b lic e x p e n d itu r e o n lo n g te r m in s titu tio n a l c a r e

in e u r o s 2 0 0 3 X 2 0 0 3 X 2 0 0 3 X 2 0 0 4 2 0 0 4 2 0 0 4 T o ta l p u b lic e x p e n d itu r e o n lo n g te r m c a r e a t h o m e

in e u r o s 2 0 0 3 X 2 0 0 3 X 2 0 0 3 X 2 0 0 4 2 0 0 4 2 0 0 4 T o ta l n u m b e r o f r e c ip ie n ts o f lo n g te rm c a r e re la te d c a s h b e n e f its

M a le , F e m a le 2 0 0 3 to ta l X 2 0 0 3 to ta l X 2 0 0 3 m /f X 2 0 0 4 2 0 0 4 X S in g le y e a r X 0 4 , 6 0 6 4 ,

5 y e a r c o h o r ts 0 4 , ... , 9 0 + X ... , 6 5 +

T o ta l p u b lic e x p e n d itu r e o n lo n g te r m c a r e r e la te d c a s h b e n e fits

in e u r o s 2 0 0 3 to ta l 2 0 0 3 X X X 2 0 0 4 2 0 0 4 X

I n d ic a t o r P o s s ib l e s p l i t A v a i l a b i l it y

F I S E U K C Y C Z E E H U L T L V T o ta l p u b lic s p e n d in g o n lo n g te r m c a r e

in e u r o s 2 0 0 3 2 0 0 4 2 0 0 2 /0 3 2 0 0 4 2 0 0 3 2 0 0 3 X 2 0 0 4 2 0 0 3 P e r c a p i ta p u b lic s p e n d in g o n lo n g te r m c a r e

M a le , F e m a le 2 0 0 3 2 0 0 4 2 0 0 2 /0 3 X 2 0 0 3 m /f X X 2 0 0 4 m /f 2 0 0 3 m /f S in g le y e a r 0 , ... , 1 0 0 + 0 , ... , 1 0 0 + 0 4 , ... ,

5 y e a r c o h o r ts 0 4 , ... , 9 5 + 1 , ... , 1 0 0 0 4 , ... , 8 5 + 1 0 0 +

T o ta l n u m b e r o f d e p e n d e n t p e o p le r e c e iv i n g lo n g t e r m c a r e in i n s t itu tio n s

2 0 0 2 2 0 0 4 to ta l

M a le , F e m a le 2 0 0 3 to ta l 2 0 0 3 to ta l X 2 0 0 3 to ta l X X 2 0 0 4 m /f e s tim a te m /f 2 0 0 3 m /f

S in g le y e a r 0 , ... , 1 0 0 0 4 , ... 1 0 0 + 0 6 4 , ... , 6 5 6 9 , ... ,

5 y e a r c o h o r ts 6 5 , .. , 1 0 0 X 8 5 + 8 5 +

T o ta l n u m b e r o f d e p e n d e n t p e o p le r e c e iv i n g lo n g t e r m c a r e a t h o m e

2 0 0 4 m /f

M a le , F e m a le 2 0 0 3 to ta l 2 0 0 3 to ta l 2 0 0 2 X 2 0 0 3 to ta l X X 2 0 0 4 to ta l to ta l

S in g le y e a r X X 0 6 4 ; 6 5 7 4 ;

5 y e a r c o h o r ts 6 5 , .. , 1 0 0 X X 7 5 8 4 ; 8 5 +

T o ta l p u b lic e x p e n d itu r e o n lo n g te r m in s tit u t io n a l c a r e

in e u r o s 2 0 0 3 2 0 0 4 2 0 0 2 / 2 0 0 3 X 2 0 0 3 X X 2 0 0 4 2 0 0 3 T o ta l p u b lic e x p e n d itu r e o n lo n g te r m c a r e a t h o m e

in e u r o s 2 0 0 3 2 0 0 4 2 0 0 2 / 2 0 0 3 X 2 0 0 3 X X 2 0 0 4 2 0 0 4 T o ta l n u m b e r o f r e c ip ie n t s o f lo n g te r m c a r e r e la t e d c a s h b e n e f its

M a le , F e m a le 2 0 0 3 to ta l X X X X X X 2 0 0 4 to ta l X S in g le y e a r

5 y e a r c o h o r ts 0 4 ; 9 5 +

T o ta l p u b lic e x p e n d itu r e o n lo n g te r m c a r e r e la t e d c a s h b e n e f its

in e u r o s 2 0 0 3 to ta l X X 2 0 0 4 2 0 0 3 to ta l X X 2 0 0 4 to ta l X 88

9.

A DDITIONAL SCENARIOS FOR PUBLIC SPENDING ON LONG TERM CARE

Table 9 1 presents the overview of additional scenarios (sensitivity tests) that complement the analysis of factors affecting public long term care spending presented in chapter 5 of the report.

Table 9 1 Overview of additional scenarios for public spending on long term care

High life Improved Increase in Increase in

expectancy disability formal care all formal care all scenario in the home in institutions

A I A II A III A-IV AWG scenario

Population AWG scenario AWG scenario AWG scenario high life

projection baseline baseline baseline expectancy

Disability status Disability rates Age specific Disability rates Disability rates over time held constant at disability rates held constant at held constant at 2004 level fall twice as fast 2004 level 2004 level as age specific

mortality rates

(compression of

morbidity)

Policy setting Probability of Probability of 1% p.a. decrease 1% p.a. decrease receiving care receiving care in number of in number of

held constant at held constant at persons receiving persons receiving 2004 level 2004 level informal care up informal care up to 2020 all going to 2020 all going to home care to institutions

Unit costs GDP per worker GDP per worker GDP per worker GDP per worker

9.1. High life expectancy scenario

Scenario A I examines the impact of higher life expectancy on long term care spending. It is based on the same assumptions as the pure ageing scenario (I) presented in chapter 4, except that it uses the high life expectancy population projection rather than the AWG population scenario: for more details, see chapter 2 in EPC and European Commission (2005a).

On average, public expenditure on long term care is projected to increase by close to 1 p.p. of GDP over the period 2004 2050. A mildly stronger increase is projected compared to the pure ageing scenario over the whole projection period. Public expenditure on long term care starts increasing faster than under the pure ageing scenario after 2040. Such results illustrate the demographic effect of higher life expectancy, whereby people live longer and require long term care services for a longer period of time. This effect has not fully materialised before the end of the projection period.

Table 9 2 Projection results for the "high life expectancy" scenario (A I)

Projected spending as % of GDP Difference as % of GDP compared to pure demographic scenario

2004 2010 2020 2030 2040 2050 2004-2050 2010 2030 2050

BE 0.9 1.0 1.1 1.4 1.9 2.2 1.4 0.0 0.1 0.2 DK 1.1 1.2 1.4 2.0 2.4 2.9 1.7 0.0 0.1 0.3 DE 1.0 1.0 1.3 1.5 1.9 2.4 1.5 0.0 0.1 0.2 GR

ES 0.5 0.5 0.5 0.6 0.7 0.9 0.3 0.0 0.0 0.0 FR

IE 0.6 0.6 0.6 0.8 1.1 1.5 0.9 0.0 0.0 0.1 IT 1.5 1.5 1.6 1.8 2.1 2.5 0.9 0.0 0.0 0.1 LU 0.9 1.0 1.1 1.3 1.7 2.1 1.2 0.0 0.1 0.3 NL 0.5 0.5 0.6 0.9 1.1 1.3 0.9 0.0 0.0 0.1 AT 0.6 0.6 0.6 0.6 0.7 0.7 0.1 0.0 0.0 0.0 PT

FI 1.7 1.9 2.3 3.3 4.1 4.3 2.6 0.0 0.1 0.3 SE 3.8 3.8 4.0 5.6 6.2 6.9 3.0 0.0 0.2 0.6 UK 1.0 1.0 1.1 1.5 1.8 2.2 1.2 0.0 0.0 0.2 CY CZ

0.3 0.3 0.4 0.6 0.7 0.9 0.5 0.0 0.0 0.1 EE

LT 0.5 0.6 0.6 0.7 0.8 1.0 0.6 0.0 0.0 0.1 LV 0.4 0.4 0.5 0.6 0.8 0.9 0.5 0.0 0.0 0.1 MT 0.9 0.9 0.9 1.1 1.3 1.3 0.4 0.0 0.0 0.1 PL 0.1 0.1 0.1 0.1 0.2 0.2 0.1 0.0 0.0 0.0 SK 0.7 0.8 0.8 0.9 1.2 1.5 0.8 0.0 0.0 0.1 SI 0.9 1.1 1.4 1.6 2.2 2.6 1.7 0.0 0.1 0.2

EU25 0.9 0.9 1.0 1.2 1.5 1.8 0.9 0.0 0.0 0.1 EU15 0.9 0.9 1.0 1.3 1.5 1.8 1.0 0.0 0.0 0.1 EU10 0.2 0.3 0.3 0.4 0.5 0.6 0.3 0.0 0.0 0.0 Note: EU25, EU15 and EU10 average weighted by GDP

9.2. Improved disability scenario

The improved disability scenario (scenario A II) is inspired by the compression of morbidity hypothesis. It assumes that the number of years spent in bad health and with disability during a life time is lower in 2050 compared to that in 2004, i.e. it involves a shortening of the share of one's lifespan spent with disability, so that the age specific disability rate falls twice as fast as the mortality rate.

Table 9 3 presents the projection results. If disability rates are assumed to fall twice as fast as mortality rates, practically all the effects of an ageing population on public spending will be offset by positive developments in the disability status. Public long term care spending is projected to remain broadly constant.

Table 9 3 Projection results for the "improved disability" scenario (A II)

Projected spending as % of GDP Difference as % of GDP compared to pure demographic scenario

2004 2010 2020 2030 2040 2050 2004-2050 2010 2030 2050

BE 0.9 0.9 0.9 0.9 1.0 1.0 0.2 0.1 0.5 1.0 DK 1.1 1.1 1.0 1.2 1.2 1.2 0.1 0.1 0.7 1.3 DE 1.0 1.0 1.0 1.0 1.1 1.3 0.3 0.1 0.4 1.0 GR

ES 0.5 0.5 0.5 0.5 0.5 0.6 0.1 0.0 0.1 0.2 FR

IE 0.6 0.5 0.5 0.6 0.6 0.7 0.1 0.0 0.2 0.6 IT 1.5 1.5 1.4 1.5 1.6 1.7 0.2 0.1 0.3 0.7 LU 0.9 0.9 0.8 0.8 0.8 0.8 0.1 0.1 0.4 0.9 NL 0.5 0.4 0.4 0.5 0.6 0.6 0.1 0.0 0.3 0.6 AT

FI 1.7 1.8 1.8 2.2 2.2 2.1 0.4 0.1 1.0 1.9 SE 3.8 3.4 3.0 3.6 3.3 3.2 0.6 0.3 1.8 3.1 UK 1.0 0.9 0.9 1.0 1.0 1.0 0.0 0.1 0.5 1.0 CY CZ

0.3 0.3 0.3 0.4 0.4 0.4 0.1 0.0 0.2 0.4 EE

LT 0.5 0.5 0.5 0.5 0.5 0.6 0.1 0.0 0.2 0.4 LV 0.4 0.4 0.4 0.4 0.4 0.4 0.0 0.0 0.2 0.4 MT 0.9 0.9 0.8 0.9 0.9 0.8 0.1 0.0 0.2 0.4 PL 0.1 0.1 0.1 0.1 0.1 0.1 0.0 0.0 0.0 0.1 SK 0.7 0.7 0.7 0.7 0.9 0.9 0.2 0.0 0.2 0.5 SI 0.9 1.0 1.1 1.2 1.4 1.4 0.5 0.1 0.4 1.0

EU25 0.8 0.8 0.8 0.8 0.9 0.9 0.1 0.1 0.3 0.7 EU15 0.9 0.8 0.8 0.9 0.9 1.0 0.1 0.1 0.4 0.8 EU10 0.2 0.3 0.2 0.3 0.3 0.3 0.1 0.0 0.1 0.2 Note: EU25, EU15 and EU10 average weighted by GDP

9.3. Increase in formal care all people receive formal care at home

Scenario A III examines the impact of a change in policy setting in which the supply of informal or no care is assumed to decrease by 1% p.a. until 2020 with the people who no longer receive informal or no care receiving formal care at home.

Table 9 4 shows the projection results. The increase in supply of formal care leads to higher public expenditure on long term care as compared to the "pure ageing scenario". If the people who used to receive informal or no care are assumed to receive formal care at home, public spending over the projection period would increase by 1.3 p.p. (1.4 p.p. in the EU15 and a mere 0.4 p.p. in the EU10). The projected increase is lower than in the scenario IV in chapter 5 which assumes the same increase in the population receiving formal care, but where the population is split in two, with half of the people receiving formal care at home and the other half receiving care in institutions. This is explained by the difference in unit cost of the two types of care services, with formal care at home being less costly than formal care in institutions.

Table 9 4 Projection results for the scenario "increase in formal care" (A-III) Projected spending as % of GDP Difference as % of GDP compared to pure demographic scenario

2004 2010 2020 2030 2040 2050 2004-2050 2010 2030 2050

BE 0.9 1.0 1.2 1.5 2.0 2.3 1.4 0.0 0.1 0.2 DK

DE 1.0 1.1 1.4 1.6 2.0 2.4 1.5 0.0 0.1 0.2 GR

ES 0.5 0.6 0.7 0.8 1.0 1.3 0.7 0.1 0.2 0.4 FR

IE 0.6 0.6 0.7 0.8 1.1 1.4 0.8 0.0 0.0 0.1 IT 1.5 1.6 1.8 2.0 2.3 2.7 1.1 0.1 0.2 0.3 LU 0.9 1.0 1.3 1.4 1.7 2.0 1.1 0.1 0.2 0.2 NL 0.5 0.5 0.6 0.8 1.0 1.2 0.7 0.0 0.0 0.0 AT

FI 1.7 2.0 2.4 3.5 4.2 4.3 2.6 0.1 0.3 0.4 SE 3.8 3.8 4.0 5.5 6.0 6.5 2.7 0.1 0.2 0.2 UK 1.0 1.5 2.2 2.8 3.4 4.0 3.1 0.4 1.4 2.0 CY CZ

0.3 0.4 0.6 0.9 1.1 1.3 1.0 0.1 0.3 0.5 EE

LT 0.5 0.6 0.7 0.8 0.9 1.1 0.6 0.0 0.1 0.2 LV 0.4 0.6 0.9 1.0 1.3 1.5 1.1 0.1 0.4 0.7 MT 0.9 0.9 0.9 1.1 1.2 1.2 0.4 0.0 0.0 0.0 PL 0.1 0.1 0.1 0.2 0.2 0.2 0.1 0.0 0.0 0.0 SK 0.7 0.8 0.9 1.0 1.4 1.7 1.0 0.0 0.1 0.2 SI 0.9 1.1 1.4 1.6 2.2 2.5 1.6 0.0 0.0 0.1

EU25 0.8 1.0 1.2 1.5 1.8 2.1 1.3 0.1 0.3 0.5 EU15 0.9 1.0 1.2 1.6 1.9 2.2 1.4 0.1 0.3 0.5 EU10 0.2 0.3 0.4 0.4 0.6 0.7 0.4 0.0 0.1 0.1 Note: EU25, EU15 and EU10 average weighted by GDP

9.4. Increase in formal care all people receive formal care in institutions

Scenario A IV examines the impact of a similar change in policy setting, where the people who no longer receive informal or no care is assumed to receive formal care in institutions. This scenario explores the policy option of providing formal care in institutions, which is relatively more costly than formal care at home. Table 9 5 shows the projection results. The increase in supply of formal care leads to higher public expenditure on long term care; public spending over the projection period would increase by 1.6 p.p. (1.7 p.p. in the EU15 and 0.8 p.p. in the EU10).

Table 9 5 Projection results for the scenario "increase in formal care" (A-IV)

Projected spending as % of GDP Difference as % of GDP compared to pure demographic scenario

2004 2010 2020 2030 2040 2050 2004-2050 2010 2030 2050

BE 0.9 1.0 1.3 1.6 2.1 2.4 1.5 0.1 0.2 0.3 DK

DE 1.0 1.2 1.7 2.0 2.6 3.2 2.2 0.2 0.6 0.9 GR

ES 0.5 0.7 1.0 1.2 1.6 2.1 1.6 0.2 0.6 1.3 FR

IE 0.6 0.7 0.8 1.1 1.4 1.8 1.2 0.1 0.3 0.5 IT 1.5 1.8 2.4 2.7 3.2 3.9 2.3 0.3 0.9 1.5 LU 0.9 1.1 1.5 1.6 2.0 2.3 1.4 0.2 0.4 0.6 NL 0.5 0.9 1.5 2.3 2.9 3.3 2.8 0.4 1.4 2.1 AT

FI 1.7 2.1 2.7 3.9 4.7 4.8 3.1 0.2 0.7 0.9 SE 3.8 4.0 4.4 6.0 6.5 7.1 3.3 0.2 0.7 0.8 UK 1.0 1.3 1.7 2.3 2.7 3.2 2.2 0.3 0.8 1.2 CY CZ

0.3 0.4 0.5 0.8 1.0 1.1 0.8 0.1 0.2 0.4 EE

LT 0.5 0.8 1.1 1.2 1.6 1.9 1.4 0.2 0.6 1.0 LV 0.4 1.2 2.6 3.0 3.7 4.6 4.2 0.8 2.4 3.7 MT 0.9 0.9 0.9 1.1 1.3 1.3 0.4 0.0 0.0 0.0 PL 0.1 0.2 0.3 0.4 0.5 0.6 0.5 0.1 0.2 0.4 SK 0.7 0.9 1.0 1.2 1.6 2.0 1.3 0.1 0.3 0.6 SI 0.9 1.5 2.3 2.9 4.0 4.7 3.8 0.4 1.3 2.3

EU25 0.8 1.0 1.4 1.7 2.0 2.4 1.6 0.2 0.5 0.8 EU15 0.9 1.1 1.4 1.8 2.1 2.5 1.7 0.2 0.5 0.8 EU10 0.2 0.4 0.5 0.7 0.9 1.0 0.8 0.1 0.3 0.5 Note: EU25, EU15 and EU10 average weighted by GDP

10.

M ETHODOLOGY FOR CORE PROJECTIONS OF UNEMPLOYMENT BENEFIT EXPENDITURE

In order to assess whether and by how much the projected changes in labour market performance will affect UB expenditure (as % of GDP), a simple methodology has been used.

The basic approach applied to the projections of UB expenditure generates projections of UB expenditure, expressed as a share of GDP, where average expenditure per head grows at the same rate as GDP per worker in each projection year.

Step 1 - Estimation of current per capita expenditure

In order to obtain current per capita spending, total UB expenditure (UB) in the base year can be decomposed according to the following identity

UB b

b pc =

ub UP b b

Where UB = total expenditure on UB in base year in national currency; b = numbers of unemployed persons in base year; UP

b = average UB expenditures for each unemployed persons in base year expressed in national currency; ub

b = base year. Step 2 Expressing per capita expenditure in terms of productivity level (GDP per employed

person)

Base year UB expenditure for unemployed person ( ub ) can be deflated by base year GDP pc

per worker, such that:

ub b pc b pc =

yub ( ) GDP b E b

where: yub b pc = average UB expenditure for each unemployed person in the base year b, expressed as a share of base year GDP per worker; b

E = total employment in base year; and

GDP b = national GDP in base year.

Step 3 Matching the base-year profiles to the future labour market structure

The "deflated" per capita expenditure for the base year yub b pc is then matched to the t

unemployment vector UP for each of the projection years t from 2000 2050 as follows: ub b pc t UB

b pc t × t

yub UP = ( ) UP = ( ) *

GDP b E b GDP t E t where UB t = projected total UB expenditure in projection year t (the bar above the variable denotes that it is projection); and

This step generates the projected total UB expenditure expressed as a share of GDP per worker, under the implicit assumption that UB expenditure per head grows at the same rate as GDP per worker. This, in turn, implies (see equation 3 in the main test) unchanged unemployment benefit schemes (mainly gross replacement rates, coverage, take up ratio) and a constant wage share in income distribution, that is, average wage per capita grows at the same rate as labour productivity (GDP per worker).

Step 4 - Expressing the results as a share of projected national GDP for each projection year

The results can then be expressed in terms of projected national GDP for each of the projection years by dividing by projected employment levels as follows:

b t

UB t yub UP = pc

GDP t E t

Thus, projections of UB expenditure as a share of GDP can be generated using only UB expenditure and GDP levels in the base year, and existing projections for the unemployed and employed persons.

11.

T HE A PPROACH USED AT EU LEVEL TO ASSESS THE SUSTAINABILITY OF PUBLIC FINANCES

11.1. Background and approach

11.1.1. The mandate from the European Council

The projected demographic change, with the old age dependency ratio doubling over the coming decades in the EU, has led to growing concerns regarding the long term sustainability of public finances. Since the launch of the euro, in 1999, the EU has sought to integrate an examination of the sustainability of public finances into the existing EU framework for the surveillance of Member States' economic and budgetary policies, in line with the conclusions of the Stockholm (March 2001). The Stockholm Council agreed that it should regularly review the long term sustainability of public finances, including the expected strains caused by the demographic changes ahead in the context of the stability and convergence programmes and outlined a three pronged strategy to address the economic and budgetary consequences of ageing populations, i.e. reducing public debt at a fast pace, raising employment rates especially amongst women and older workers, and reforms of pensions and health care systems including appropriate recourse to the funding of public pensions.

The importance attached to ensure sustainability of public finances was confirmed by the Barcelona European Council in March 2002 and the March 2003 ECOFIN Council. In addition, the 20 March 2005 ECOFIN Council emphasised long term sustainability issues in the context of the agreement of the 2005 reform of the Stability and Growth Pact

Specifically, the Council stressed that sufficient attention should be given in the surveillance of budgetary positions to debt and sustainability so as to safeguard the sustainability of public finances in the long run.

The Commission and the Council is therefore regularly producing the assessment of long term sustainability of public finances in the context of the Stability and Growth Pact. These assessments are an integral part of budgetary surveillance of the Stability and Convergence Programmes

. An overview of the assessments of public finance sustainability is available in

the Commission's Public Finances in EMU reports .

9 The new Stability and Growth Pact entered into force with the adoption of: (i) Council Regulation (EC) No

1055/2005 amending Regulation (EC) No 1466/97 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies; and, (ii) Council Regulation (EC) No 1056/2005 amending Regulation (EC) No 1467/97 on speeding up and clarifying the implementation of the excessive deficit procedure.

10 See the Commission's web site for all information relating to the implementation of budgetary surveillance and the Stability and Growth Pact, available at: http://europa.eu.int/comm/economy_finance/about/activities/sgp/main_en.htm.

11 See European Commission (2005), Public Finances in EMU 2005 and earlier editions of this report, available at: http://europa.eu.int/comm/economy_finance/publications/publicfinance_en.htm

11.1.2. An assessment based on quantitative indicators and qualitative

information

In the absence of an agreed definition in the literature as to what constitutes a sustainable public finance position, a pragmatic approach was adopted. Sustainability of public finances is assessed against the government's intertemporal budget constraint and the budgetary requirements of EMU; in particular, the Treaty requirement to keep debt levels below the 60% of GDP. At the same time, it was recognised that sustainability of public finances is a multifaceted policy challenge. Aside from avoiding deficits and debt accumulation, sustainability in addition requires that tax burdens remain at reasonable levels and that other non age related expenditures (infrastructure, R&D) are not squeezed out.

In recognition of this, the Commission's and the Council's assessments examines both quantitative and qualitative information, aiming at capturing the degree of budgetary risks associated with current policies and ageing populations. The approach to assess public finance sustainability in the EU has been broadly similar since 2001 when the first exercise was carried out, though it is important to note that a number of improvements have been undertaken in order to enhance the quality of the assessment.

In view of ensuring comparable analysis and assessments of the sustainability of public finances in the EU, the EPC considers that long term projections made within the context of the common projections exercise should be used. The importance of the common budgetary projections is underlined by the 2005 reform of the Stability and Growth Pact and the Code of Conduct, according to which the common projections should be included in the annual stability and convergence programmes. These projections will form the basis of the assessment of public finance sustainability. This will contribute to increase the comparability of the projections across countries, with positive effects on the assessment of public finance sustainability made by the Commission and the Council

11.1.3. Projecting debt on the basis of long term budgetary projections

The main quantitative tool used in the EU surveillance of sustainability of public finances is extrapolation of debt, with budgetary developments incorporating long term projections of government expenditure that evolve in line with demographic projections, thus indicating the budgetary impact of ageing populations. Based on the long term budgetary projections, sustainability gap indicators provide a gauge of the scale of budgetary adjustment required for a Member State to reach a sustainable public finance position over the long term as measured by the different definitions used.

The extrapolation of the debt to GDP ratio relies on several assumptions:

Tax revenues remain constant as a share of GDP over the projection period ; 12

The new Code of Conduct, the `Specifications on the implementation of the Stability and Growth Pact and Guidelines on the format and content of Stability and Convergence Programmes' is available at: http://europa.eu.int/comm/economy_finance/about/activities/sgp/codeofconduct_en.pdf

The EPC (2001) considered that if national projections of changes in the revenue to GDP ratio due to ageing populations are available, they should be considered by the Commission and the Council in their assessments of public finance sustainability. In the 2004 assessment round of the Stability and Convergence Programmes made by the Commission and the Council, changes in the tax ratio were included in the Stability and

Projected age related related expenditures evolve in line with the available demographic projections;

Non age related primary expenditures remain constant as a share of GDP at the last year covered by the programme over the projection period 14

;

The GDP deflator is fixed at 2% for the whole projection period;

The GDP real growth rate is country specific and is projected using the commonly 15

agreed assumptions in the current exercise ;

an assumption of a real interest rate of 3% for all countries is made in the current exercise 16

The treatment of temporary budgetary effects due to the cycle or to one off measures has developed significantly over time. In the first two waves of assessment (2001 and 2002), the budgetary position of the last year of the programme was measured in nominal terms (not adjusted for the cycle). This implied that temporary budgetary effects were assumed constant over time. Since the 2003 assessment, the budgetary figures have been corrected for the cycle and in the 2004 assessment they were also corrected for one off measures.

The debt concept used by the Commission is Maastricht gross debt. However, governments may hold assets which contribute positively to the sustainability of public finances. Since reducing debt or accumulating liquid assets in public pension schemes, has a similar effect on fiscal sustainability with the latter strategy however not reflected in the gross debt measure these are taken into account in the analysis of public finances sustainability, i.e. an adjusted gross debt measure is calculated (see Annex 11). For several countries, this adjustment has a profound impact on the evolution of debt.

These debt projections are made assuming that stock flow adjustments (SFA) are zero over the projection period. Existing plans (e.g. privatisations that affect debt but not the deficit) are included during the period covered by the programme according to information provided in the SCPs).

It is important to recall that the purpose of debt extrapolation is to signal possible imbalances on the basis of current policies and projected age related expenditure trends. However, being a mechanical, partial equilibrium analysis

, projections are in some cases bound to show highly

Convergence Programmes for seven Member States (Denmark, Germany, the Netherlands, Sweden, Latvia, Lithuania and Estonia), which were incorporated in the sustainability analysis.

These include mainly public investment, other social expenditure apart from education, health and pensions, purchases of goods and services not due to age related expenditures, compensation of employees (excluding the staff in education and health care sectors). The Commission took into account the decline in the non age related expenditures in the case of the UK only. The dynamics reflects the current set of legislation in place, according to which most non pension social benefits will rise in line with prices after 2009 10, thus reducing their share of GDP.

In the 2004 assessment round of the Stability and Convergence Programmes made by the Commission and the Council, real GDP growth rates used in the sustainability analysis was taken from the programmes for almost all countries.

In the assessments made during 2001 2004, the assumed nominal interest rate was assumed to be around 5.5% (1.75% real growth rate in the EU15 plus 2% inflation in line with the ECBs target plus an interest growth rate differential of 2%). In the current exercise, a real interest rate of 3% is assumed for all 25 Member States plus 2% inflation, i.e. a 5% nominal interest rate.

For example, the interest rate does not depend on the level of debt.

accentuated profiles. As a consequence, the projected evolution of debt levels is not a forecast of likely or even possible outcomes and should not be taken at face value. Instead, the indicators are a tool to facilitate policy debate and at best provide an indication of the timing and scale of emerging budgetary challenges that could occur on the basis of `no policy change'. In practice, it is likely that governments would respond to either explosive debt trajectories or the implosion of debt leading to the accumulation of large net assets.

11.1.4. Quantitative indicators

Based on the long term budgetary projections and the assumptions given in section 8.1.3, sustainability gap indicators provide an indication of budgetary adjustment required for a Member State to reach a sustainable public finance position over the long term as measured by the different definitions used. On the basis of the work of the Economic Policy Committee (2001 and 2003), two indicators are used to quantify the sustainability of public finances based on the debt projections. The indicators are described in detail in Annex 9.

S1 shows the difference, the sustainability gap, between the constant revenue ratio as a share of GDP required to reach a debt ratio in 2050 of 60% of GDP and the current revenue ratio

Formally, the S1 indicator is a sum of three terms.

2050 PB

-

+ t - t

r ( D 60 ) ( 1 r ) 0 = - + t - t = t + 1 S rD PB 0 0 (1)

1 1 4 2 t 4 3 t + 2050 - t - 2050 0 0 ( 1 r ) 0 1 1 1 4 2 4 4 3 4 A + t - t ( 1 r ) 0

B 1 4 = 4 + 2 4 4 3 t t 1 0

where:

D gross government debt (including pension funds assets) at date t relative to GDP

PB structural primary balance, i.e. cyclically adjusted primary balance net of one off

and temporary measures at date t relative to GDP

= +

PB change in structural primary balance PB PB PB relative to GDP t t 0 t 19

r difference between nominal interest rate and nominal GDP growth rate .

The first term (A) is a condition concerning the initial budgetary position. The debt/GDP ratio increases by the difference between the nominal interest rate and the nominal growth rate. Should the initial structural primary balance exactly compensate for this increase, the debt/GDP ratio would remain stable and no adjustment would be necessary. However, if the

18 The sustainability gap indicators (S1, S2) do not necessarily suggest that taxes should be increased; strengthening the fiscal position by permanently reducing the level of non age related primary spending could be preferable and has the same impact.

19 The GDP growth assumptions set up in the AWG varies over time in line with development of labour supply while the real interest rate is set at 3% for the entire projection period, implying a non constant discount rate. Formulas with a non constant interest growth differential are given in Annex 1. For presentational purposes, the formulae here (S1 and S2) are given under the assumption that the differential between nominal interest rate and nominal GDP growth rate is constant.

initial structural primary balance is not sufficient, the debt/GDP ratio would be on an explosive path and the sustainability gap would be positive.

The S1 indicator is set so that (adjusted) government debt will converge towards 60% of GDP at the end of the projections period: this is ensured by the second term (B).

Finally, because of the impact of ageing on primary expenditure, the structural primary balance with unchanged polices, is generally bound to decrease. The third term (C) calculates the discounted average of future (up to 2050) changes in the structural primary balance compared with the base year.

However, S1 only takes into account changes in the structural primary balance up to 2050, which in most cases underestimates the cost of ageing. This is because the impact of ageing is generally larger in 2050 (and therefore, until infinity, given the impact of ageing is assumed to remain constant afterwards) than the average impact of ageing between today and 2050. The government's inter temporal budget constraint may then not be respected.

S2 shows the difference, the sustainability gap, between the constant revenue ratio as a share of GDP that guarantees the respect of the inter temporal budget constraint of the government, i.e. that equates the actualized flow of revenues and expenses over an infinite horizon, and the current revenue ratio. In this case, the budgetary adjustment is such that no other reform would be needed to ensure long term sustainability. Formally, the S2 indicator is a sum of two terms

=

- - t

S rD PB r (2)

2 1 4 2 t 4 3 t 0 + t - t 0 ( 1 r ) 0

1 4 t = t 4 + 1 2 4 4 3 0

The first term (D) is the same as (A) in S1: it ensures that the debt/GDP ratio remains constant, whatever its initial level: there is therefore no constraint on the level of debt. The second term (E) is very similar to the term (C) for S1 except that it takes into account changes in the structural primary balance compared with the base year over an infinite horizon rather than up to 2050.

It is the main indicator ensuring sustainability over infinity. To calculate this indicator, assumptions on developments after the end of the projection period are needed. Specifically, the structural primary balance as a share of GDP, the interest rate and the growth rate are assumed to remain constant after 2050, implying that no further budgetary impact of ageing is assumed after that date.

The S2 indicator can be expressed in terms of a required primary balance (RPB) in order to give a clear indication of the medium term budgetary policy implications of achieving sustainable public finances over an infinite horizon. The RPB measures the average level of the structural primary balance over the first five years of the projection after the programme period that would satisfy the government's inter temporal budget constraint. The level of the structural primary balance would decline in the future, in line with projected increases in expenditure, but the RPB would be a sufficient starting position to cover the entire cost of ageing over an infinite horizon. Thus, the RPB can be used to compare the actual or planned

See also footnote 22.

budgetary strategy with the structural primary balance required for fulfilling the inter temporal budget constraint. Formally, the RPB is expressed as follows (in the case when 2009 is the first year of the projection after the programme period).

+ + +

PB PB ... PB

=

2009 2010 2013 + RPB S (3) 2

For these indicators, two scenarios are calculated: (i) the stability/convergence programme scenario which assumes that the medium term budgetary plans as set out in the stability and convergence programmes are achieved. This means that the starting point for the projections is the last year of the programme period; (ii) the 2005 scenario which assumes that no changes in the structural primary balance takes place after the current year. Also in this case, the starting point for the projections is the last year of the programme period but the structural primary balance is kept unchanged at its level in 2005 until the last year of the programme period. The purpose of having also the 2005 scenario is to demonstrate the long term impact on debt developments of departing from the programme scenario as set down in Member States' stability and convergence programmes.

A further improvement in the next sustainability assessment, endorsed by the EPC, is to perform a sensitivity test that highlights the cost of delay in achieving budgetary consolidation. For countries with a positive S2, it implies that the size of the required adjustment will increase in the future. A detailed description is given in Annex 2.

A limitation of the indicators is that they provide limited guidance on what is the appropriate budget target which Member States should aim at in light of the expected costs of ageing populations. In particular, a positive "sustainability gap" does not necessarily imply that taxes should be increased. Instead an appropriate combination is needed of changes on the revenue side, reforms to reduce the level of non age related primary spending and reforms of pension and health care systems to curtail the impact of ageing on expenditure growth needs. This requires a case by case assessment examining the underlying causes of potential budgetary imbalances.

Qualitative considerations are therefore central in order to interpret the information provided by the sustainability indicators.

Taking on board qualitative information

In addition to the quantitative information used in the analysis described above, incorporating qualitative features when making an overall assessment is a key aspect in the interpretation of the results obtained. These factors allow identifying and qualifying the nature and size of risks countries are facing.

The main qualitative features shaped into the assessment are dealing with: the budgetary position and the level of the debt ratio, the impact of structural reforms, the reliability of the projections and the current level of the tax burden. These qualitative features considered in the assessment are described further in Table 11 1 below, which draws on the agreement with the EPC

See the EPC report "The impact of ageing populations on public finances: overview of analysis carried out at EU level

and proposals for a future work programme", EPC/ECFIN/435/03 final, 22.10.03.

Table 11 1 Qualitative factors taken on board in reaching policy recommendations on the sustainability of public finances

Area Issue Concern Explanation about

sustainability

Public debt High level of outstanding public debt well above 60% of GDP reference value Increases Vulnerability to negative interest rate or economic growth rate shocks. A higher than average primary surplus required for several decades which in practice may be hard to achieve given competing budgetary pressures; in

absence of a sufficiently high primary surplus, debt could be on an unsustainable path even without considering the projected future budgetary pressures stemming from ageing populations.

Low debt levels Decreases Reverse of the arguments above.

Debt increasing financial operations and large or increasing contingent liabilities Increases Large positive stock flow adjustments linked to debt increasing financial operations. Particularly relevant in MS where debt reduction is central to meet the budgetary costs of ageing.

Budget balance Contributions to funded pension schemes Decreases Contributions to funded pension schemes recorded outside general government may imply lower social security contributions recorded in general government, and thus result in higher recorded public deficit levels. Sensitivity of projections to key parameters Increases High sensitivity of results to demographic factors, indexation rules and numbers of cross border workers. An appreciation of risk factors complements the analysis of projected changes in public expenditures.

Robustness of Underlying assumptions and coverage of budgetary projections Increases Earlier cut off dates than 2050 may underestimate budgetary impact as effects of baby boom generation on population size and age structure may not have peaked. age related expenditure projections

Incomplete coverage of or within expenditure items underestimates risks to sustainability.

Projections are in some cases based on assumptions of large increase in labour force participation rates. This may require additional policy measures to be taken.

Methodological differences Reduces comparability If non demographic drivers of expenditure are assumed in the projections for a particular country (e.g. a trend rise in health care expenditure) but not in others, risks to sustainability would be overestimated vis à vis other countries, making it difficult to compare sustainability risks across countries.

Tax ratio High tax ratio Increases The viability and desirability of high tax ratios (e.g. above 50% of GDP) over long term may be affected by increased factor mobility affecting tax bases. Also, some governments have the stated objective of lowering the tax burden. The challenge is to do so while preserving sustainable public finance positions and adequate provision of public services. In the case long term projections of revenue items made at national level are available, such projections need to be explained so that its impact can be identified and assessed; a rising tax burden may have an adverse impact on economic growth. Low tax ratio Decreases Low tax ratio provides greater margin to raise taxes (if necessary) to meet increased age related expenditures.

The impact of Pension / health care system reforms Decreases Efficient and effective pension and health care systems contribute to reduction of the budgetary risks. structural reforms

Risk of implicit contingent liabilities related to performance of private occupational schemes Increases In some MS, the performance of overall pension system will be increasingly reliant on private occupational schemes and individual pension savings. Pressure for higher public spending could emerge (implicit contingent liability) if such schemes have insufficient coverage or fail to generate returns that secure an adequate level of retirement income.

Limited In some countries success of reforms partially depends on an effective regulatory and taxation framework for private occupational and individual pension schemes, and thus allows citizens to supplement their retirement income. An overall assessment of risks to public finance sustainability

On the basis of the considerations above, the results of the quantitative indicators as well as the qualitative considerations, an overall assessment of public finance sustainability is reached. All Member States will face the budgetary challenge that ageing population represents over the coming decades. The aim of the sustainability assessment is to arrive at a view on how important the risks to public finance sustainability are in a country and where they mainly stem from.

An overall assessment of risks to public finance sustainability should be characterized by whether the country concerned appears to face low, medium or high risks. This approach has several advantages, as it: (i) recognises that ageing population represents a budgetary challenge for all countries to varying degrees; and, (ii) provides a clear distinction between the different degrees of risks to public finance sustainability countries are facing and where do they come from. Since this analysis is an integral part of fiscal surveillance conducted by the Commission and the Council, it is important to identify where major risks are related to current, or medium term, budgetary developments.

11.2. Increased focus on the sustainability of public finances: improvements and

future work

11.2.1. Agreed improvements to the analysis framework and notably the

indicators for the 2005 updates of stability and convergence programmes and beyond

There is consensus agreement that efforts to assess the sustainability of public finances as part of the evaluation of stability and convergence programmes have proved useful, and they have helped shape the policy debate at both EU and national level. The 2005 reform of the Stability and Growth Pact confirms the importance that policy makers assign to ensuring sustainability of public finances in the EU. This section outlines the changes to be made to the analysis framework and the existing indicators that were agreed by the EPC following a debate in the AWG.

First, move towards a more comprehensive assessment of sustainability. The EPC considers that, in the context of fiscal surveillance, a comprehensive assessment of the sustainability of public finances with a multi annual cycle (three or five years), and an annual update of the assessment of sustainability in the context of the Stability and Convergence Programmes should be made. This approach has several important merits: (i) risks to fiscal sustainability in a country are a long term issue; (ii) a more comprehensive assessment is required in order to better identify the main risks to sustainability, including sensitivity tests, and; (iii) basing the sustainability analysis on the common EPC projections would ensure greater comparability across countries. The timing and length of the cycle should be synchronized with the updates of demographic projections by Eurostat and the budgetary projection exercise (due every three to five years).The annual update of the assessment would allow taking into account major reforms with direct budgetary impact, e.g. of the pension system, compared with the latest common projections, as well as important budgetary and economic developments in the short to medium term.

Second, continue to use the set of two indicators (S1 and S2) in the assessments (the indicators are explained in detail in Annex 1); and the additional information derived from the S2, the `Required Primary Balance' (RPB). The EPC also considers that the cost of delay in achieving budgetary consolidation should be further highlighted in the analysis. This can be achieved through the introduction of a sensitivity test (described in detail in Annex 2). Moreover, the transparency of the analysis should be increased so that the impact of possible national estimates of budgetary items not covered by the common projection exercise (e.g. changes in the revenue/GDP ratio) in different Member States can be easily identified and quantified. The AWG and EPC considers that further work can be envisaged with respect to establishing principles for if and how account could be taken of changes in the budgetary items not covered by the common projections exercise in the calculation of the sustainability indicators. This would contribute to improved comparability of the analysis across countries, which is a key issue in the context of multilateral budgetary surveillance.

Third, the last round of SPC assessment took into account the assets of public pension funds, to better reflect the challenges for sustainability. In this context, to ensure a full consistency between all Member States, the EPC, based on a proposal by the Commission, has prepared a set of guidelines on reporting on public pension fund assets. Those guidelines will be taken into account in the forthcoming round of SCP assessments (the guidelines are given in Annex

11). They could be further developed after another ex post examination of their application, if considered necessary in the light of the experience gained.

Fourth, for the 2005 assessment round, the commonly agreed underlying assumptions will serve as a reference when considering national projections included in the Stability and Convergence Programmes.

11.2.2. Implications of the reform of the Stability and Growth Pact

In the reformed Stability and Growth Pact, there is increased focus on sustainability. Structural reforms will be taken into consideration in the implementation of both the preventive and the corrective part of the Pact. Specifically, the medium term objective for the government's budgetary position may be adjusted, or the adjustment path towards it, in the event a major structural reform is implemented. Only major reforms which have direct long term cost saving effects, including by raising potential growth, and therefore a verifiable positive impact on the long term sustainability of public finances, will be taken into account. Member States should include a detailed cost benefit analysis in their stability and convergence programmes of the short term costs if any and of the long term benefits of the reforms from the budgetary point of view. The EPC considers that an assessment of the long term direct budgetary impact of reforms especially those affecting expenditure items covered by the common projections exercise

could benefit from a peer review within the

AWG.

In addition, implicit liabilities (related to increasing expenditures in the light of ageing populations) should be taken into account in the definition of the medium term objective for the government's budgetary position, as soon as criteria and modalities for doing so are appropriately established and agreed by the Council. By the end of 2006, the Commission should report on progress achieved towards the methodology for completing the analysis by incorporating such implicit liabilities

. The EPC has expressed an interest in collaborating

with the Commission on this issue.

In accordance with the ECOFIN Council report of 20 March 2005 "Improving the implementation of the Stability and

Growth Pact".

12.

D EFINITIONS AND PROPERTIES OF DEBT PROJECTIONS AND THE SUSTAINABILITY INDICATORS

Case 1: the difference between the nominal interest rate and nominal GDP growth is constant

1.

The inter temporal budget constraint and the S2 indicator

There is no agreed definition on what constitutes a sustainable position for the public finances. One can however impose that the debt (relative to GDP) remains bounded at any time in the future. This implies (see proof in appendix) that the actualised value of future structural primary balances should cover the current level of debt, i.e.:

-

t =

D 0 (1)

t + t - t

0 ( 1 r ) 0 t = t + 1 0

This condition is referred to as the inter temporal budget constraint.

The S2 indicator is closely linked to this constraint. Indeed, given an initial debt, an interest growth differential assumption and a future path of the structural primary balance, condition (1) has no reason to be checked. The S2 indicator is thus the change in the structural primary balance for every future year that ensures that condition (1) is true.

=

- - t

S rD PB r (2). (See proof in appendix)

2 1 4 2 t 4 3 t 0 + t - t 0 ( 1 r ) 0

1 4 t = t 4 + 1 2 4 4 3 0

The first term (D) is a condition concerning the initial budgetary position: if the structural primary balance (relative to GDP) remains unchanged in the future, the sustainability condition simply says that the structural primary balance should be equal to apparent real interest paid on the current level of debt. In that case, the level of debt would remain stable. Indeed, debt relative to GDP increases by the difference between nominal interest rate and the nominal growth rate. If the structural primary balance compensates for this increase, the debt relative to GDP will remain stable.

The second term (E) is a condition concerning future developments in the structural primary balance: the bigger the decrease of the structural primary balance, the higher the immediate rise in the structural primary balance should be to fully compensate those changes. (E) is simply a average of discounted changes in the structural primary balance.

It is also supposed to be strictly positive.

2.

The S1 indicator

S1 indicates the additional constant tax ratio required to reach a debt ratio in 2050 of 60% of GDP. The calculations are made for any date T in the future and for any level of debt

D .

T PB

-

+ i - t

r ( D D ) ( 1 r ) 0

=

- + t T - i = t + 1 S rD PB 0 0 (3)

1 1 4 2 t 4 3 t + T - t - T 0 0 ( 1 r ) 0 1 1 1 4 2 4 4 3 4 A + i - t ( 1 r ) 0

B 1 4 = 4 + 2 4 4 3 i t 1 0

As for S2, the S1 indicator is a sum of several terms:

The first term (A) is the same as in S2. If the initial conditions are satisfied and no change in the structural primary balance is forecasted, debt will remain constant. Contrary to S2, S1 also assumes that debt reaches a certain level of debt. This is ensured by the second term (B): it tends to be large if:

the desired level of debt is small; the period of time given to reach this debt level is small; the initial debt is large.

The last term (C) is a condition concerning future developments of the structural primary balance. It is slightly different compared with the S2 indicator because S1 only takes into account changes in the structural primary balance up to 2050, which in most cases, underestimates the cost of ageing.

3.

Comparison of S1 and S2

=

- = T T = Given that A rD PB D ; B 0 ; C r t E t t + t - t

0 0 ( 1 r ) 0 t = t + 1 0

S ( T , D ) S (4) 1 T 2

If the debt requirement is set at a very distant date in the future, the two indicators S1 and S2 will be very close but, but in practice, given the non so distant requirement (2050), S1 and S2 can be somewhat different.

Table A1.1 sums up the definition of S1 and S2: it proposes a decomposition of the two indicators that can be useful in the analysis to fully separate the impact of the current budgetary position, the debt requirement and the long term development of primary expenditure.

Table A1.1: comparison of S1 and S2

Current budgetary Debt requirement in Long term changes in position 2050 the primary balance T PB

-

+ i - t

r ( D D ) ( 1 r ) 0 - i = t + 1

A= rD - PB t T C= S1= + B= 0 + 0 t t + T - T

0 0 ( 1 r ) 1 1 + i - t

( 1 r ) 0 i = t + 1 0

-

t

S2= D= rD - PB + 0 + E= r t t + t - t

0 0 ( 1 r ) 0 t = t + 1 0

(E) can be written as a weighted average of (C) and the change in the structural primary balance in 2050. So (E) is greater than (C) when the change in the structural primary balance in 2050 is greater than what it is on average between 2010 and 2050. Given that usually, the impact of ageing on expenditure reaches its maximum towards the end of the period, (E) is usually greater than (C).

Proof:

PB T PB PB

t t + t

+ t - t + t - t + t - t

PB ( 1 r ) 0 ( 1 r ) 0 ( 1 r ) 0

=

- = - t = t + 1 = - t = t + 1 t = T + 1 E r t 0 0

+ t - t 1 1 ( 1 r ) 0 t = t + 1 0

+ t - t + t - t

( 1 r ) 0 ( 1 r ) 0 t = t + 1 t = t + 1 0 0 T

1 1 -

C PB

+ i - t T + t - t

( 1 r ) 0 ( 1 r ) 0

=

i = t + 1 t = T + 1 = + - E 0 C ( 1 )( PB ) T 1

+ t - t

( 1 r ) 0 t = t + 1 0

Case 2: the difference between the nominal interest rate and nominal GDP growth is not constant

The interest growth rate differential is often assumed to be constant. This is not the case for example in the EU's analysis of public finance sustainability, given that the real interest rate is constant for all EU25 countries while GDP growth projections are country specific. Therefore, formulas with non constant interest growth rate differential are needed.

= + + +

Lets introduce ( 1 r )( 1 r )...( 1 r ) if i j and 1 otherwise. i ; j i i + 1 j t

= -

The dynamics of debt is: D D PB ;

t t t + 1 ; t i i + 1 ; t 0 0

i = t + 1 0

PB = i

The inter temporal budgetary condition is: D t 0

i = t + 1 t + 1 , i 0 0

PB i

=

t - - i = t + 1 t + 1 , i The S2 indicator is: S 0 PB 0 0 (2bis) 2 t

1 0 1

i = t + 1 t + 1 , i i = t + 1 t + 1 , i 0 0 0 0

In the case where the interest rate/growth rate differential and the structural primary balance are constant after a certain date (here 2050):

2050 PB PB

i + D r

i = t + 1 + +

=

t - - t 1 , i t 1 , 2050 S 0 PB 0 0 0 (2ter)

2 2050 1 1 t 2050 1 1 0 + +

r r

1 i = t 4 + 1 4 t 4 + 1 , 4 i 4 4 2050 2 4 t 4 + 1 , 2050 4 4 4 4 3 1 i 4 = t 4 + 1 4 t 4 + 1 , 2 i 4 4 t 4 + 1 4 , 2050 3 0 0 0 0 0 0 C D T

= - +

S1 is such that D D ( PB )

T t t + 1 ; T i 1 i + 1 ; T 0 0

i = t + 1 0

-

i i + 1 ; T D D
=

t t + 1 ; T T - - i = t + 1 S 0 0 PB 0 (3bis) 1 T t T 0

i + 1 ; T i + 1 ; T i = t + 1 i = t + 1 0 0 Appendix: proofs

Equation 1

Let's suppose the debt (relative to GDP) remains bounded at any time in the future.

- -

=

+ t t - + t i <

It means that M such as D D ( 1 r ) 0 PB ( 1 r ) M t t i 0

i = t + 1 0

t D M

+ + i = t < t So D PB ( 1 r ) 0 because r is strictly positive.

t i + t - t + t - t

0 ( 1 r ) 0 ( 1 r ) 0 i = t + 1 0

- -

-

+ ( i t ) =

D PB ( 1 r ) 0 0 (1) t i 0

i = t + 1 0

Equation 2

The S2 indicator is the change in the structural primary balance compared with the base year for every future year that ensures that condition (1) is verified.

PB S

=

t 2

Mathematically, it can be written: D (1).

t + t - t

0 ( 1 r ) 0 t = t + 1 0

1 1 =

Since the discount rate is strictly positive, .

+ t - t

( 1 r ) 0 r t = t + 1 0

PB S PB PB

=

2 + t = 2 + t 0 + t D

t + t - t + t - t

0 r ( 1 r ) 0 r r ( 1 r ) 0 t = t + 1 t = t + 1 0 0

=

- - t

S rD PB r (2).

2 t t 0 + t - t 0 ( 1 r ) 0 t = t + 1 0

Equation 3

The calculations are made for any date T in the future and for any level of debt in the future. The dynamics of the debt can be written:

t t

- - -

=

+ t t - + t i - + t i

D D ( 1 r ) 0 PB ( 1 r ) PB ( 1 r ) t t t i 0 0

i = t + 1 i = t + 1 0 0

S is such that D = D 1 t T T

+ T - i

PB ( 1 r )

+ T - t - i

D ( 1 r ) 0 D

=

t T - - i = t + 1 S 0 PB 0 1 T t T 0

+ T - i + T - i ( 1 r ) ( 1 r )

i = t + 1 i = t + 1 0 0

T T - 1 + T - t ( 1 r ) 0 1

+ T - i = + i =

Given ( 1 r ) ( 1 r ) r

i = t + 1 i = t 0 0 T

+ T i

PB ( 1 r )

+ T - t - + - i

rD ( 1 r ) 0 rD rD rD

=

t t t T - - i = t + 1 S 0 0 0 PB 0

1 + T - t - t T ( 1 r ) 0 1 0 + T - i ( 1 r )

i = t + 1 0

+ -

PB ( 1 r ) T i r ( D - D ) i

=

- + t T - i = t + 1 S rD PB 0 0

1 t t + T - t - T 0 0 ( 1 r ) 0 1 + T - i ( 1 r )

i = t + 1 0

T PB

-

+ i - t

r ( D D ) ( 1 r ) 0

=

- + t T - i = t + 1 S rD PB 0 0 (3)

1 t t + T - t - T

0 0 ( 1 r ) 0 1 1 + i - t

( 1 r ) 0 i = t + 1 0

13.

A SENSITIVITY TEST FOR ASSESSING THE SUSTAINABILITY OF PUBLIC FINANCES : THE COST OF DELAY IN ACHIEVING BUDGETARY CONSOLIDATION

The AWG and EPC agreed with the introduction of a new sensitivity test showing the cost of delay in achieving budgetary consolidation. This test was proposed by Harry ter Rele, Dutch delegate in the AWG. It provides an estimate of the cost of delay in making a complete adjustment according to the old S1 and the S2 indicators. It further assumed a constant interest rate growth rate differential. This Annex calculates the cost of a delay with non constant interest rate for the currently used indicators, S1 and S2.

S2 indicator:

PB S = t 2 If the adjustment is made today, D t 0

t = t + 1 t + 1 ; t 0 0

PB S

=

t + 2 If the adjustment is postponed in 5 years then, D t 0

t = t + 1 + t = t + 1 + delay + 0 t 1 ; t 0 t 1 ; t 0 0 Relationships between the two indicators:

1 1 1 +

=

t = t + 1 + = t = t + 1 + ' 0 t 1 ; t 0 t 1 ; t 1 , 50 S S 0 S 0 2 2 2 50 1 1 1 +

t = t + 1 + delay + t = t + 1 + delay + 0 t 1 ; t 0 t 1 ; t 1 , 50 0 0 24

The cost of the delay is proportional to the initial tax gap indicator. If r is constant , the ' = + delay

former formula is significantly reduced: S S ( 1 r ) 2 2 S1 indicator:

The expression for the cost of delay using the S1 indicator is:

2050 delay

1 1

=

t = t + 1 t + 1 ; t = + t = t + 1 t + 1 ; t S ' S 0 S ( 1 0 ) 0 0

1 1 2050 1 1 50 1

t = t + 1 + delay t + 1 ; t t = t + 1 + delay t + 1 ; t 0 0 0 0 24

As in the Dutch proposal.

14.

G UIDELINES FOR TAKING INTO ACCOUNT ASSETS OF PUBLIC PENSION FUNDS IN 25

THE ASSESSMENT OF THE SUSTAINABILITY OF PUBLIC FINANCES

The main quantitative tool used in the EU surveillance of the sustainability of public finances is extrapolation of debt, with budgetary developments incorporating long-term projections of government expenditure that evolve in line with demographic projections, thus indicating the budgetary impact of ageing populations. For this purpose, government debt is defined as general government gross debt (the Maastricht definition). Since reducing debt or accumulating assets in public pension funds has a similar effect on fiscal sustainability, which however is not reflected in the gross debt measure, the EPC in September 2004 considered it appropriate to take into account the position of fund assets in the analysis of long-term sustainability of public finances. It was agreed that the dynamics of consolidated gross debt should continue to be calculated, and that in addition it should, be adjusted for such pension fund assets. However, clarifications are needed to specify exactly which kind of assets would be used in making adjustments, and how to value them in a consistent way within the EU Member States.

In the 2004 assessment of Stability and Convergence Programmes (SCP), the Commission took into account public pension fund assets for six countries (Denmark, Spain, Estonia, Ireland, Cyprus, Finland and Sweden)

. The proposed guidelines aim at clarifying the

proposed adjustment, and providing reporting requirements for Member States for the preparation of the future assessments of SCP's, considering that also other Member States have such funds.

The EPC considers that public pension fund assets should be taken into account for the purposes of complementing the assessment of the long-term sustainability of the public finances in case they are:

-

Consolidated liquid assets and their current value can be determined; and
-

Accumulated for the strict purpose of covering pension-related expenditure, in

accordance with the principle of "good governance" . Reporting by Member States should include most recent estimates of:

-

the consolidated liquid public pension fund asset recorded in general government that

are established to cover pension-related expenditure, in most cases recorded in the social security funds sub-sector of general government (an example from the Finnish 2004 stability programme is given in the Annex); and

-

the size of property income due to such consolidated liquid public pension fund assets.

These guidelines were adopted by the EPC, ECFIN/EPC(2005)REP/53512 final, 11.10.2005. See also the Commission report `Public finances in EMU 2005'.

26 This proposal has been prepared on the basis of a note by the Commission "Guidelines for taking into account

assets of public pension funds in the assessment of the sustainability of public finances" (doc. ECFIN/REP/53950/05) which has been discussed and agreed by the AWG on 19 20 September.

For the

mandate, see letter by the EPC President to the Chairman of the EFC Alternates of 22 September 2004 (doc. ECFIN/EPC(2004)REP/50308 final).

27 In these cases, the funds concerned sizable and assigned assets for financing future public pension expenditure, and therefore had relevance for the assessment of the sustainability of public finances.

The issues of good governance will be further explored for the 2006 SCP assessments.

Detail

11.1. Identifying liquid public pension fund assets

The EPC considers that three issues need to be addressed in this regard; i) which assets should be considered and how to value them ii) the use of funds to be considered; and iii) how to distinguish between national government bonds and other bonds.

i)

Financial assets to be considered

On financial assets to be considered, all assets held by governments ease the budgetary pressures on the public finances arising from ageing populations in the longer term. However, for some financial assets, such as shares in non-floated publicly owned enterprises, current market value cannot be easily determined. This introduces a considerable element of uncertainty. In order to circumvent this obstacle, only liquid assets for which a current value can be determined should be considered. Such assets are currencies, deposits and tradable securities, for which a current market value can be determined. Information on financial assets is available from the financial accounts. The relevant liquid asset categories are given in Table 11.1. Member States should submit data on public pension fund assets according to this delimitation, specified further in the second point below, and reported according to their current market value

Table 11.1 Liquid financial assets*, financial accounts**

Code Description AF.21 Currency

AF.22 Transferable deposits AF.29 Other deposits

AF.331 Securities other than shares; Short-term (bills) AF.332 Securities other than shares; Long-term (bonds)

AF.34 Securities other than shares; Financial derivatives AF.511 Shares and other equity; Quoted shares

AF.52 Shares and other equity; Mutual fund shares

*

Assets of public pension funds with a strict purpose of covering pension-related expenditure should be included, see the second point below in the text. ** Information from the financial accounts should be consolidated, see the third point below in the text.

Source: ESA95

According to the "Manual on Sources and Methods for the compilation of ESA95 Financial Accounts", first edition, Eurostat, 2002, p. 26, ESA95 states as a general rule for all assets (7.25) that all assets and liabilities are to be valued using current market prices on the date to which the balance sheet relates. This rule applies to financial assets (7.44): "Financial assets and liabilities should in principle be valued at current prices. They should be assigned the same value whether they appear as financial assets and liabilities." This manual provides additional information on the valuation of financial instruments and is available at:

http://europa.eu.int/estatref/info/sdds/en/fina/fina_esa95_manual_sources_methods.pdf .

ii)

Use of funds to be considered

Public pension fund assets that are established or legislated with a strict purpose of covering pension-related expenditure should be included, and fund assets accumulated for other purposes should not be included. They should be accumulated in accordance with the principle of "good governance"

. In most cases, such funds are

recorded in the social security funds sub-sector (S.1314) of general government (S.13), see Figure 11.1. However, in some cases they are recorded in the central government sector (S.1311) rather than in the social security funds (S.1314). As the financial assets in the social security funds (S.1314) or elsewhere in general government (S.13) may comprise more than public pension fund assets that have a strict purpose of covering pension-related expenditure, Member States need to make this distinction. In order for the Commission to adjust Maastricht gross debt by taking into account public pension funds with a strict purpose of covering pension-related expenditure in the social security funds (S.1314) or elsewhere in the general government sector (S.13), Member States should provide this data according to the delimitation given in Table 11.1 above.

Figure 11.1 General government and its sub-sectors in ESA95

General Government

(S.13)

Central Government State Government Local Government Social Security Funds (S.1311) (S.1312) (S.1313) (S.1314)

Moreover, revenues (property income) from consolidated liquid public pension fund assets should be deducted from gross interest expenditure so that an adjusted primary balance can be calculated. Member States are asked to provide the size of property income that is due to holdings of such public pension fund assets.

Eurostat's decision of 2 March 2004 on the classification of pension schemes implies that funded defined contribution pension schemes should be classified outside government, the argument being that pensions to be paid depend on financial market developments (and on households' investment choices) and not on government decisions. According to Eurostat's press release of deficit and debt data for 2003 of 23 September 2004, Member States are required to implement this by March 2007 at the latest. Some countries have opted for this implementation period and include the flows of contributions and corresponding future pension payments of such schemes in general government whereas others exclude them at present.

The issues of good governance will be further explored for the 2006 SCP assessments.

Public pension fund assets may be accumulated in defined benefit (DB) pay-as-you-go schemes, in funded defined contribution (DC) schemes or in buffer funds

. For consistency

and for the purposes of assessing sustainability of public finances, data on liquid public pension fund assets, in DB or DC schemes, should be provided to the extent that the corresponding public pension expenditures are included in the long-term budgetary projections. In a funded defined contribution pension scheme, contributions should match liabilities by construction. In a defined benefit pay-as-you-go scheme, contributions may be accumulated in a fund in order e.g. to smoothen the `required' contributions over time in order to reduce the intergenerational impact.

iii)

National government bonds and other bonds

It should be borne in mind that if the non-consolidated financial balance sheets are used, national government bonds need to be netted out. By contrast, if the consolidated financial balance sheets are used, national government bonds have already been netted out. In the Maastricht definition of consolidated gross debt, national government bonds are already netted out. Hence:

-

for those countries where consolidated balance sheets are available, the relevant

financial assets are given net of national government bonds. No adjustments are needed; and

-

for those countries where non-consolidated financial balance sheets are available, the

relevant financial assets need to be reported net of national government bonds in order to avoid double-counting.

11.2. Adjusted gross debt net of liquid public pension fund assets

Adjusted gross debt equals Maastricht gross debt net of the consolidated liquid public pension fund assets, according to the delimitations described in section 11.1 above.

The projection of debt developments over the long run on the basis of Maastricht gross debt should be continued. In addition, sustainability indicators (S1, S2, RPB) are calculated on the basis of adjusted gross debt, thus taking into account public pension fund assets, where applicable. In the projections on such funds, the rate of return to be used will correspond to the interest paid on government bonds. Moreover, no further build-up or drawdown of pension fund assets is assumed.

Some countries have chosen to accumulate liquid assets in public pension funds, and for these this adjustment had a considerable impact (see graph below). This is particularly true for Finland, Sweden and Denmark, where the accumulation of funds has taken place for many years. Other countries have started accumulating funds recently. Maastricht gross debt in 2004 in EU-25 was 63.9% of GDP, dropping to 62.2% when looking at adjusted gross debt. The small difference between the debt definitions at the EU aggregate level reflects the fact that accumulation of liquid assets in public pension funds predominantly has taken place in a number of smaller Member States so far.

31 Such as in France (the so called Fonds de Réserve des Retraites), in Ireland or in Sweden. These funds should be accumulated strictly for the purpose of covering pension related expenditure and comply with all the criteria set down in these guidelines.

Graph 11.1. Maastricht gross debt and adjusted gross debt in 2004

Maastricht and Adjusted Gross Debt in 2004

% of GDP (% of GDP) 80

Maastricht gross debt

Adjusted gross debt

50 EU25 gross debt EU25 Adj. Gross debt

CY ES SE DK IE FI

Source: European Commission (2005), Public Finances in EMU 2005,

European Economy.

____________________

ANNEX: Extract from the Finnish 2004 stability programme

The Finnish 2004 SP (pp. 31-32) contains information on holdings of liquid assets by public pension funds in: (i) the social security funds (Table 7) and; (ii) the central government (Table 8). These assets within the general government sector were reported according to the agreed delimitation, i.e. consolidated liquid assets for which a current market value can be determined.

ANNEX LIST OF AWG MEMBERS AND CONTRIBUTORS

CHAIRMAN

Mr. Henri BOGAERT, Commissaire au Plan, Bureau du Plan BELGIQUE BELGIE

Mr. Michel ENGLERT Bureau fédéral du Plan Federaal Planbureau

Mme Micheline LAMBRECHT Bureau fédéral du Plan Federaal Planbureau CZECH REPUBLIC

Mr. Ales KREJDL Ministry of Finance DANMARK

Mr. Morten Granzau NIELSEN Ministry of Finance Mr. Martin MADSEN Ministry of Finance

Mr. Anders Due MADSEN Ministry of Finance BUNDESREPUBLIK DEUTSCHLAND

Ms Britta VELLEUER Bundesministerium der Finanzen

Mr. Konrad HAKER Ministerium für Arbeit und Soziales ESTONIA

Mr. Tanel STEINBERG Ministry of Finance ELLAS

Ms. Marianna PAPAMICHAIL National Actuarial Authority

Mr. Dimitris PAPAOIKONOMOU Ministry of Economy and Finance ESPAÑA

Mr. Juan BURDIEL Ministerio de Economia y Hacienda Mr. Juan VARELA Ministerio de Economia y Hacienda Mr. Francisco DE CASTRO Bank of Spain

Ms Angela BLANCO Instituto de Estudios Fiscales Mr. Jorge RELANO Ministerio de Sanidad y Consumo Ms Mercedes ALFARO Ministerio de Sanidad y Consumo

Ms Maria Jesus SANZ Ministerio de Economia y Hacienda

FRANCE

Mr. Alexandre VINCENT Ministère de l'économie, des finances et de l'industrie Mr. Nicolas FERRARI Ministère de l'économie, des finances et de l'industrie

Mr Jean François OUVRARD Ministère de l'économie, des finances et de l'industrie IRELAND

Ms Loretta O'SULLIVAN Budget and economic Division Department of Finance Mr. Ronnie DOWNES Budget and economic Division Department of Finance ITALIA

Mr. Federico GIAMMUSSO Ministero del Tesoro

Mr. Rocco APRILE I.G.E.S.P.E.S. Ragioneria Generale dello Stato

Mr. Francesco MASSICCI I.G.E.S.P.E.S. Ragioneria Generale dello Stato CYPRUS

Ms Nayia POSPORI Ministry of Finances LATVIA

Mr. Ilmrs SUCINS Ministry of Finance LITHUANIA

Ms Ruta BANELIENE Ministry of Finance LUXEMBOURG

Mr. Jean LANGERS STATEC

Mr. Raymond WAGENER Inspection Générale de la Securité Sociale Mr. Tom DOMINIQUE Inspection Générale de la Securité Sociale

Ms Laurence WEBER Inspection Générale de la Sécurité Sociale

HUNGARY

Mr. Andras HORVATH Ministry of Finance MALTA

Ms Charmaine PORTELLI Ministry of Finance and Economic Affairs Mr. Godwin MIFSUD Ministry of Finance and Economic Affairs NEDERLAND

Mr Harry TER RELE Centraal Planbureau Mr. W. KOOLMEES Ministry of Finance

Mr. Pieter VAN WINDEN Department of Economic Affairs ÖSTERREICH

Mr. Peter PART Bundesministerium für Finanzen

Dr. Karin SCHÖNPFLUG Bundesministerium für Finanzen Mr. Hans STEFANITS Ministry of Social Affairs POLAND

Ms.Agnieszka CHLO DOMICZAK Ministry of Economy, Labour and Social Policy Mr. Pawek STRZELECKI Ministry of Economy, Labour and Social Policy Ms Joanna STACHURA Ministry of Economy, Labour and Social Policy

PORTUGAL

Mr. Jorge OLIVEIRA Ministry of Finance SLOVENIA

Mr. Dusan KIDRIC, Institute of Macroeconomic Analysis and Development Mr. Boris MAJCEN Institute for Economic Research

Mr. Joze SAMBT Economic Faculty

SLOVAKIA

Mr. Viktor NOVYSEDLAK Ministry of Finance SUOMI FINLAND

Mr. Jorma TUUKKANEN Ministry of Finance

Mr. Jussi HUOPANIEMI Ministry of Finance Mrs. Marja TUOVINEN Ministry of Finance SVERIGE

Ms Anna KLEEN Ministry of Finance

Mr. Tomas NORDSTRÖM Ministry of Finance

Mr. Sten HANSEN National Institute of Economic Research

Mr. Martin KNUDSEN National Institute of Economic Research UNITED KINGDOM

Mr. Frank EICH HM Treasury

Mr. Joshua FLEMING HM Treasury Mr. Thomas PYBUS HM Treasury Mr. Robert WOODS HM Treasury ROMANIA (Observer)

Ms. Ana RADU Ministry of Public Finance

Ms Martha CHIRVASE National Forecasting Commission BULGARIAN (Observer)

Ms Ana MIHAYLOVA Ministry of Finance EPC SECRETARIAT

Mr Pekka MOREN (Secretary) Mr. Heinz SCHERRER Mrs. Odile RENAUD BASSO Mrs. Brigitte DE CONINCK Mr. Dagmar DIEZLER HANAGHAN

EUROPEAN COMMISSION

Mr. Servaas DEROOSE Mr. Declan COSTELLO Ms Elena FLORES GUAL Mr. Werner RÖGER Mr. Giuseppe CARONE Ms Cecile DENIS Ms Nuria DIEZ GUARDIA Mr. Per ECKEFELT Mr. Jouko KUOSMANEN Mr. Fabrizio MELCARNE Mr. Kieran MCMORROW Mr. Gilles MOURRE Mr. Bartosz PRZYWARA Ms Aino SALOMÄKI Ms Ingvild STROMSHEIM WOLD Ms Dominique CORNESSE Ms Patricia TUITE

OECD

Mr. Joaquim OLIVEIRA Economics Department Mr. Pablo ANTOLIN Economics Department Mr. Peter SCHERRER Health Division

Mr. Gaetan LAFORTUNE Health Division EUROPEAN CENTRAL BANK

Ms Christiane NICKEL European Central Bank Mr. Louis BÊ DUC

EUROSTAT

Mr. Michail SKALIOTIS Mr. Konstantinos GIANNAKOURIS Mr. Giampaolo LANZIERI Mr. Fabio SARTORI

WORLD BANK Mr. Hermann von GERSDORFF

IMF

Mr Pierre DHONTE

STATISTICAL ANNEX:

COUNTRY TABLES

Belgium Main demographic and macroeconomic assumptions (BA SELINE SCENA RIO)

Budgetary Projection: A WG variant population scenario

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 De mogra phic a ssumptions

Fe rtility rate 1.6 1.6 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 Life e xpe ctancy at bir th

m ale s 75.5 75.8 76.9 77.9 78.9 79.7 80.3 80.9 81.4 81.8 82.1

fe m ale s 81.6 81.9 82.9 83.9 84.8 85.5 86.1 86.6 87.0 87.2 87.5 Life e xpe ctancy at 65

m ale s 15.8 16.0 16.7 17.4 18.1 18.6 19.1 19.4 19.7 20.0 20.3

fe m ale s 19.7 19.9 20.7 21.4 22.1 22.6 23.1 23.4 23.7 23.9 24.1

Ne t m igr ation (thous and) 23.7 22.3 19.6 19.3 18.9 18.7 18.5 18.5 18.5 18.5 18.5

Ne t m igr ation as % of population 0.23 0.21 0.19 0.18 0.18 0.17 0.17 0.17 0.17 0.17 0.17 Population (m illion) 10.4 10.4 10.6 10.7 10.8 10.9 11.0 11.0 11.0 10.9 10.8

Population age d 0-14 as % of total 17.3 17.1 16.4 16.0 15.7 15.6 15.4 15.1 14.9 14.7 14.7

Prim e age population (25-54) as % of total 42.7 42.5 41.5 40.1 38.6 37.2 36.3 35.9 35.5 35.4 35.2 Work ing age population (15-64) as % of total 65.6 65.6 66.1 65.1 63.8 61.9 59.9 58.6 58.0 58.0 57.9 Elde rly population age d 65+ as % of total 17.1 17.2 17.5 18.9 20.5 22.5 24.6 26.2 27.1 27.3 27.3

V e ry e lde rly population age d 80 and ove r as % of total 4.1 4.3 5.0 5.6 5.9 6.0 7.1 8.1 9.3 10.3 10.8

Elde rly population age d 55+ as % of w or k ing age pop.15-64 7.2 7.2 7.4 7.9 8.5 9.1 9.7 10.0 10.2 10.1 10.1 Ma croe conomic a ssumptions

Re al GDP (grow th r ate ) 2.2 2.1 2.7 2.1 1.7 1.4 1.3 1.5 1.5 1.6 1.5

Labour input (grow th r ate ) 1.1 0.8 0.9 0.3 -0.1 -0.4 -0.4 -0.2 -0.2 -0.1 -0.2

Labour pr oductivity (gr ow th rate ) 1.1 1.3 1.7 1.8 1.8 1.8 1.7 1.7 1.7 1.7 1.7 TFP (gr ow th rate ) 1.0 1.1 1.3 1.2 1.1 1.1 1.1 1.1 1.1 1.1 1.1

Capital de e pe ning (c ontribution to labour productivity grow th) 0.1 0.2 0.4 0.7 0.7 0.7 0.6 0.6 0.6 0.6 0.6 GDP pe r capita (grow th r ate ) 1.8 1.8 2.4 1.9 1.4 1.2 1.2 1.5 1.6 1.7 1.7

GDP in 2004 price s (in billions of e uro) 283 288 326 366 401 431 461 494 533 576 621 GDP pe r w ork e r 21.8 22.2 24.7 27.5 29.8 31.7 33.6 36.0 38.9 42.2 45.9 Re al inte re s t r ate 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 La bour force a ssum ptions

Population grow th (w ork ing age :15-64) 0.3 0.1 -0.1 -0.3 -0.5 -0.6 -0.3 -0.1 -0.2 -0.1

Labour force (thous ands ) 4458 4495 4664 4766 4753 4667 4570 4507 4471 4442 4401 Participation rate (15-64) 65.4 65.7 66.8 68.6 69.1 69.2 69.5 69.8 70.1 70.0 70.0

young (15-24) 35.6 35.9 36.0 37.3 36.7 36.9 36.4 36.3 36.5 36.7 36.8

prim e -age (25-54) 82.8 83.3 85.7 87.4 88.1 88.3 88.6 88.6 88.6 88.6 88.6 olde r (55-64) 29.9 30.5 33.8 39.6 42.8 43.2 43.3 43.7 44.7 44.7 44.9 olde s t (65-71) 2.7 3.0 3.2 3.4 3.5 3.7 3.7 3.6 3.6 3.7 3.7 Em ploym e nt rate (15-64) 60.2 60.6 62.1 64.1 64.6 64.7 65.0 65.3 65.5 65.5 65.5 Em ploym e nt rate (15-71) 54.9 55.4 57.1 57.9 57.7 57.3 56.9 57.1 57.7 58.1 58.0 Em ploym e nt grow th (15-64) 1.0 0.9 0.2 -0.2 -0.4 -0.4 -0.2 -0.1 -0.1 -0.2

Une m ploym e nt rate (15-64) 7.9 7.7 7.0 6.5 6.5 6.5 6.5 6.5 6.5 6.5 6.5 De pe nde ncy ra tios:

Share of olde r w or k e rs 7.5 7.8 9.5 11.7 13.5 13.8 13.4 12.8 12.8 13.0 13.4

Old-age de pe nde ncy ratio (1) 26.1 26.3 26.4 29.1 32.2 36.3 41.1 44.7 46.7 47.0 47.2 Total de pe nde ncy ratio (2) 52.5 52.4 51.2 53.6 56.8 61.5 66.9 70.6 72.3 72.4 72.6

Total e conom ic de pe nde ncy ratio 153.3 151.4 143.4 139.5 142.7 149.6 156.7 161.3 163.0 163.3 163.7 Econom ic old-age de pe nde ncy ratio (15-64) 42.9 42.8 42.1 44.7 49.1 55.3 62.4 67.7 70.5 71.1 71.3 Econom ic old-age de pe nde ncy ratio (15-71) 42.7 42.6 41.9 44.5 48.7 54.9 61.8 67.1 70.0 70.5 70.7 LEGENDA :

S h a r e o f o ld e r wo r k e r s = P o p u la t io n a g e d 5 5 t o 6 4 a s % o f p o p u la t io n a g e d 15 - 6 4

O ld - a g e d e p e n d e n c y ra t io ( 1) = P o p u la t io n a g e d 6 5 a n d o v e r a s a p e rc e n t a g e o f t h e p o p u la t io n a g e d 15 - 6 4

T o t a l d e p e n d e n c y r a t io ( 2 ) = P o p u la t io n u n d e r 15 a n d o v e r 6 4 a s a p e rc e n t a g e o f t h e p o p u la t io n a g e d 15 - 6 4

T o t a l e c o n o m ic d e p e n d e n c y r a t io = T o t a l p o p u la t io n le s s e m p lo ye d a s % o f e m p lo ye d p o p u la t io n ( 15 - 6 4 )

E c o n o m ic o ld - a g e d e p e n d e n c y ra t io ( 15 - 6 4 ) = In a c t iv e p o p u la t io n a g e d 6 5 + a s % o f e m p lo ye d p o p u la t io n ( 15 - 6 4 )

E c o n o m ic o ld - a g e d e p e n d e n c y ra t io ( 15 - 7 1) = In a c t iv e p o p u la t io n a g e d 6 5 + a s % o f e m p lo ye d p o p u la t io n ( 15 - 7 1)

Belgium EPC-AW G Pension expenditure projections

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Baseline scenario; as % of GDP

Social security pensions, gross 10.4 10.4 10.4 11.0 12.1 13.4 14.7 15.5 15.7 15.7 15.5

Old-age and early pens ions , gros s 9.6 9.6 9.6 10.3 11.3 12.7 14.0 14.8 15.1 15.0 14.9

Of which: earnings -related pens ions , gros s 9.5 9.5 9.5 10.2 11.3 12.6 13.9 14.7 15.0 15.0 14.8 Private s ector em ployees , gros s 6.3 6.3 6.4 6.9 7.7 8.7 9.6 10.2 10.4 10.3 10.2 Public s ector em ployees , gros s 3.2 3.2 3.1 3.3 3.5 3.9 4.2 4.5 4.6 4.7 4.6

Other pens ions (dis ability, s urvivors ), gros s 0.8 0.8 0.8 0.8 0.8 0.7 0.7 0.7 0.7 0.7 0.7 Occupational pensions, gross : : : : : : : : : : :

Private mandatory pensions, gross : : : : : : : : : : :

Total pension expenditure, gross 10.4 10.4 10.4 11.0 12.1 13.4 14.7 15.5 15.7 15.7 15.5 Social security pensions, net : : : : : : : : : : :

Total pension expenditure, net : : : : : : : : : : :

Social security pensions, contributions : : : : : : : : : : : Total pension contributions : : : : : : : : : : :

Social security pensions, assets 4.4 4.7 7.3 13.4 16.4 13.6 1.9 0.0 0.0 0.0 0.0 All pensions, assets 4.4 4.7 7.3 13.4 16.4 13.6 1.9 0.0 0.0 0.0 0.0 Additional indicators

Social security pensions, net / Social sec. pensions, gross,% : : : : : : : : : : : Total pension expenditure, net / Total pension exp., gross, % : : : : : : : : : : :

Social security pensions, num ber of pensioners , 1000 pers. 2501 2516 2635 2870 3144 3456 3748 3952 4052 4078 4050 All pensions, pensioners , 1000 pers. 2501 2516 2635 2870 3144 3456 3748 3952 4052 4078 4050

Number of pensioners aged 65+ , 1000 pers. 1860 1874 1960 2186 2435 2742 3073 3318 3443 3468 3447

Share of pensioners below age 65 as % of all pensioners 25.6 25.5 25.6 23.8 22.6 20.7 18.0 16.0 15.0 15.0 14.9 Average gross social sec. pension, 1000 in 2004 prices 11.8 12.0 12.9 14.1 15.4 16.7 18.0 19.3 20.7 22.2 23.8 Average gross total pensions, 1000 in 2004 prices 11.8 12.0 12.9 14.1 15.4 16.7 18.0 19.3 20.7 22.2 23.8 Output / W orker, 1000 in 2004 prices 69.9 70.8 72.5 79.2 86.7 94.8 103.4 112.5 122.5 133.3 145.1 Social sec. benefit ratio 16.8 16.9 17.8 17.8 17.8 17.6 17.4 17.2 16.9 16.6 16.4

Total pension benefit ratio 16.8 16.9 17.8 17.8 17.8 17.6 17.4 17.2 16.9 16.6 16.4

Social security pensions, num of contributors, in 1000 4249 4297 4491 4623 4620 4545 4457 4394 4355 4323 4281 Average social sec. pension contribution, 1000 in 2004 prices : : : : : : : : : : : Average total pension contribution, 1000 in 2004 prices : : : : : : : : : : :

Support ratio (contributors /100 pensioners, social sec. pens.) 170 171 170 161 147 132 119 111 107 106 106 High life expectancy; as % of GDP

Social security pensions, gross 10.4 10.4 10.5 11.1 12.2 13.6 14.8 15.7 16.1 16.2 16.1 Old-age and early pensions, gross 9.6 9.6 9.6 10.3 11.4 12.8 14.1 15.0 15.4 15.5 15.4

Total pension expenditure, gross 10.4 10.4 10.5 11.1 12.2 13.6 14.8 15.7 16.1 16.2 16.1 All pensions, assets 4.4 4.7 7.4 13.5 16.2 12.9 0.5 0.0 0.0 0.0 0.0 Higher labour productivity; as % of GDP

Social security pensions, gross 10.4 10.4 10.4 11.1 12.1 13.3 14.5 15.2 15.4 15.4 15.2 Old-age and early pensions, gross 9.6 9.6 9.6 10.3 11.3 12.6 13.8 14.5 14.8 14.7 14.5

Total pension expenditure, gross 10.4 10.4 10.4 11.1 12.1 13.3 14.5 15.2 15.4 15.4 15.2 All pensions, assets 4.4 4.7 7.3 13.4 16.2 13.5 2.4 0.0 0.0 0.0 0.0 Lower labour productivity; as % of GDP

Social security pensions, gross 10.4 10.4 10.4 11.1 12.2 13.5 14.8 15.7 16.0 16.0 15.9 Old-age and early pensions, gross 9.6 9.6 9.6 10.3 11.4 12.8 14.1 15.0 15.3 15.4 15.2

Total pension expenditure, gross 10.4 10.4 10.4 11.1 12.2 13.5 14.8 15.7 16.0 16.0 15.9 All pensions, assets 4.4 4.7 7.4 13.6 16.5 13.6 1.4 0.0 0.0 0.0 0.0 Higher employment rate (1 p.p.); as % of GDP

Social security pensions, gross 10.4 10.4 10.4 11.0 12.0 13.3 14.5 15.3 15.6 15.5 15.4 Old-age and early pensions, gross 9.6 9.6 9.6 10.2 11.2 12.6 13.8 14.6 14.9 14.9 14.7

Total pension expenditure, gross 10.4 10.4 10.4 11.0 12.0 13.3 14.5 15.3 15.6 15.5 15.4 All pensions, assets 4.4 4.7 7.3 13.5 16.5 13.9 2.5 0.0 0.0 0.0 0.0 Higher older workers empl. rate (5 p.p.); as % of GDP

Social security pensions, gross 10.4 10.4 10.4 11.0 11.9 13.2 14.4 15.2 15.5 15.5 15.3 Old-age and early pensions, gross 9.6 9.6 9.6 10.2 11.2 12.5 13.7 14.6 14.8 14.8 14.6

Total pension expenditure, gross 10.4 10.4 10.4 11.0 11.9 13.2 14.4 15.2 15.5 15.5 15.3 All pensions, assets 4.4 4.7 7.3 13.5 16.5 14.1 3.1 0.0 0.0 0.0 0.0 Lower interest rate; as % of GDP

Social security pensions, gross 10.4 10.4 10.4 11.0 12.1 13.4 14.7 15.5 15.7 15.7 15.5 Old-age and early pensions, gross 9.6 9.6 9.6 10.3 11.3 12.7 14.0 14.8 15.1 15.0 14.9

Total pension expenditure, gross 10.4 10.4 10.4 11.0 12.1 13.4 14.7 15.5 15.7 15.7 15.5 All pensions, assets 4.4 4.7 7.1 12.8 14.9 11.3 0.0 0.0 0.0 0.0 0.0 Higher interest rate; as % of GDP

Social security pensions, gross 10.4 10.4 10.4 11.0 12.1 13.4 14.7 15.5 15.7 15.7 15.5 Old-age and early pensions, gross 9.6 9.6 9.6 10.3 11.3 12.7 14.0 14.8 15.1 15.0 14.9

Total pension expenditure, gross 10.4 10.4 10.4 11.0 12.1 13.4 14.7 15.5 15.7 15.7 15.5 All pensions, assets 4.4 4.7 7.5 14.2 17.9 16.2 5.4 0.0 0.0 0.0 0.0 : = data not provided

Belgium OTHER AGE-RELATED EXPENDITURES as % of GDP

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Health care spending as % of GDP

Pure ageing s cenario 6.2 6.2 6.4 6.6 6 .8 7.0 7.3 7.5 7.6 7.7 7.7

Cons tant health s cenario 6.2 6.2 6.2 6.3 6 .4 6.5 6.6 6.8 6.9 6.9 6.9

Death-related cos ts s cenario 6.2 6.2 6.4 6.5 6 .6 6.8 6.9 7.1 7.2 7.3 7.3 Incom e elas ticity of dem and 6.2 6.3 6.5 6.8 7 .0 7.2 7.5 7.7 7.9 8.0 8.0 Unit cos ts - GDP per worker 6.2 6.2 6.2 6.3 6 .6 7.0 7.4 7.8 8.0 8.1 8.1 AWG reference s cenario 6.2 6.2 6.4 6.6 6 .8 6.9 7.1 7.3 7.5 7.6 7.6 Long-term care spending as % of GDP

Pure ageing s cenario 0.9 0.9 1.0 1.1 1 .1 1.2 1.4 1.6 1.8 2.0 2.1

Unit cos ts - GDP per capita 0.9 0.9 1.0 1.1 1 .2 0.8 1.3 1.5 1.7 1.9 2.0

Cons tant dis ability s cenario 0.9 0.9 0.9 1.0 1 .0 1.0 1.1 1.3 1.4 1.5 1.5 Increas e in form al care 0.9 0.9 1.0 1.2 1 .3 1.3 1.5 1.8 2.0 2.2 2.3 AWG reference s cenario 0.9 0.9 0.9 1.0 1 .1 1.1 1.3 1.4 1.6 1.8 1.8 Numbe r of de pe nde nt pe ople (in thous ands )

Pure ageing s cenario 416 42 4 4 60 5 02 540 587 664 737 797 834 84 1

Unit cos ts - GDP per capita 416 42 4 4 60 5 02 540 306 664 737 797 834 84 1

Cons tant dis ability s cenario 416 41 8 4 25 3 67 438 447 482 515 541 555 54 7 Increas e in form al care 416 42 4 4 60 5 02 540 587 664 737 797 834 84 1 AWG reference s cenario 416 42 1 4 43 4 68 489 517 573 626 669 694 69 4 of which re ce iving formal care

Pure ageing s cenario 262 26 8 2 99 3 28 350 376 430 484 534 569 57 9

Unit cos ts - GDP per capita 262 26 8 2 99 3 28 350 376 430 484 534 569 57 9

Cons tant dis ability s cenario 262 26 5 2 79 2 90 293 296 325 353 379 396 39 5 Increas e in form al care 262 27 6 3 42 4 03 457 494 561 626 681 717 72 6 AWG reference s cenario 262 26 7 2 89 3 09 322 336 377 419 457 482 48 7 of which re ce iving informal or no care

Pure ageing s cenario 154 15 6 1 61 1 74 190 212 234 253 264 265 26 3

Unit cos ts - GDP per capita 154 15 6 1 61 1 74 190 89 234 253 264 265 26 3

Cons tant dis ability s cenario 154 15 3 1 46 1 16 146 150 157 161 162 158 15 2 Increas e in form al care 154 14 8 1 19 99 83 93 103 111 116 117 11 6

AWG reference s cenario 154 15 4 1 54 1 59 168 181 196 207 213 212 20 7 Education spending as % of GDP

Total 5.6 5.6 5.2 5.0 4 .9 4.9 5.0 5.0 5.0 5.0 5.0

of which: Transfers 0.3 0.3 0.3 0.3 0 .3 0.3 0.3 0.3 0.3 0.3 0.3 Prim ary 1.4 1.3 1.3 1.2 1 .2 1.2 1.2 1.2 1.2 1.2 1.2

of which: Transfers 0.0 0.0 0.0 0.0 0 .0 0.0 0.0 0.0 0.0 0.0 0.0 Low s econdary 0.9 0.9 0.8 0.8 0 .7 0.7 0.8 0.8 0.8 0.7 0.7

of which: Transfers 0.0 0.0 0.0 0.0 0 .0 0.0 0.0 0.0 0.0 0.0 0.0 Upper s econdary 2.0 2.0 1.9 1.8 1 .7 1.7 1.8 1.8 1.8 1.8 1.8

of which: Transfers 0.1 0.1 0.1 0.1 0 .1 0.1 0.1 0.1 0.1 0.1 0.1 Tertiary education 1.4 1.4 1.3 1.3 1 .2 1.2 1.2 1.2 1.3 1.3 1.2

of which: Transfers 0.2 0.2 0.2 0.2 0 .2 0.2 0.2 0.2 0.2 0.2 0.2 Number of s tudents (in thous ands )

Total 2373 2360 2312 2253 221 8 220 3 22 00 21 84 2 152 2 114 2087 Prim ary 753 74 4 7 32 7 08 704 710 713 702 686 672 66 7

Low s econdary 424 42 3 3 98 3 93 383 382 383 381 373 366 36 1

Upper s econdary 819 82 1 8 10 7 87 774 762 762 760 751 736 72 4

Tertiary education 376 37 1 3 72 3 65 357 348 342 342 343 340 33 4 Memo

Population aged 15 64 (in thous ands ) 6819 6841 6980 6947 688 0 674 2 65 75 64 55 6 382 6 344 6286 Unemployment benefit spending as % of GDP

2.3 2.2 2.0 1.8 1 .8 1.8 1.8 1.8 1.7 1.8 1.8

Czech Republic Main demographic and macroeconomic assumptions (BA SELINE SCENA RIO)

Budgetary Projection: A WG variant population scenario

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 De m ogra phic a ssum ptions

Fe r tility r ate 1.2 1.2 1.2 1.4 1.4 1.5 1.5 1.5 1.5 1.5 1.5 Life e xpe ctancy at bir th

m ale s 72.4 72.6 73.7 74.8 75.9 76.9 77.8 78.3 78.8 79.3 79.7

fe m ale s 78.8 79.0 79.8 80.5 81.3 82.1 82.7 83.1 83.5 83.8 84.1 Life e xpe ctancy at 65

m ale s 13.8 13.9 14.5 15.1 15.8 16.5 17.0 17.4 17.7 18.1 18.4

fe m ale s 17.0 17.1 17.7 18.2 18.8 19.3 19.8 20.1 20.4 20.6 20.9

Ne t m igr ation (thous and) 4.3 4.3 2.6 -1.0 9.7 20.2 21.6 21.4 21.0 20.5 20.0

Ne t m igr ation as % of population 0.04 0.04 0.03 -0.01 0.10 0.21 0.22 0.22 0.22 0.22 0.22 Population (m illion) 10.2 10.2 10.1 10.0 9.9 9.8 9.7 9.5 9.3 9.1 8.9

Population age d 0-14 as % of total 15.2 14.9 13.6 13.7 13.8 13.5 12.9 12.3 12.1 12.3 12.6

Pr im e age population (25-54) as % of total 44.4 44.5 43.8 43.6 43.4 41.8 39.2 36.2 35.0 34.2 33.5 Wor k ing age population (15-64) as % of total 70.8 71.1 70.9 68.0 65.4 64.1 63.5 63.1 61.1 58.0 56.5 Elde r ly population age d 65+ as % of total 13.9 14.0 15.5 18.2 20.8 22.4 23.6 24.6 26.8 29.7 31.0

V e r y e lde r ly population age d 80 and ove r as % of total 2.9 3.0 3.5 3.8 4.0 4.9 6.5 7.8 8.1 8.3 8.7

Elde r ly population age d 55+ as % of w or k ing age pop.15-64 6.0 6.0 6.2 6.7 7.2 7.5 7.8 8.1 8.4 8.9 9.1 Ma croe conom ic a ssum ptions

Re al GDP (gr ow th r ate ) 3.1 3.2 3.6 2.9 2.5 2.3 1.9 0.9 0.4 0.7 0.8

Labour input (gr ow th r ate ) 0.0 -0.1 0.3 -0.4 -0.6 -0.5 -0.8 -1.1 -1.4 -1.1 -1.0 Labour pr oductivity (gr ow th r ate ) 3.1 3.3 3.4 3.3 3.0 2.8 2.7 2.0 1.9 1.8 1.7 TFP (gr ow th r ate ) 0.9 1.0 1.4 1.7 1.7 1.7 1.8 1.3 1.2 1.2 1.1

Capital de e pe ning (contribution to labour productivity grow th) 2.2 2.3 2.0 1.6 1.3 1.1 0.9 0.7 0.7 0.6 0.6 GDP pe r capita (gr ow th r ate ) 3.0 3.3 3.8 3.2 2.7 2.5 2.2 1.3 0.9 1.1 1.3

GDP in 2004 pr ice s (in billions of e ur o) 86 89 106 125 142 159 177 189 195 200 208 GDP pe r w or k e r 13.0 13.4 16.2 19.2 22.1 25.0 28.1 30.6 32.2 33.9 36.0 Re al inte r e s t r ate 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 La bour force a ssumptions

Population gr ow th (w or k ing age :15-64) 0.2 -0.6 -1.1 -0.9 -0.3 -0.6 -0.6 -1.5 -1.4 -0.9

Labour for ce (thous ands ) 5094 5108 5170 5123 4981 4850 4691 4483 4194 3935 3744 Par ticipation r ate (15-64) 70.4 70.5 72.0 75.2 76.9 77.2 76.2 74.6 73.6 74.4 74.5

young (15-24) 37.0 36.2 37.1 39.8 35.7 35.9 36.0 36.5 37.4 37.6 36.8

pr im e -age (25-54) 88.2 88.5 89.4 90.5 90.9 91.4 91.3 91.0 90.7 90.5 90.7 olde r (55-64) 44.4 44.4 49.7 54.1 59.1 61.3 62.5 62.3 58.7 60.1 60.1 olde s t (65-71) 7.9 7.7 8.8 10.7 10.0 10.6 11.5 11.0 12.0 11.1 10.6 Em ploym e nt r ate (15-64) 64.9 65.0 66.8 70.3 71.9 72.1 71.2 69.8 68.8 69.6 69.7 Em ploym e nt r ate (15-71) 60.7 60.8 61.6 63.4 64.2 64.8 64.5 62.6 60.7 59.5 60.4 Em ploym e nt gr ow th (15-64) 0.3 0.3 -0.4 -0.6 -0.5 -0.8 -1.1 -1.4 -1.1 -1.0

Une m ploym e nt r ate (15-64) 7.8 7.8 7.3 6.5 6.5 6.5 6.5 6.5 6.5 6.5 6.5 De pe nde ncy ra tios:

Shar e of olde r w or k e r s 11.3 11.7 14.2 14.6 15.0 15.8 18.6 22.3 21.2 20.1 20.0 Old-age de pe nde ncy r atio (1) 19.7 19.8 21.9 26.8 31.8 35.0 37.1 39.0 43.8 51.2 54.8 Total de pe nde ncy r atio (2) 41.2 40.7 41.0 47.0 52.8 56.1 57.4 58.5 63.5 72.3 77.1

Total e conom ic de pe nde ncy r atio 117.4 116.6 111.2 109.0 112.6 116.4 121.0 127.2 137.7 147.6 154.0 Econom ic old-age de pe nde ncy r atio (15-64) 29.4 29.5 31.5 36.1 42.3 46.5 50.0 53.7 60.8 70.2 75.8 Econom ic old-age de pe nde ncy r atio (15-71) 29.1 29.3 31.2 35.5 41.4 45.7 49.0 52.6 59.1 68.0 73.8 LEGENDA :

S h a re o f o l d e r wo r k e rs = P o p u la t i o n a g e d 5 5 t o 6 4 a s % o f p o p ul a t io n a g e d 15 - 6 4

O ld - a g e d e p e n de n c y r a t io ( 1) = P o p ul a t io n a g e d 6 5 a n d o v e r a s a p e rc e n t a g e o f t he p o p u la t i o n a ge d 15 - 6 4

T o t a l d e p e n d e nc y ra t io ( 2 ) = P o p u la t i o n un d e r 15 a n d o v e r 6 4 a s a pe rc e n t a g e o f t h e p o p u la t i o n a ge d 15 - 6 4

T o t a l e c o n o m ic d e p e n d e n c y ra t io = T o t a l p o p u la t io n le s s e m p lo ye d a s % o f e m p l o ye d p o p u la t io n ( 15 - 6 4 )

E c o no m i c o ld - a g e d e p e nd e n c y ra t io ( 15 - 6 4 ) = I n a c t i v e p o pu l a t io n a g e d 6 5 + a s % o f e m p l o ye d p o p u la t i o n ( 15 - 6 4 )

E c o no m i c o ld - a g e d e p e nd e n c y ra t io ( 15 - 7 1) = In a c t iv e p o p u la t io n a g e d 6 5 + a s % o f e m p lo ye d p o p u la t i o n ( 15 - 7 1)

Czech Republic EPC-AW G Pension expenditure projections

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Baseline scenario; as % of GDP

Social security pensions, gross 8.5 8.5 8.2 8.2 8.4 8.9 9.6 10.6 12.2 13.3 14.0

Old-age and early pens ions , gros s 7.6 7.6 7.4 7.4 7.6 8.1 8.7 9.9 11.4 12.5 13.3

Of which: earnings -related pens ions , gros s 7.6 7.6 7.4 7.4 7.6 8.1 8.7 9.9 11.4 12.5 13.3 Private s ector em ployees , gros s : : : : : : : : : : : Public s ector em ployees , gros s : : : : : : : : : : :

Other pens ions (dis ability, s urvivors ), gros s 0.8 0.8 0.8 0.8 0.8 0.9 0.8 0.8 0.8 0.8 0.8 Occupational pensions, gross : : : : : : : : : : :

Private mandatory pensions, gross : : : : : : : : : : :

Total pension expenditure, gross 8.5 8.5 8.2 8.2 8.4 8.9 9.6 10.6 12.2 13.3 14.0 Social security pensions, net 8.5 8.5 8.2 8.2 8.4 8.9 9.6 10.6 12.2 13.3 14.0

Total pension expenditure, net 8.5 8.5 8.2 8.2 8.4 8.9 9.6 10.6 12.2 13.3 14.0

Social security pensions, contributions 8.9 8.9 8.9 8.9 8.9 8.9 8.9 8.9 8.9 8.9 8.9 Total pension contributions 8.9 8.9 8.9 8.9 8.9 8.9 8.9 8.9 8.9 8.9 8.9

Social security pensions, assets 0.3 0.7 3.5 6.8 9.9 11.0 9.4 3.6 0.0 0.0 0.0 All pensions, assets 0.3 0.7 3.5 6.8 9.9 11.0 9.4 3.6 0.0 0.0 0.0 Additional indicators

Social security pensions, num ber of pensioners , 1000 pers. 2629 2667 2795 2893 2984 3099 3215 3351 3483 3513 3496 All pensions, pensioners , 1000 pers. 2629 2667 2795 2893 2984 3099 3215 3351 3483 3513 3496

Number of pensioners aged 65+ , 1000 pers. 1405 1423 1556 1804 2011 2113 2199 2249 2422 2590 2627

Share of pensioners below age 65 as % of all pensioners 46.6 46.6 44.3 37.7 32.6 31.8 31.6 32.9 30.5 26.3 24.9 Average gross social sec. pension, 1000 in 2004 prices 2.8 2.8 3.1 3.5 4.0 4.6 5.3 6.0 6.8 7.6 8.4 Average gross total pensions, 1000 in 2004 prices 2.8 2.8 3.1 3.5 4.0 4.6 5.3 6.0 6.8 7.6 8.4 Output / W orker, 1000 in 2004 prices 17.6 18.2 22.2 26.1 30.5 35.2 40.3 45.1 49.7 54.5 59.4 Social sec. benefit ratio 15.7 15.5 14.1 13.5 13.2 13.0 13.1 13.3 13.7 14.0 14.1

Total pension benefit ratio 15.7 15.5 14.1 13.5 13.2 13.0 13.1 13.3 13.7 14.0 14.1

Social security pensions, num of contributors, in 1000 4767 4778 4880 4911 4776 4650 4500 4306 4056 3822 3620 Average social sec. pension contribution, 1000 in 2004 prices 1.6 1.7 1.9 2.3 2.6 3.0 3.5 3.9 4.3 4.7 5.1 Average total pension contribution, 1000 in 2004 prices : : : : : : : : : : :

Support ratio (contributors /100 pensioners, social sec. pens.) 181 179 175 170 160 150 140 128 116 109 104 High life expectancy; as % of GDP

Social security pensions, gross 8.5 8.5 8.2 8.2 8.5 8.9 9.6 10.8 12.4 13.6 14.4

Old-age and early pensions, gross 7.6 7.6 7.5 7.4 7.7 8.1 8.8 10.0 11.6 12.8 13.6 Total pension expenditure, gross 8.5 8.5 8.2 8.2 8.5 8.9 9.6 10.8 12.4 13.6 14.4 All pensions, assets 0.3 0.7 3.4 6.5 9.1 9.7 7.2 0.2 0.0 0.0 0.0 Higher labour productivity; as % of GDP

Social security pensions, gross 8.5 8.5 8.2 8.1 8.3 8.7 9.3 10.4 11.9 13.0 13.6

Old-age and early pensions, gross 7.6 7.6 7.4 7.3 7.5 7.9 8.5 9.6 11.1 12.2 12.9 Total pension expenditure, gross 8.5 8.5 8.2 8.1 8.3 8.7 9.3 10.4 11.9 13.0 13.6 All pensions, assets 0.3 0.7 3.4 6.7 9.8 11.2 10.1 5.0 0.0 0.0 0.0 Lower labour productivity; as % of GDP

Social security pensions, gross 8.5 8.5 8.2 8.2 8.5 9.0 9.6 10.7 12.3 13.4 14.2

Old-age and early pensions, gross 7.6 7.6 7.4 7.4 7.7 8.1 8.8 9.9 11.5 12.6 13.4 Total pension expenditure, gross 8.5 8.5 8.2 8.2 8.5 9.0 9.6 10.7 12.3 13.4 14.2 All pensions, assets 0.3 0.7 3.4 6.6 9.2 9.9 7.5 0.8 0.0 0.0 0.0 Higher employment rate (1 p.p.); as % of GDP

Social security pensions, gross 8.5 8.5 8.2 8.1 8.3 8.8 9.4 10.4 12.0 13.1 13.8

Old-age and early pensions, gross 7.6 7.6 7.4 7.3 7.5 7.9 8.6 9.7 11.2 12.3 13.0 Total pension expenditure, gross 8.5 8.5 8.2 8.1 8.3 8.8 9.4 10.4 12.0 13.1 13.8 All pensions, assets 0.3 0.7 3.5 7.0 10.3 11.7 10.5 5.3 0.0 0.0 0.0 Higher older workers empl. rate (5 p.p.); as % of GDP

Social security pensions, gross 8.5 8.5 8.2 8.1 8.3 8.8 9.4 10.4 11.9 13.0 13.7

Old-age and early pensions, gross 7.6 7.6 7.4 7.3 7.5 7.9 8.5 9.6 11.1 12.2 12.9 Total pension expenditure, gross 8.5 8.5 8.2 8.1 8.3 8.8 9.4 10.4 11.9 13.0 13.7 All pensions, assets 0.3 0.7 3.5 6.9 10.0 11.4 10.2 5.2 0.0 0.0 0.0 Lower interest rate; as % of GDP

Social security pensions, gross 8.5 8.5 8.2 8.2 8.4 8.9 9.6 10.6 12.2 13.3 14.0

Old-age and early pensions, gross 7.6 7.6 7.4 7.4 7.6 8.1 8.7 9.9 11.4 12.5 13.3 Total pension expenditure, gross 8.5 8.5 8.2 8.2 8.4 8.9 9.6 10.6 12.2 13.3 14.0 All pensions, assets 0.3 0.7 3.4 6.5 9.2 9.8 7.7 1.4 0.0 0.0 0.0 Higher interest rate; as % of GDP

Social security pensions, gross 8.5 8.5 8.2 8.2 8.4 8.9 9.6 10.6 12.2 13.3 14.0

Old-age and early pensions, gross 7.6 7.6 7.4 7.4 7.6 8.1 8.7 9.9 11.4 12.5 13.3 Total pension expenditure, gross 8.5 8.5 8.2 8.2 8.4 8.9 9.6 10.6 12.2 13.3 14.0 All pensions, assets 0.3 0.7 3.6 7.2 10.6 12.4 11.4 6.2 0.0 0.0 0.0 : = data not provided

Czech Republic OTHER AGE-RELATED EXPENDITURES as % of GDP

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Health care spending as % of GDP

Pure ageing s cenario 6.4 6.5 6.7 7 .0 7.3 7.5 7.7 7.9 8.1 8 .2 8.3

Cons tant health s cenario 6.4 6.5 6.6 6 .7 6.8 7.0 7.1 7.2 7.3 7 .4 7.5

Death-related cos ts s cenario 6.4 6.5 6.6 6 .8 7.0 7.2 7.4 7.5 7.6 7 .7 7.8 Incom e elas ticity of dem and 6.4 6.5 6.8 7 .2 7.6 7.9 8.2 8.4 8.6 8 .7 8.9 Unit cos ts - GDP per worker 6.4 6.5 6.6 6 .8 7.2 7.6 7.9 8.4 8.9 9 .5 9.8 AWG reference s cenario 6.4 6.5 6.8 7 .1 7.4 7.6 7.8 8.0 8.1 8 .3 8.4 Long-term care spending as % of GDP

Pure ageing s cenario 0.3 0.3 0.3 0 .4 0.4 0.5 0.6 0.6 0.7 0 .7 0.8

Unit cos ts - GDP per capita 0.3 0.3 0.4 0 .4 0.4 0.3 0.5 0.6 0.6 0 .6 0.7

Cons tant dis ability s cenario 0.3 0.3 0.3 0 .3 0.3 0.4 0.5 0.5 0.5 0 .6 0.6 Increas e in form al care 0.3 0.3 0.4 0 .5 0.6 0.7 0.8 1.0 1.0 1 .1 1.2 AWG reference s cenario 0.3 0.3 0.3 0 .3 0.4 0.4 0.5 0.6 0.6 0 .6 0.7 Numbe r of de pe nde nt pe ople (in thous ands )

Pure ageing s cenario 299 304 333 371 4 15 46 8 520 551 572 600 6 25

Unit cos ts - GDP per capita 299 304 333 371 4 15 22 0 520 551 572 600 6 25

Cons tant dis ability s cenario 299 299 304 256 3 23 34 4 369 378 375 375 3 77 Increas e in form al care 299 304 333 371 4 15 46 8 520 551 572 600 6 25 AWG reference s cenario 299 302 318 342 3 69 40 6 444 465 474 487 5 01 of which re ce iving formal care

Pure ageing s cenario 134 136 150 168 1 86 20 9 234 250 260 272 2 81

Unit cos ts - GDP per capita 134 136 150 168 1 86 20 9 234 250 260 272 2 81

Cons tant dis ability s cenario 134 134 138 143 1 46 15 4 167 173 172 172 1 71 Increas e in form al care 134 144 199 256 3 14 35 4 394 419 435 456 4 73 AWG reference s cenario 134 135 144 156 1 66 18 2 200 211 216 222 2 26 of which re ce iving informal or no care

Pure ageing s cenario 166 168 182 203 2 29 25 9 286 301 312 328 3 44

Unit cos ts - GDP per capita 166 168 182 203 2 29 12 0 286 301 312 328 3 44

Cons tant dis ability s cenario 166 165 166 139 1 78 18 9 202 205 203 203 2 05 Increas e in form al care 166 160 134 115 1 01 11 4 126 133 137 144 1 51 AWG reference s cenario 166 167 174 187 2 03 22 4 244 253 257 265 2 75 Education spending as % of GDP

Total 3.8 3.8 3.3 2 .9 2.8 2.9 3.0 3.0 3.0 3 .1 3.1

of which: Transfers 0.2 0.2 0.2 0 .2 0.2 0.2 0.2 0.2 0.2 0 .2 0.2 Prim ary 0.6 0.6 0.5 0 .5 0.6 0.6 0.6 0.5 0.5 0 .6 0.6

of which: Transfers 0.0 0.0 0.0 0 .0 0.0 0.0 0.0 0.0 0.0 0 .0 0.0 Low s econdary 1.1 1.0 0.8 0 .7 0.8 0.8 0.8 0.8 0.8 0 .8 0.8

of which: Transfers 0.0 0.0 0.0 0 .0 0.0 0.0 0.0 0.0 0.0 0 .0 0.0 Upper s econdary 1.3 1.2 1.1 0 .9 0.9 0.9 1.0 1.0 1.0 1 .0 1.0

of which: Transfers 0.1 0.1 0.1 0 .1 0.1 0.1 0.1 0.1 0.1 0 .1 0.1 Tertiary education 0.9 0.9 0.8 0 .7 0.6 0.6 0.6 0.7 0.7 0 .7 0.7

of which: Transfers 0.1 0.1 0.1 0 .0 0.0 0.0 0.0 0.0 0.0 0 .0 0.0 Number of s tudents (in thous ands )

Total 1 875 18 23 159 5 1439 1398 1395 1 375 13 14 123 7 1184 1164 Prim ary 533 501 463 468 4 68 46 5 440 402 381 380 3 85

Low s econdary 505 498 373 359 3 62 36 7 365 344 314 299 3 00

Upper s econdary 551 541 500 380 3 79 38 0 384 380 356 329 3 17

Tertiary education 286 283 260 231 1 88 18 3 185 188 186 176 1 63 Memo

Population aged 15 64 (in thous ands ) 7 234 72 47 717 7 6812 6479 6287 6 157 60 08 569 9 5286 5023 Unemployment benefit spending as % of GDP

0.2 0.2 0.2 0 .2 0.2 0.2 0.2 0.2 0.2 0 .2 0.2

Denmark Main demographic and macroeconomic assumptions (BA SELINE SCENA RIO)

Budgetary Projection: A WG variant population scenario

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 De mogra phic a ssum ptions

Fe r tility rate 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 Life e xpe ctancy at birth

m ale s 75.2 75.4 76.4 77.3 78.1 78.9 79.5 80.1 80.6 81.0 81.4

fe m ale s 79.6 79.7 80.5 81.3 82.1 82.7 83.3 83.8 84.3 84.8 85.2 Life e xpe ctancy at 65

m ale s 15.2 15.3 15.9 16.5 17.0 17.5 17.9 18.3 18.6 19.0 19.3

fe m ale s 18.0 18.1 18.6 19.0 19.5 20.0 20.4 20.8 21.2 21.5 21.9

Ne t m igration (thous and) 7.8 7.6 7.1 7.2 6.9 6.7 6.6 6.6 6.6 6.6 6.6

Ne t m igration as % of population 0.15 0.14 0.13 0.13 0.12 0.12 0.12 0.12 0.12 0.12 0.12 Population (m illion) 5.4 5.4 5.5 5.5 5.5 5.6 5.6 5.6 5.6 5.5 5.5

Population age d 0-14 as % of total 18.9 18.8 18.0 16.9 16.0 15.9 16.2 16.5 16.3 15.9 15.5

Prim e age population (25-54) as % of total 42.4 42.1 40.3 39.1 38.2 37.1 36.3 35.9 36.2 36.3 36.0 Work ing age population (15-64) as % of total 66.2 66.2 65.7 64.5 63.9 62.7 60.8 59.1 58.4 58.6 59.6 Elde r ly population age d 65+ as % of total 14.9 15.0 16.3 18.6 20.1 21.4 22.9 24.4 25.3 25.5 25.0

V e ry e lde r ly population age d 80 and ove r as % of total 4.0 4.1 4.1 4.2 4.6 5.6 6.9 7.5 8.0 8.7 9.5

Elde rly population age d 55+ as % of w ork ing age pop.15-64 3.8 3.8 4.0 4.1 4.3 4.5 4.9 5.1 5.0 4.9 4.8 Ma croe conomic a ssumptions

Re al GDP (grow th rate ) 1.8 2.0 2.1 2.0 1.7 1.4 1.1 1.3 1.5 1.9 1.8

Labour input (gr ow th rate ) 0.1 0.3 0.0 0.0 -0.1 -0.4 -0.6 -0.4 -0.2 0.2 0.1

Labour pr oductivity (grow th rate ) 1.7 1.7 2.1 2.0 1.8 1.8 1.7 1.7 1.7 1.7 1.7 TFP (grow th rate ) 1.1 1.1 1.4 1.3 1.1 1.1 1.1 1.1 1.1 1.1 1.1

Capital de e pe ning (contribution to labour productiv ity grow th) 0.6 0.6 0.7 0.7 0.7 0.7 0.6 0.6 0.6 0.6 0.6 GDP pe r capita (gr ow th rate ) 1.6 1.7 1.9 1.9 1.6 1.3 1.1 1.3 1.7 2.0 1.9

GDP in 2004 price s (in billions of e uro) 195 199 220 243 266 286 304 323 346 378 414 GDP pe r w or k e r 22.3 22.7 24.9 27.3 29.7 31.8 33.5 35.6 38.3 42.2 46.6 Re al inte r e s t r ate 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 La bour force a ssumptions

Population grow th (w or k ing age :15-64) 0.2 -0.1 -0.1 -0.1 -0.3 -0.7 -0.3 -0.3 0.0 0.2

Labour force (thous ands ) 2845 2855 2864 2862 2855 2820 2742 2674 2636 2643 2661

Par ticipation rate (15-64) 79.6 79.7 79.8 80.6 80.7 80.7 80.5 80.8 80.9 81.4 81.3

young (15-24) 65.6 66.0 66.8 68.0 68.2 68.5 68.4 67.8 67.5 67.7 68.1

prim e -age (25-54) 87.9 88.1 88.9 89.3 89.3 89.4 89.6 89.7 89.8 89.8 89.7 olde r (55-64) 64.1 64.4 63.7 66.6 67.9 67.7 66.1 66.2 65.3 67.8 69.0

olde s t (65-71) 11.3 10.9 12.2 11.7 11.9 12.0 12.2 11.7 11.9 11.6 11.7 Em ploym e nt rate (15-64) 75.4 75.8 76.4 77.2 77.3 77.3 77.1 77.3 77.5 78.0 77.9 Em ploym e nt rate (15-71) 70.2 70.4 70.1 69.5 70.0 69.8 69.1 68.6 69.1 69.9 70.8 Em ploym e nt grow th (15-64) 0.7 0.0 0.0 -0.1 -0.4 -0.6 -0.4 -0.2 0.2 0.1

Une m ploym e nt rate (15-64) 5.3 4.9 4.3 4.3 4.3 4.3 4.3 4.3 4.3 4.3 4.3 De pe nde ncy ra tios:

Shar e of olde r w ork e r s 15.6 16.0 16.1 16.1 17.3 18.5 18.2 17.3 15.4 15.2 17.0 Old-age de pe nde ncy ratio (1) 22.5 22.6 24.9 28.8 31.5 34.2 37.7 41.3 43.3 43.6 41.9 Total de pe nde ncy r atio (2) 51.0 51.1 52.3 55.0 56.5 59.5 64.4 69.3 71.4 70.7 67.9

Total e conom ic de pe nde ncy ratio 100.3 99.4 99.4 100.8 102.5 106.4 113.3 118.9 121.2 118.9 115.6

Econom ic old-age de pe nde ncy r atio (15-64) 28.5 28.6 30.8 35.4 38.8 42.2 46.7 51.1 53.7 53.9 52.0 Econom ic old-age de pe nde ncy r atio (15-71) 28.2 28.2 30.3 34.7 38.1 41.4 45.7 49.9 52.5 52.8 51.1 LEGENDA :

S h a re o f o ld e r wo rk e rs = P o p u la t io n a g e d 5 5 t o 6 4 a s % o f p o p u la t io n a g e d 15 - 6 4

O ld - a g e d e p e n d e n c y ra t io ( 1) = P o p u la t io n a g e d 6 5 a n d o v e r a s a p e r c e n t a g e o f t h e p o p u la t io n a g e d 15 - 6 4

T o t a l d e p e n d e n c y r a t io ( 2 ) = P o p u la t io n u n d e r 15 a n d o v e r 6 4 a s a p e r c e n t a g e o f t h e p o p u la t io n a g e d 15 - 6 4

T o t a l e c o n o m ic d e p e n d e n c y r a t io = T o t a l p o p u la t io n le s s e m p lo ye d a s % o f e m p lo ye d p o p u la t io n ( 15 - 6 4 )

E c o n o m ic o ld - a g e d e p e n d e n c y ra t io ( 15 - 6 4 ) = In a c t iv e p o p u la t io n a g e d 6 5 + a s % o f e m p lo ye d p o p u la t io n ( 15 - 6 4 )

E c o n o m ic o ld - a g e d e p e n d e n c y ra t io ( 15 - 7 1) = In a c t iv e p o p u la t io n a g e d 6 5 + a s % o f e m p lo ye d p o p u la t io n ( 15 - 7 1)

Denmark EPC-AW G Pension expenditure projections

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Baseline scenario; as % of GDP

Social security pensions, gross 9.5 9.6 10.1 10.8 11.3 12.0 12.8 13.3 13.5 13.1 12.8

Old-age and early pens ions , gros s 7.3 7.5 8.2 8.9 9.4 10.0 10.8 11.3 11.5 11.1 10.7 Of which: earnings -related pens ions , gros s : : : : : : : : : : : Private s ector em ployees , gros s : : : : : : : : : : : Public s ector em ployees , gros s : : : : : : : : : : :

Other pens ions (dis ability, s urvivors ), gros s 2.2 2.2 1.9 1.9 1.9 2.0 2.0 2.0 2.0 2.0 2.1 Occupational pensions, gross : : : : : : : : : : :

Private m andatory pensions, gross : : : : : : : : : : : Total pension expenditure, gross : : : : : : : : : : :

Social security pensions, net 6.9 7.0 7.4 7.9 8.3 8.9 9.5 9.9 10.1 9.9 9.6 Total pension expenditure, net : : : : : : : : : : :

Social security pensions, contributions : : : : : : : : : : : Total pension contributions : : : : : : : : : : :

Social security pensions, assets : : : : : : : : : : : All pensions, assets : : : : : : : : : : : Additional indicators

Social security pensions, net / Social sec. pensions, gross,% 73 73 73 74 74 74 74 75 75 75 75 Total pension expenditure, net / Total pension exp., gross, % : : : : : : : : : : :

Social security pensions, num ber of pensioners , 1000 pers. 1255 1286 1395 1511 1598 1675 1749 1788 1787 1748 1702 All pensions, pensioners , 1000 pers. 1255 1286 1395 1511 1598 1675 1749 1788 1787 1748 1702

Num ber of pensioners aged 65+ , 1000 pers. 860 877 980 1120 1204 1273 1348 1416 1441 1428 1371

Share of pensioners below age 65 as % of all pensioners 31.5 31.8 29.7 25.9 24.6 24.0 22.9 20.8 19.4 18.3 19.4 Average gross social sec. pension, 1000 in 2004 prices 14.7 14.9 16.0 17.3 18.8 20.5 22.2 24.0 26.1 28.3 31.2 Average gross total pensions, 1000 in 2004 prices : : : : : : : : : : :

Output / W orker, 1000 in 2004 prices 72.6 73.9 80.2 88.7 97.2 106.1 115.7 126.0 137.2 149.3 162.5 Social sec. benefit ratio 20.2 20.1 19.9 19.5 19.4 19.3 19.2 19.1 19.0 19.0 19.2 Total pension benefit ratio : : : : : : : : : : :

Social security pensions, num of contributors, in 1000 : : : : : : : : : : :

Average social sec. pension contribution, 1000 in 2004 prices : : : : : : : : : : : Average total pension contribution, 1000 in 2004 prices : : : : : : : : : : :

Support ratio (contributors /100 pensioners, social sec. pens.) : : : : : : : : : : : High life expectancy; as % of GDP

Social security pensions, gross 9.5 9.6 10.1 10.8 11.4 12.1 13.0 13.7 13.9 13.6 13.4 Old-age and early pensions, gross 7.3 7.5 8.3 8.9 9.5 10.1 11.0 11.6 11.9 11.6 11.3 Total pension expenditure, gross : : : : : : : : : : : All pensions, assets : : : : : : : : : : : Higher labour productivity; as % of GDP

Social security pensions, gross 9.5 9.6 10.1 10.8 11.3 12.0 12.8 13.3 13.5 13.1 12.8 Old-age and early pensions, gross 7.3 7.5 8.2 8.9 9.4 10.0 10.8 11.3 11.5 11.1 10.7 Total pension expenditure, gross : : : : : : : : : : : All pensions, assets : : : : : : : : : : : Lower labour productivity; as % of GDP

Social security pensions, gross 9.5 9.6 10.0 10.6 11.1 11.6 12.4 13.0 13.1 12.8 12.5 Old-age and early pensions, gross 7.3 7.5 8.2 8.8 9.3 9.8 10.6 11.2 11.3 11.0 10.6 Total pension expenditure, gross : : : : : : : : : : : All pensions, assets : : : : : : : : : : : Lower interest rate; as % of GDP

Denmark OTHER AGE-RELATED EXPENDITURES as % of GDP

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Health care spending as % of GDP

Pure ageing s cenario 6.9 6.9 7.0 7.2 7 .4 7.6 7.7 7.8 7.9 7.9 8.0

Cons tant health s cenario 6.9 6.9 6.8 6.9 7 .0 7.1 7.2 7.2 7.2 7.1 7.1

Death-related cos ts s cenario 6.9 6.9 6.9 7.1 7 .2 7.4 7.5 7.5 7.5 7.6 7.6 Incom e elas ticity of dem and 6.9 6.9 7.1 7.3 7 .6 7.8 8.0 8.1 8.1 8.2 8.3 Unit cos ts - GDP per worker 6.9 6.9 7.0 7.2 7 .5 7.9 8.3 8.5 8.7 8.6 8.6 AWG reference s cenario 6.9 6.9 7.0 7.2 7 .4 7.6 7.7 7.7 7.8 7.8 7.8 Long-term care spending as % of GDP

Pure ageing s cenario 1.1 1.1 1.2 1.2 1 .3 1.6 1.9 2.1 2.3 2.4 2.6

Unit cos ts - GDP per capita 1.1 1.1 1.2 1.2 1 .3 1.1 1.8 1.9 2.0 2.2 2.4

Cons tant dis ability s cenario 1.1 1.1 1.1 1.1 1 .2 1.3 1.6 1.7 1.8 1.8 1.9 Increas e in form al care 1.1 1.1 1.0 0.9 0 .9 1.1 1.3 1.5 1.6 1.7 1.8 AWG reference s cenario 1.1 1.1 1.1 1.1 1 .2 1.5 1.7 1.9 2.0 2.1 2.2 Numbe r of de pe nde nt pe ople (in thous ands )

Pure ageing s cenario 139 14 0 1 50 1 65 180 205 232 248 260 270 27 5

Unit cos ts - GDP per capita 139 14 0 1 50 1 65 180 105 232 248 260 270 27 5

Cons tant dis ability s cenario 139 13 8 1 38 1 16 144 155 168 173 175 178 17 9 Increas e in form al care 139 14 0 1 50 1 65 180 205 232 248 260 270 27 5 AWG reference s cenario 139 13 9 1 44 1 53 162 180 200 211 217 224 22 7 of which re ce iving formal care

Pure ageing s cenario 189 19 0 1 98 2 15 242 280 318 343 363 383 39 7

Unit cos ts - GDP per capita 189 19 0 1 98 2 15 242 280 318 343 363 383 39 7

Cons tant dis ability s cenario 189 18 8 1 83 1 86 197 217 239 247 252 260 26 5 Increas e in form al care 189 18 7 1 85 1 93 207 238 270 290 305 320 32 9 AWG reference s cenario 189 18 9 1 90 2 01 219 249 279 295 308 322 33 1 of which re ce iving informal or no care

Pure ageing s cenario : : : : : : : : : : :

Unit cos ts - GDP per capita : : : : : : : : : : :

Cons tant dis ability s cenario : : : : : : : : : : : Increas e in form al care : : : : : : : : : : : AWG reference s cenario : : : : : : : : : : : Education spending as % of GDP

Total 7.8 7.7 7.5 7.6 7 .5 7.3 7.3 7.5 7.6 7.6 7.5

of which: Transfers 1.6 1.5 1.5 1.5 1 .6 1.5 1.5 1.5 1.5 1.5 1.5 Prim ary 2.0 2.0 1.9 1.8 1 .7 1.6 1.7 1.9 1.9 1.8 1.7

of which: Transfers 0.0 0.0 0.0 0.0 0 .0 0.0 0.0 0.0 0.0 0.0 0.0 Low s econdary 1.2 1.2 1.3 1.3 1 .2 1.1 1.1 1.2 1.3 1.3 1.2

of which: Transfers 0.0 0.0 0.0 0.0 0 .0 0.0 0.0 0.0 0.0 0.0 0.0 Upper s econdary 1.8 1.8 2.0 2.1 2 .0 2.0 1.9 1.9 2.0 2.0 2.0

of which: Transfers 0.7 0.7 0.7 0.7 0 .7 0.7 0.7 0.7 0.7 0.7 0.7 Tertiary education 2.8 2.7 2.3 2.5 2 .6 2.6 2.6 2.5 2.5 2.5 2.5

of which: Transfers 0.9 0.8 0.7 0.8 0 .8 0.8 0.8 0.8 0.8 0.8 0.8 Number of s tudents (in thous ands )

Total 1073 1078 1080 1068 102 8 985 972 985 997 990 96 5 Prim ary 423 42 6 4 10 3 90 361 348 362 379 379 364 34 7

Low s econdary 233 23 9 2 61 2 50 239 220 212 221 232 231 22 2

Upper s econdary 220 22 0 2 41 2 51 244 233 219 215 222 228 22 6

Tertiary education 198 19 2 1 68 1 76 184 184 179 170 164 166 16 9 Memo

Population aged 15 64 (in thous ands ) 3575 3582 3590 3550 353 6 349 4 34 06 33 10 3 257 3 245 3272 Unemployment benefit spending as % of GDP

1.5 1.4 1.2 1.2 1 .2 1.2 1.2 1.2 1.2 1.2 1.2

Germany Main demographic and macroeconomic assumptions (BA SELINE SCENA RIO)

Budgetary Projection: A WG variant population scenario

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 De mogra phic a ssumptions

Fe rtility rate 1.4 1.4 1.4 1.4 1.4 1.5 1.5 1.5 1.5 1.5 1.5 Life e xpe ctancy at bir th

m ale s 76.1 76.3 77.2 78.1 78.9 79.6 80.2 80.7 81.2 81.6 82.0

fe m ale s 81.7 81.9 82.7 83.5 84.2 84.8 85.4 85.8 86.2 86.5 86.8 Life e xpe ctancy at 65

m ale s 16.1 16.2 16.8 17.4 18.0 18.4 18.8 19.2 19.5 19.8 20.1

fe m ale s 19.5 19.6 20.3 20.9 21.4 21.9 22.3 22.6 22.9 23.1 23.4

Ne t m igr ation (thous and) 270.0 250.0 230.0 230.0 215.0 215.0 205.0 205.0 200.0 200.0 200.0 Ne t m igr ation as % of population 0.33 0.30 0.28 0.28 0.26 0.26 0.25 0.25 0.25 0.25 0.26 Population (m illion) 82.5 82.7 83.1 83.4 83.5 83.3 82.7 81.8 80.7 79.4 77.7

Population age d 0-14 as % of total 14.7 14.5 13.6 13.2 13.2 13.2 13.0 12.6 12.3 12.1 12.2

Prim e age population (25-54) as % of total 43.6 43.5 42.9 42.0 39.7 37.4 36.8 36.6 36.1 35.5 35.3 Work ing age population (15-64) as % of total 67.3 67.0 66.1 66.0 64.7 62.9 60.4 58.4 58.1 58.2 57.9 Elde rly population age d 65+ as % of total 18.0 18.6 20.3 20.8 22.1 23.9 26.6 29.0 29.6 29.6 29.9

V e ry e lde rly population age d 80 and ove r as % of total 4.2 4.3 5.0 5.6 6.9 7.7 7.7 8.5 9.7 11.5 12.7

Elde rly population age d 55+ as % of w or k ing age pop.15-64 54.9 55.3 57.5 59.9 65.0 70.3 73.4 75.2 75.3 75.0 74.4 Ma croe conomic a ssumptions

Re al GDP (grow th r ate ) 1.1 1.2 2.3 1.9 1.3 1.0 0.8 1.1 1.4 1.3 1.2

Labour input (grow th r ate ) 0.4 0.5 1.2 0.4 -0.4 -0.8 -0.9 -0.6 -0.3 -0.5 -0.6

Labour pr oductivity (gr ow th rate ) 0.7 0.7 1.1 1.5 1.7 1.8 1.7 1.7 1.7 1.7 1.7 TFP (gr ow th rate ) 0.5 0.6 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1

Capital de e pe ning (c ontribution to labour productivity grow th) 0.1 0.1 0.0 0.4 0.6 0.6 0.6 0.6 0.6 0.6 0.6 GDP pe r capita (grow th r ate ) 1.1 1.0 2.2 1.9 1.3 1.1 1.0 1.3 1.7 1.6 1.6

GDP in 2004 price s (in billions of e uro) 2177 2203 2419 2684 2887 3050 3184 3342 3566 3806 4037 GDP pe r w ork e r 20.3 20.5 22.4 24.8 26.6 28.2 29.7 31.5 34.0 36.9 40.0 Re al inte re s t r ate 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 La bour force a ssum ptions

Population grow th (w ork ing age :15-64) -0.3 -0.1 -0.2 -0.5 -0.8 -1.0 -0.8 -0.2 -0.4 -0.5

Labour force (thous ands ) 40526 40710 42514 43340 42712 41189 39251 37819 37272 36561 35533 Participation rate (15-64) 73.0 73.5 77.4 78.7 79.1 78.7 78.6 79.2 79.5 79.1 79.0

young (15-24) 50.5 50.5 52.6 52.1 52.4 51.8 51.3 51.5 51.8 52.1 52.1

prim e -age (25-54) 86.5 86.9 88.3 88.9 89.4 89.6 89.9 90.1 89.9 89.8 89.8 olde r (55-64) 45.9 47.2 61.7 67.9 69.5 69.0 67.4 68.7 70.7 70.1 69.2 olde s t (65-71) 6.2 6.5 6.2 8.3 8.6 8.8 8.8 8.3 7.9 8.7 8.6 Em ploym e nt rate (15-64) 66.0 66.6 70.9 73.2 73.5 73.2 73.1 73.7 73.9 73.6 73.5 Em ploym e nt rate (15-71) 59.9 60.1 63.5 67.0 66.3 65.2 63.7 63.6 65.2 65.9 65.0 Em ploym e nt grow th (15-64) 0.6 1.3 0.3 -0.5 -0.9 -1.0 -0.5 -0.2 -0.5 -0.6

Une m ploym e nt rate (15-64) 9.5 9.4 8.5 7.0 7.0 7.0 7.0 7.0 7.0 7.0 7.0 De pe nde ncy ra tios:

Share of olde r w or k e rs 11.2 11.2 14.2 17.5 20.5 22.3 20.0 17.9 18.9 20.1 20.0

Old-age de pe nde ncy ratio (1) 26.8 27.7 30.7 31.5 34.2 38.1 44.0 49.7 51.0 50.9 51.7 Total de pe nde ncy ratio (2) 48.7 49.3 51.3 51.5 54.6 59.0 65.5 71.3 72.1 71.8 72.9

Total e conom ic de pe nde ncy ratio 125.1 124.1 113.6 106.9 110.2 117.3 126.5 132.5 132.8 133.4 135.3 Econom ic old-age de pe nde ncy ratio (15-64) 39.5 40.4 42.3 41.8 45.1 50.3 58.2 65.4 67.4 67.6 68.7 Econom ic old-age de pe nde ncy ratio (15-71) 39.0 40.0 41.8 41.3 44.4 49.5 57.0 64.1 66.3 66.6 67.5 LEGENDA :

S h a r e o f o ld e r wo r k e r s = P o p u la t io n a g e d 5 5 t o 6 4 a s % o f p o p u la t io n a g e d 15 - 6 4

O ld - a g e d e p e n d e n c y ra t io ( 1) = P o p u la t io n a g e d 6 5 a n d o v e r a s a p e rc e n t a g e o f t h e p o p u la t io n a g e d 15 - 6 4

T o t a l d e p e n d e n c y r a t io ( 2 ) = P o p u la t io n u n d e r 15 a n d o v e r 6 4 a s a p e rc e n t a g e o f t h e p o p u la t io n a g e d 15 - 6 4

T o t a l e c o n o m ic d e p e n d e n c y r a t io = T o t a l p o p u la t io n le s s e m p lo ye d a s % o f e m p lo ye d p o p u la t io n ( 15 - 6 4 )

E c o n o m ic o ld - a g e d e p e n d e n c y ra t io ( 15 - 6 4 ) = In a c t iv e p o p u la t io n a g e d 6 5 + a s % o f e m p lo ye d p o p u la t io n ( 15 - 6 4 )

E c o n o m ic o ld - a g e d e p e n d e n c y ra t io ( 15 - 7 1) = In a c t iv e p o p u la t io n a g e d 6 5 + a s % o f e m p lo ye d p o p u la t io n ( 15 - 7 1)

Germany EPC-AW G Pension expenditure projections

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Baseline scenario; as % of GDP

Social security pensions, gross 11.4 11.1 10.5 10.5 11.0 11.6 12.3 12.7 12.8 12.9 13.1

Old-age and early pens ions , gros s 11.4 11.1 10.5 10.5 11.0 11.6 12.3 12.7 12.8 12.9 13.1

Of which: earnings -related pens ions , gros s 11.4 11.1 10.5 10.5 11.0 11.6 12.3 12.7 12.8 12.9 13.1 Private s ector em ployees , gros s 9.8 9.6 8.9 8.9 9.1 9.7 10.3 10.6 10.8 10.9 11.1 Public s ector em ployees , gros s 1.6 1.6 1.6 1.7 1.8 1.9 2.0 2.0 2.0 2.0 2.0 Other pens ions (dis ability, s urvivors ), gros s : : : : : : : : : : : Occupational pensions, gross : : : : : : : : : : :

Private m andatory pensions, gross : : : : : : : : : : :

Total pension expenditure, gross 11.4 11.1 10.5 10.5 11.0 11.6 12.3 12.7 12.8 12.9 13.1 Social security pensions, net 10.1 9.6 9.0 9.0 9.3 9.8 10.4 10.6 10.7 10.7 10.9

Total pension expenditure, net 10.1 9.6 9.0 9.0 9.3 9.8 10.4 10.6 10.7 10.7 10.9

Social security pensions, contributions 7.7 7.5 7.3 6.9 7.3 7.8 8.3 8.6 8.7 8.8 8.9 Total pension contributions 7.7 7.5 7.3 6.9 7.3 7.8 8.3 8.6 8.7 8.8 8.9

Social security pensions, assets 0.1 0.1 0.4 0.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 All pensions, assets 0.1 0.1 0.4 0.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Additional indicators

Social security pensions, net / Social sec. pensions, gross,% 88 86 86 85 85 85 84 84 84 83 83 Total pension expenditure, net / Total pension exp., gross, % 88 86 86 85 85 85 84 84 84 83 83 Social security pensions, num ber of pensioners , 1000 pers. 23840 24104 25684 26829 28256 30066 32082 33374 33792 34175 34441 All pensions, pensioners , 1000 pers. 23840 24104 25684 26829 28256 30066 32082 33374 33792 34175 34441

Num ber of pensioners aged 65+ , 1000 pers. 19592 20181 21921 22986 24436 26175 28457 30283 30730 30929 31138

Share of pensioners below age 65 as % of all pensioners 17.8 16.3 14.7 14.3 13.5 12.9 11.3 9.3 9.1 9.5 9.6

Average gross social sec. pension, 1000 in 2004 prices 10.4 10.2 9.9 10.5 11.2 11.8 12.2 12.7 13.5 14.4 15.3 Average gross total pensions, 1000 in 2004 prices 10.4 10.2 9.9 10.5 11.2 11.8 12.2 12.7 13.5 14.4 15.3 Output / W orker, 1000 in 2004 prices 56.2 56.6 59.2 63.4 69.0 75.3 82.1 89.4 97.4 106.0 115.5 Social sec. benefit ratio 18.5 18.0 16.6 16.6 16.2 15.6 14.8 14.2 13.9 13.6 13.3

Total pension benefit ratio 18.5 18.0 16.6 16.6 16.2 15.6 14.8 14.2 13.9 13.6 13.3 Social security pensions, num of contributors, in 1000 32206 32486 34316 35624 35263 34135 32698 31514 30869 30255 29472

Average social sec. pension contribution, 1 000 in 2004 pr ice s 5.2 5.1 5.1 5.2 6.0 7.0 8.1 9.2 10.1 11.1 12.2 Average total pension contribution, 1000 in 2004 prices : : : : : : : : : : :

Support ratio (contributors /100 pensioners, social sec. pens.) 135 135 134 133 125 114 102 94 91 89 86 High life expectancy; as % of GDP

Social security pensions, gross 11.4 11.1 10.5 10.5 11.0 11.7 12.4 12.8 12.9 13.1 13.3

Old-age and early pensions, gross 11.4 11.1 10.5 10.5 11.0 11.7 12.4 12.8 12.9 13.1 13.3 Total pension expenditure, gross 11.4 11.1 10.5 10.5 11.0 11.7 12.4 12.8 12.9 13.1 13.3 All pensions, assets 0.1 0.1 0.4 0.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Higher labour productivity; as % of GDP

Social security pensions, gross 11.4 11.1 10.5 10.5 11.0 11.6 12.3 12.7 12.8 12.9 13.1

Old-age and early pensions, gross 11.4 11.1 10.5 10.5 11.0 11.6 12.3 12.7 12.8 12.9 13.1 Total pension expenditure, gross 11.4 11.1 10.5 10.5 11.0 11.6 12.3 12.7 12.8 12.9 13.1 All pensions, assets 0.1 0.1 0.4 0.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Lower labour productivity; as % of GDP

Social security pensions, gross 11.4 11.1 10.4 10.5 11.0 11.6 12.3 12.7 12.8 12.9 13.1

Old-age and early pensions, gross 11.4 11.1 10.4 10.5 11.0 11.6 12.3 12.7 12.8 12.9 13.1 Total pension expenditure, gross 11.4 11.1 10.4 10.5 11.0 11.6 12.3 12.7 12.8 12.9 13.1 All pensions, assets 0.1 0.1 0.4 0.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Higher employment rate (1 p.p.); as % of GDP

Social security pensions, gross 11.4 11.1 10.4 10.4 10.9 11.5 12.2 12.6 12.7 12.9 13.0

Old-age and early pensions, gross 11.4 11.1 10.4 10.4 10.9 11.5 12.2 12.6 12.7 12.9 13.0 Total pension expenditure, gross 11.4 11.1 10.4 10.4 10.9 11.5 12.2 12.6 12.7 12.9 13.0 All pensions, assets 0.1 0.1 0.4 0.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Higher older workers empl. rate (5 p.p.); as % of GDP

Social security pensions, gross 11.4 11.1 10.4 10.5 10.9 11.5 12.2 12.6 12.7 12.9 13.0

Old-age and early pensions, gross 11.4 11.1 10.4 10.5 10.9 11.5 12.2 12.6 12.7 12.9 13.0 Total pension expenditure, gross 11.4 11.1 10.4 10.5 10.9 11.5 12.2 12.6 12.7 12.9 13.0 All pensions, assets 0.1 0.1 0.4 0.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Lower interest rate; as % of GDP

Social security pensions, gross 11.4 11.1 10.5 10.5 11.0 11.6 12.3 12.7 12.8 12.9 13.1

Old-age and early pensions, gross 11.4 11.1 10.5 10.5 11.0 11.6 12.3 12.7 12.8 12.9 13.1 Total pension expenditure, gross 11.4 11.1 10.5 10.5 11.0 11.6 12.3 12.7 12.8 12.9 13.1 All pensions, assets 0.1 0.1 0.4 0.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 : = data not provided

Germany OTHER AGE-RELATED EXPENDITURES as % of GDP

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Health care spending as % of GDP

Pure ageing s cenario 6.0 6.1 6.3 6.5 6 .7 6.8 7.0 7.1 7.2 7.3 7.3

Cons tant health s cenario 6.0 6.0 6.1 6.2 6 .3 6.4 6.4 6.5 6.6 6.7 6.7

Death-related cos ts s cenario 6.0 6.1 6.2 6.4 6 .6 6.7 6.8 6.9 6.9 7.0 7.0 Incom e elas ticity of dem and 6.0 6.1 6.3 6.6 6 .9 7.0 7.2 7.3 7.5 7.6 7.6 Unit cos ts - GDP per worker 6.0 6.0 6.0 6.0 6 .3 6.6 7.0 7.4 7.6 7.8 7.8 AWG reference s cenario 6.0 6.1 6.3 6.5 6 .7 6.8 6.9 7.0 7.1 7.2 7.2 Long-term care spending as % of GDP

Pure ageing s cenario 1.0 1.0 1.0 1.1 1 .3 1.4 1.5 1.6 1.8 2.1 2.3

Unit cos ts - GDP per capita 1.0 1.0 1.1 1.2 1 .3 1.1 1.5 1.6 1.8 2.0 2.2

Cons tant dis ability s cenario 1.0 1.0 1.0 1.0 1 .1 1.2 1.3 1.3 1.5 1.6 1.8 Increas e in form al care 1.0 1.0 1.1 1.3 1 .6 1.7 1.8 2.0 2.3 2.6 2.8 AWG reference s cenario 1.0 1.0 1.0 1.0 1 .2 1.3 1.4 1.5 1.6 1.9 2.0 Numbe r of de pe nde nt pe ople (in thous ands )

Pure ageing s cenario 2790 2867 3245 3547 394 4 424 4 44 94 49 05 5 299 5 608 5689

Unit cos ts - GDP per capita 2790 2867 3245 3547 394 4 230 3 44 94 49 05 5 299 5 608 5689

Cons tant dis ability s cenario 2790 2826 2982 2546 320 8 327 3 32 54 33 91 3 558 3 722 3731 Increas e in form al care 2790 2867 3245 3547 394 4 424 4 44 94 49 05 5 299 5 608 5689 AWG reference s cenario 2790 2847 3114 3296 357 6 375 9 38 74 41 48 4 429 4 665 4710 of which re ce iving formal care

Pure ageing s cenario 1510 1551 1768 1955 224 4 242 9 25 18 27 48 3 023 3 304 3421

Unit cos ts - GDP per capita 1510 1551 1768 1955 224 4 242 9 25 18 27 48 3 023 3 304 3421

Cons tant dis ability s cenario 1510 1531 1644 1713 187 5 193 9 19 03 19 92 2 131 2 296 2347 Increas e in form al care 1510 1616 2159 2641 319 5 344 5 36 24 39 55 4 297 4 594 4691 AWG reference s cenario 1510 1541 1706 1834 205 9 218 4 22 11 23 70 2 577 2 800 2884 of which re ce iving informal or no care

Pure ageing s cenario 1280 1317 1477 1592 170 0 181 5 19 75 21 58 2 276 2 304 2269

Unit cos ts - GDP per capita 1280 1317 1477 1592 170 0 855 19 75 21 58 2 276 2 304 2269

Cons tant dis ability s cenario 1280 1295 1339 1075 133 3 133 5 13 51 13 99 1 427 1 426 1383 Increas e in form al care 1280 1251 1086 9 05 748 799 869 950 1 002 1 014 99 8

AWG reference s cenario 1280 1306 1408 1463 151 7 157 5 16 63 17 78 1 851 1 865 1826 Education spending as % of GDP

Total 4.0 4.0 3.6 3.3 3 .2 3.2 3.3 3.4 3.4 3.3 3.3

of which: Transfers 0.4 0.4 0.3 0.3 0 .3 0.3 0.3 0.3 0.3 0.3 0.3 Prim ary 0.7 0.7 0.6 0.6 0 .6 0.6 0.6 0.6 0.6 0.6 0.6

of which: Transfers 0.0 0.0 0.0 0.0 0 .0 0.0 0.0 0.0 0.0 0.0 0.0 Low s econdary 1.4 1.4 1.2 1.1 1 .0 1.1 1.1 1.2 1.1 1.1 1.1

of which: Transfers 0.0 0.0 0.0 0.0 0 .0 0.0 0.0 0.0 0.0 0.0 0.0 Upper s econdary 0.8 0.8 0.7 0.6 0 .6 0.6 0.6 0.7 0.7 0.6 0.6

of which: Transfers 0.1 0.1 0.1 0.1 0 .1 0.1 0.1 0.1 0.1 0.1 0.1 Tertiary education 1.2 1.2 1.1 1.0 1 .0 1.0 1.0 1.0 1.0 1.0 1.0

of which: Transfers 0.2 0.2 0.2 0.2 0 .2 0.2 0.2 0.2 0.2 0.2 0.2 Number of s tudents (in thous ands )

Total 1428 7 141 80 133 48 12 562 1 2136 1 1969 11907 11690 1131 3 1090 2 105 93 Prim ary 3285 3295 3130 2970 302 2 305 0 29 92 28 56 2 726 2 644 2614

Low s econdary 5557 5426 4929 4686 444 8 450 1 45 41 44 55 4 262 4 070 3947

Upper s econdary 3248 3287 3168 2895 275 4 260 4 26 28 26 49 2 605 2 497 2388

Tertiary education 2198 2171 2120 2012 191 1 181 3 17 45 17 30 1 720 1 691 1642 Memo

Population aged 15 64 (in thous ands ) 5551 0 553 57 549 20 55 052 5 4021 5 2359 49961 47735 4690 1 4619 9 449 75 Unemployment benefit spending as % of GDP

1.3 1.3 1.1 0.9 0 .9 0.9 0.9 0.9 0.9 0.9 0.9

Estonia Main demographic and macroeconomic assumptions (BA SELINE SCENA RIO)

Budgetary Projection: A WG variant population sc enario

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 De mogra phic a ssumptions

Fe rtility r ate 1.4 1.4 1.5 1.5 1.5 1.6 1.6 1.6 1.6 1.6 1.6 Life e xpe ctancy at bir th

m ale s 65.5 65.7 66.5 67.6 68.9 70.3 71.6 72.7 73.5 74.2 74.9

fe m ale s 76.9 77.0 77.8 78.6 79.5 80.4 81.2 81.8 82.3 82.8 83.1 Life e xpe ctancy at 65

m ale s 12.4 12.5 12.8 13.3 13.9 14.7 15.4 16.0 16.5 17.0 17.3

fe m ale s 16.9 16.9 17.4 17.9 18.4 19.0 19.5 20.0 20.4 20.6 20.9

Ne t m igration (thous and) 0.8 0.8 -2.0 -2.5 -0.4 1.5 1.8 1.8 1.7 1.7 1.7

Ne t m igration as % of population 0.06 0.06 -0.15 -0.19 -0.04 0.12 0.15 0.15 0.15 0.15 0.15 Population (m illion) 1.4 1.3 1.3 1.3 1.2 1.2 1.2 1.2 1.2 1.1 1.1

Population age d 0-14 as % of total 16.0 15.4 14.7 15.8 16.4 16.2 15.1 14.1 13.8 14.2 14.8

Pr im e age population (25-54) as % of total 41.5 41.5 42.2 42.9 42.1 40.8 39.6 38.8 37.7 36.0 35.6 Wor k ing age population (15-64) as % of total 67.9 68.1 68.4 66.7 64.9 63.9 63.6 63.9 63.1 61.7 59.6 Elde rly population age d 65+ as % of total 16.2 16.4 16.9 17.5 18.7 20.0 21.2 22.0 23.1 24.1 25.7

V e ry e lde r ly population age d 80 and ove r as % of total 3.0 3.1 3.9 4.4 5.0 5.0 5.5 6.3 7.2 7.8 8.0 Elde rly population age d 55+ as % of w ork ing age pop.15-64 0.9 0.8 0.8 0.9 0.9 0.9 0.9 0.9 0.9 1.0 1.0 Ma croe conom ic a ssumptions

Re al GDP (gr ow th rate ) 6.3 6.3 5.6 3.7 2.7 2.4 2.3 1.5 1.3 0.9 0.6

Labour input (grow th r ate ) 0.8 0.8 0.5 -0.5 -0.9 -0.7 -0.4 -0.5 -0.6 -0.9 -1.1 Labour productivity (gr ow th rate ) 5.5 5.4 5.1 4.1 3.6 3.1 2.7 2.0 1.9 1.8 1.7 TFP (grow th r ate ) 2.6 2.6 2.5 2.0 1.9 1.8 1.8 1.3 1.2 1.2 1.1

Capital de e pe ning (contribution to labour productivity grow th) 2.9 2.9 2.6 2.2 1.7 1.3 0.9 0.7 0.7 0.6 0.6 GDP pe r capita (gr ow th r ate ) 6.8 6.6 6.2 4.2 3.1 2.7 2.6 1.8 1.6 1.2 0.9 GDP in 2004 price s (in billions of e uro) 9 9 13 16 18 20 23 25 27 28 29 GDP pe r w ork e r 9.3 9.9 13.5 17.3 20.5 23.6 26.9 30.0 32.7 34.9 36.7 Re al inte re s t rate 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 La bour force a ssum ptions

Population gr ow th (w ork ing age :15-64) 0.1 -0.6 -1.3 -0.9 -0.6 -0.3 -0.4 -0.6 -0.8 -1.1

Labour for ce (thous ands ) 647 650 667 658 630 605 589 577 562 540 511

Participation r ate (15-64) 70.6 70.9 74.2 77.2 77.8 77.3 77.0 76.5 76.6 76.4 76.1

young (15-24) 37.1 37.4 42.4 42.8 37.6 37.3 37.7 38.9 40.4 40.5 38.9

pr im e -age (25-54) 86.6 87.4 89.4 90.3 91.1 91.8 91.9 91.7 91.2 90.9 91.3 olde r (55-64) 57.2 56.5 58.4 62.6 64.8 64.2 65.9 65.7 66.7 66.4 63.7

olde s t (65-71) 15.2 17.0 13.2 14.3 14.9 15.7 15.2 15.7 15.8 16.0 16.3 Em ploym e nt rate (15-64) 63.8 64.4 68.4 71.8 72.3 71.9 71.6 71.1 71.2 71.1 70.8 Em ploym e nt rate (15-71) 59.2 59.9 63.4 66.6 66.2 65.6 65.1 65.1 64.8 64.4 63.4 Em ploym e nt gr ow th (15-64) 1.1 0.5 -0.5 -0.9 -0.7 -0.4 -0.5 -0.6 -0.9 -1.1

Une m ploym e nt r ate (15-64) 9.6 9.1 7.8 7.0 7.0 7.0 7.0 7.0 7.0 7.0 7.0 De pe nde ncy ra tios:

Shar e of olde r w ork e rs 13.1 12.9 13.8 15.6 16.6 16.1 16.7 17.6 19.4 21.6 20.0

Old-age de pe nde ncy ratio (1) 23.8 24.1 24.7 26.3 28.7 31.3 33.4 34.5 36.6 39.1 43.1 Total de pe nde ncy ratio (2) 47.4 46.8 46.2 49.9 54.0 56.6 57.2 56.5 58.5 62.2 67.9

Total e conom ic de pe nde ncy ratio 130.9 127.7 113.7 108.9 112.9 117.7 119.6 120.1 122.6 128.2 137.1 Econom ic old-age de pe nde ncy r atio (15-64) 34.8 34.7 34.2 34.7 37.3 40.7 43.9 45.8 48.6 51.9 57.3 Econom ic old-age de pe nde ncy r atio (15-71) 34.0 33.8 33.5 34.0 36.4 39.6 42.8 44.7 47.2 50.4 55.3 LEGENDA :

S h a r e o f o ld e r wo rk e r s = P o p u la t io n a g e d 5 5 t o 6 4 a s % o f p o p u la t io n a g e d 15 - 6 4

O ld - a g e d e p e n d e n c y r a t io ( 1) = P o p u la t io n a g e d 6 5 a n d o v e r a s a p e rc e n t a g e o f t h e p o p u la t io n a g e d 15 - 6 4

T o t a l d e p e n d e n c y ra t io ( 2 ) = P o p u la t io n u n d e r 15 a n d o v e r 6 4 a s a p e rc e n t a g e o f t h e p o p u la t io n a g e d 15 - 6 4

T o t a l e c o n o m ic d e p e n d e n c y r a t io = T o t a l p o p u la t io n le s s e m p lo ye d a s % o f e m p lo ye d p o p u la t io n ( 15 - 6 4 )

E c o n o m ic o ld - a g e d e p e n d e n c y ra t io ( 15 - 6 4 ) = In a c t iv e p o p u la t io n a g e d 6 5 + a s % o f e m p lo ye d p o p u la t io n ( 15 - 6 4 )

E c o n o m ic o ld - a g e d e p e n d e n c y ra t io ( 15 - 7 1) = In a c t iv e p o p u la t io n a g e d 6 5 + a s % o f e m p lo ye d p o p u la t io n ( 15 - 7 1)

Estonia EPC-AW G Pension expenditure projections

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Baseline scenario; as % of GDP

Social security pensions, gross 6.7 7.1 6.8 6.0 5.4 5.1 4.7 4.5 4.4 4.3 4.2

Old-age and early pens ions , gros s 5.9 6.3 6.0 5.2 4.8 4.5 4.2 4.0 3.9 3.8 3.8 Of which: earnings -related pens ions , gros s : : : : : : : : : : : Private s ector em ployees , gros s : : : : : : : : : : : Public s ector em ployees , gros s : : : : : : : : : : :

Other pens ions (dis ability, s urvivors ), gros s 0.8 0.8 0.8 0.7 0.6 0.6 0.5 0.5 0.5 0.4 0.4 Occupational pensions, gross : : : : : : : : : : :

Private mandatory pensions, gross 0.0 0.0 0.0 0.1 0.2 0.3 0.6 0.9 1.3 1.7 2.4 Total pension expenditure, gross 6.7 7.1 6.8 6.0 5.6 5.4 5.3 5.4 5.6 6.0 6.6 Social security pensions, net 6.7 7.1 6.8 6.0 5.4 5.1 4.7 4.5 4.4 4.3 4.2

Total pension expenditure, net 6.7 7.1 6.8 6.0 5.6 5.4 5.3 5.4 5.6 6.0 6.6

Social security pensions, contributions 6.5 6.6 6.6 6.5 6.4 6.3 6.2 6.1 6.1 6.1 6.1 Total pension contributions 7.2 7.3 7.5 7.5 7.6 7.5 7.5 7.4 7.4 7.5 7.5

Social security pensions, assets 1.0 0.4 0.0 0.0 2.6 7.5 13.0 19.1 25.6 32.5 40.2 All pensions, assets 2.8 3.4 9.4 15.9 25.3 37.6 50.5 63.4 76.9 90.5 101.0 Additional indicators

Social security pensions, net / Social sec. pensions, gross,% 100 100 100 100 100 100 100 100 100 100 100 Total pension expenditure, net / Total pension exp., gross, % 100 100 100 100 100 100 100 100 100 100 100 Social security pensions, number of pensioners , 1000 pers. 378 379 369 357 352 356 359 362 365 370 377 All pensions, pensioners , 1000 pers. 378 379 369 357 352 356 359 362 365 370 377

Number of pensioners aged 65+ , 1000 pers. 283 283 285 281 282 288 290 295 300 308 321

Share of pensioners below age 65 as % of all pensioners 25.0 25.2 22.7 21.2 19.9 19.2 19.1 18.5 17.8 16.6 14.9 Average gross social sec. pension, 1000 in 2004 prices 1.6 1.8 2.3 2.6 2.8 2.9 3.0 3.1 3.2 3.2 3.2 Average gross total pensions, 1000 in 2004 prices 1.6 1.8 2.3 2.6 2.9 3.1 3.4 3.7 4.1 4.6 5.1 Output / W orker, 1000 in 2004 prices 14.7 15.5 20.4 25.4 30.7 36.2 41.7 46.6 51.3 56.2 61.3 Social sec. benefit ratio 10.5 11.4 11.3 10.2 9.0 8.0 7.2 6.6 6.2 5.8 5.3

Total pension benefit ratio 10.5 11.4 11.4 10.3 9.3 8.5 8.0 8.0 8.0 8.1 8.3

Social security pensions, num of contributors, in 1000 599 607 626 624 600 578 563 551 538 517 492

Average social sec. pension contribution, 1000 in 2004 prices 1.0 1.0 1.3 1.6 1.9 2.2 2.5 2.8 3.0 3.3 3.6 Average total pension contribution, 1000 in 2004 prices 1.1 1.1 1.5 1.9 2.3 2.7 3.0 3.4 3.7 4.1 4.5

Support ratio (contributors /100 pensioners, social sec. pens.) 159 160 170 175 171 162 157 152 147 140 130 High life expectancy; as % of GDP

Social security pensions, gross 6.7 7.1 6.8 6.0 5.4 5.1 4.8 4.6 4.4 4.3 4.3

Old-age and early pensions, gross 5.9 6.3 6.0 5.2 4.8 4.5 4.2 4.0 4.0 3.9 3.9 Total pension expenditure, gross 6.7 7.1 6.8 6.0 5.6 5.4 5.3 5.4 5.7 6.1 6.7 All pensions, assets 2.8 3.4 9.4 15.9 26.0 38.4 51.3 64.1 77.4 90.8 100.8 Higher labour productivity; as % of GDP

Social security pensions, gross 6.7 7.1 6.8 5.9 5.3 5.0 4.6 4.3 4.2 4.1 4.0

Old-age and early pensions, gross 5.9 6.3 6.0 5.2 4.7 4.4 4.1 3.8 3.7 3.6 3.6 Total pension expenditure, gross 6.7 7.1 6.8 5.9 5.5 5.3 5.1 5.2 5.4 5.7 6.2 All pensions, assets 2.9 3.4 9.3 15.7 25.8 38.3 51.3 64.3 77.9 91.6 102.3 Lower labour productivity; as % of GDP

Social security pensions, gross 6.7 7.1 6.8 6.0 5.4 5.1 4.8 4.6 4.5 4.4 4.4

Old-age and early pensions, gross 5.9 6.3 6.0 5.2 4.8 4.5 4.2 4.1 4.0 3.9 3.9 Total pension expenditure, gross 6.7 7.1 6.8 6.0 5.6 5.5 5.4 5.5 5.8 6.2 6.9 All pensions, assets 2.8 3.3 9.3 15.9 25.4 37.7 50.6 63.5 76.9 90.5 100.6 Higher employment rate (1 p.p.); as % of GDP

Social security pensions, gross 6.6 7.1 6.8 5.9 5.4 5.1 4.7 4.5 4.4 4.3 4.2

Old-age and early pensions, gross 5.9 6.3 6.0 5.2 4.8 4.5 4.2 4.0 3.9 3.8 3.8 Total pension expenditure, gross 6.6 7.1 6.8 6.0 5.6 5.4 5.3 5.4 5.6 6.0 6.6 All pensions, assets 2.8 3.4 9.3 15.9 26.6 39.4 52.7 66.2 80.2 94.5 105.5 Higher older workers empl. rate (5 p.p.); as % of GDP

Social security pensions, gross 7.4 8.0 7.6 6.7 6.0 5.6 5.2 5.0 4.8 4.7 4.6

Old-age and early pensions, gross 6.7 7.1 6.8 5.9 5.4 5.0 4.7 4.5 4.4 4.3 4.2 Total pension expenditure, gross 7.4 8.0 7.6 6.7 6.2 6.0 5.8 5.8 6.1 6.4 6.9 All pensions, assets 2.8 3.4 9.3 15.8 25.8 38.1 51.2 64.4 78.0 91.9 102.6 Lower interest rate; as % of GDP

Social security pensions, gross 6.7 7.1 6.8 6.0 5.4 5.1 4.7 4.5 4.4 4.3 4.2

Old-age and early pensions, gross 5.9 6.3 6.0 5.2 4.8 4.5 4.2 4.0 3.9 3.8 3.8 Total pension expenditure, gross 6.7 7.1 6.8 6.0 5.6 5.4 5.2 5.2 5.4 5.6 6.0 All pensions, assets 2.8 3.3 9.3 15.2 23.9 35.1 46.8 58.4 70.3 82.5 92.2 Higher interest rate; as % of GDP

Social security pensions, gross 6.7 7.1 6.8 6.0 5.4 5.1 4.7 4.5 4.4 4.3 4.2

Old-age and early pensions, gross 5.9 6.3 6.0 5.2 4.8 4.5 4.2 4.0 3.9 3.8 3.8 Total pension expenditure, gross 6.7 7.1 6.8 6.0 5.6 5.4 5.4 5.5 5.9 6.4 7.3 All pensions, assets 2.8 3.3 9.4 16.5 26.8 40.3 54.7 69.3 84.6 100.2 111.9 : = data not provided

Estonia OTHER AGE-RELATED EXPENDITURES as % of GDP

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Health care spending as % of GDP

Pure ageing s cenario 5.4 5.5 5.6 5.7 5 .8 5.9 6.0 6.1 6.2 6.3 6.3

Cons tant health s cenario 5.4 5.5 5.5 5.6 5 .5 5.5 5.5 5.6 5.6 5.6 5.7

Death-related cos ts s cenario 5.4 5.5 5.6 5.6 5 .7 5.7 5.7 5.8 5.9 5.9 5.9 Incom e elas ticity of dem and 5.4 5.5 5.8 6.0 6 .2 6.3 6.5 6.6 6.8 6.9 6.9 Unit cos ts - GDP per worker 5.4 5.4 5.2 5.2 5 .4 5.6 5.7 5.8 6.0 6.2 6.5 AWG reference s cenario 5.4 5.5 5.8 6.0 6 .1 6.1 6.2 6.3 6.4 6.5 6.5 Long-term care spending as % of GDP

Pure ageing s cenario : : : : : : : : : : :

Unit cos ts - GDP per capita : : : : : : : : : : :

Cons tant dis ability s cenario : : : : : : : : : : : Increas e in form al care : : : : : : : : : : : AWG reference s cenario : : : : : : : : : : : Numbe r of de pe nde nt pe ople (in thous ands )

Pure ageing s cenario 36 36 39 40 42 43 4 6 4 9 51 53 55

Unit cos ts - GDP per capita 36 36 39 40 42 21 4 6 4 9 51 53 55

Cons tant dis ability s cenario 36 36 35 28 33 32 3 2 3 3 34 34 34 Increas e in form al care 36 36 39 40 42 43 4 6 4 9 51 53 55 AWG reference s cenario 36 36 37 37 38 38 3 9 4 1 43 43 44 of which re ce iving formal care

Pure ageing s cenario 0 0 0 0 0 0 0 0 0 0 0

Unit cos ts - GDP per capita 0 0 0 0 0 0 0 0 0 0 0

Cons tant dis ability s cenario 0 0 0 0 0 0 0 0 0 0 0

Increas e in form al care 0 2 10 17 23 24 2 6 2 7 29 30 31 AWG reference s cenario 0 0 0 0 0 0 0 0 0 0 0 of which re ce iving informal or no care

Pure ageing s cenario 36 36 39 40 42 43 4 6 4 9 51 53 55

Unit cos ts - GDP per capita 36 36 39 40 42 21 4 6 4 9 51 53 55

Cons tant dis ability s cenario 36 36 35 28 33 32 3 2 3 3 34 34 34 Increas e in form al care 36 35 29 23 18 19 2 0 2 1 23 23 24 AWG reference s cenario 36 36 37 37 38 38 3 9 4 1 43 43 44 Education spending as % of GDP

Total 5.0 4.8 3.8 3.4 3 .5 3.8 3.8 3.7 3.5 3.5 3.6

of which: Transfers 0.4 0.4 0.3 0.3 0 .3 0.3 0.3 0.3 0.3 0.3 0.3 Prim ary 1.3 1.2 1.1 1.2 1 .3 1.3 1.3 1.1 1.1 1.1 1.3

of which: Transfers 0.1 0.1 0.1 0.1 0 .1 0.1 0.1 0.1 0.1 0.1 0.1 Low s econdary 1.2 1.2 0.7 0.7 0 .8 0.9 0.9 0.8 0.8 0.7 0.8

of which: Transfers 0.1 0.1 0.0 0.0 0 .0 0.0 0.0 0.0 0.0 0.0 0.0 Upper s econdary 1.2 1.2 0.9 0.7 0 .7 0.8 0.9 0.9 0.8 0.8 0.8

of which: Transfers 0.1 0.1 0.0 0.0 0 .0 0.0 0.0 0.0 0.0 0.0 0.0 Tertiary education 1.2 1.1 1.1 0.9 0 .8 0.8 0.8 0.8 0.9 0.8 0.8

of which: Transfers 0.2 0.2 0.2 0.2 0 .1 0.1 0.1 0.1 0.1 0.1 0.1 Number of s tudents (in thous ands )

Total 290 28 0 2 35 2 11 209 214 211 199 184 175 17 5 Prim ary 93 87 78 83 87 88 8 2 7 2 67 68 71

Low s econdary 65 61 40 38 40 43 4 3 4 0 35 33 33

Upper s econdary 68 69 54 41 41 43 4 5 4 5 41 36 35

Tertiary education 64 63 62 49 41 40 4 1 4 2 42 39 35 Memo

Population aged 15 64 (in thous ands ) 916 91 7 8 99 8 53 810 782 765 755 734 706 67 0 Unemployment benefit spending as % of GDP

0.1 0.1 0.1 0.1 0 .1 0.1 0.1 0.1 0.1 0.1 0.1

Greece Main demographic and macroeconomic assumptions (BA SELINE SCENA RIO)

Budgetary Projection: A WG variant population scenario

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 De mogra phic a ssumptions

Fe rtility rate 1.3 1.3 1.4 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 Life e xpe ctancy at bir th

m ale s 76.4 76.5 77.1 77.6 78.2 78.8 79.3 79.8 80.2 80.6 81.1

fe m ale s 81.4 81.5 82.1 82.8 83.3 83.9 84.4 84.8 85.2 85.6 85.9 Life e xpe ctancy at 65

m ale s 16.4 16.4 16.8 17.2 17.6 18.0 18.4 18.7 19.0 19.3 19.6

fe m ale s 18.5 18.6 19.1 19.6 20.1 20.5 20.9 21.3 21.7 22.0 22.3

Ne t m igr ation (thous and) 42.9 41.9 39.7 40.4 38.7 36.4 34.8 34.8 34.8 34.8 34.9

Ne t m igr ation as % of population 0.39 0.38 0.35 0.35 0.34 0.32 0.31 0.31 0.31 0.32 0.33 Population (m illion) 11.0 11.1 11.3 11.4 11.4 11.4 11.3 11.3 11.1 11.0 10.7

Population age d 0-14 as % of total 14.5 14.4 14.2 14.2 14.0 13.3 12.6 12.1 12.0 12.1 12.2

Prim e age population (25-54) as % of total 43.7 43.9 44.3 43.0 41.5 39.3 37.0 35.2 33.8 33.6 33.5 Work ing age population (15-64) as % of total 67.7 67.5 67.1 65.8 64.8 63.8 62.7 60.6 58.4 56.2 54.7 Elde rly population age d 65+ as % of total 17.9 18.1 18.8 20.0 21.2 22.8 24.8 27.2 29.6 31.7 33.1

V e ry e lde rly population age d 80 and ove r as % of total 3.3 3.4 4.4 5.5 6.1 6.1 6.8 7.6 8.7 9.7 11.0

Elde rly population age d 55+ as % of w or k ing age pop.15-64 7.1 7.2 7.6 8.1 8.6 9.1 9.6 10.2 10.8 11.2 11.3 Ma croe conomic a ssumptions

Re al GDP (grow th r ate ) 3.7 3.1 2.2 2.3 1.6 1.2 1.0 0.8 0.7 0.8 1.1

Labour input (grow th r ate ) 1.1 0.5 0.9 0.5 -0.3 -0.6 -0.7 -0.9 -1.0 -0.9 -0.6

Labour pr oductivity (gr ow th rate ) 2.5 2.6 1.3 1.8 1.9 1.8 1.7 1.7 1.7 1.7 1.7 TFP (gr ow th rate ) 1.4 1.3 0.2 0.9 1.0 1.0 1.1 1.1 1.1 1.1 1.1

Capital de e pe ning (c ontribution to labour productivity grow th) 1.1 1.3 1.1 1.0 0.9 0.8 0.6 0.6 0.6 0.6 0.6 GDP pe r capita (grow th r ate ) 3.4 2.7 1.9 2.2 1.6 1.3 1.1 1.0 0.9 1.2 1.5

GDP in 2004 price s (in billions of e uro) 165 170 195 217 237 254 268 279 289 300 315 GDP pe r w ork e r 14.5 14.8 16.7 18.4 20.0 21.5 22.8 23.9 25.1 26.5 28.3 Re al inte re s t r ate 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 La bour force a ssum ptions

Population grow th (w ork ing age :15-64) 0.1 0.0 -0.1 -0.3 -0.4 -0.6 -0.9 -1.1 -1.0 -0.7

Labour force (thous ands ) 4934 4990 5186 5244 5206 5087 4920 4710 4483 4270 4111 Participation rate (15-64) 66.0 66.7 68.6 69.9 70.2 69.8 69.2 69.0 69.0 69.4 70.0

young (15-24) 35.9 36.3 35.2 35.1 34.2 33.7 34.4 35.1 35.2 34.8 34.4

prim e -age (25-54) 80.5 81.0 83.0 84.3 85.0 85.4 85.3 85.1 85.2 85.3 85.4 olde r (55-64) 44.0 44.2 45.6 48.6 50.8 52.6 53.3 54.3 53.8 52.8 53.7

olde s t (65-71) 14.0 13.7 13.5 14.4 14.5 14.8 15.0 15.3 15.3 15.3 15.1 Em ploym e nt rate (15-64) 59.9 60.5 62.7 65.0 65.3 64.9 64.4 64.2 64.2 64.5 65.1 Em ploym e nt rate (15-71) 55.1 55.7 58.1 59.9 59.7 58.9 58.0 57.2 56.6 56.6 57.0 Em ploym e nt grow th (15-64) 1.1 0.9 0.5 -0.3 -0.6 -0.7 -0.9 -1.0 -0.9 -0.6

Une m ploym e nt rate (15-64) 9.3 9.3 8.6 7.0 7.0 7.0 7.0 7.0 7.0 7.0 7.0 De pe nde ncy ra tios:

Share of olde r w or k e rs 11.0 10.9 12.0 13.6 15.2 17.3 19.1 20.3 20.3 18.6 17.4

Old-age de pe nde ncy ratio (1) 26.4 26.8 28.0 30.3 32.7 35.8 39.5 44.9 50.7 56.3 60.4 Total de pe nde ncy ratio (2) 47.8 48.1 49.1 51.9 54.3 56.6 59.6 64.9 71.3 77.9 82.7

Total e conom ic de pe nde ncy ratio 146.7 144.9 137.9 133.6 136.2 141.2 148.0 156.9 166.8 175.8 180.8 Econom ic old-age de pe nde ncy ratio (15-64) 41.4 41.7 42.5 44.2 47.4 52.0 57.9 66.0 74.6 82.8 88.5 Econom ic old-age de pe nde ncy ratio (15-71) 40.3 40.7 41.6 43.1 46.1 50.4 56.0 63.5 71.5 79.2 84.7 LEGENDA :

S h a r e o f o ld e r wo r k e r s = P o p u la t io n a g e d 5 5 t o 6 4 a s % o f p o p u la t io n a g e d 15 - 6 4

O ld - a g e d e p e n d e n c y ra t io ( 1) = P o p u la t io n a g e d 6 5 a n d o v e r a s a p e rc e n t a g e o f t h e p o p u la t io n a g e d 15 - 6 4

T o t a l d e p e n d e n c y r a t io ( 2 ) = P o p u la t io n u n d e r 15 a n d o v e r 6 4 a s a p e rc e n t a g e o f t h e p o p u la t io n a g e d 15 - 6 4

T o t a l e c o n o m ic d e p e n d e n c y r a t io = T o t a l p o p u la t io n le s s e m p lo ye d a s % o f e m p lo ye d p o p u la t io n ( 15 - 6 4 )

E c o n o m ic o ld - a g e d e p e n d e n c y ra t io ( 15 - 6 4 ) = In a c t iv e p o p u la t io n a g e d 6 5 + a s % o f e m p lo ye d p o p u la t io n ( 15 - 6 4 )

E c o n o m ic o ld - a g e d e p e n d e n c y ra t io ( 15 - 7 1) = In a c t iv e p o p u la t io n a g e d 6 5 + a s % o f e m p lo ye d p o p u la t io n ( 15 - 7 1)

Greece OTHER AGE-RELATED EXPENDITURES as % of GDP

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Health care spending as % of GDP

Pure ageing s cenario 5.1 5.1 5.3 5.5 5 .5 5.7 5.9 6.2 6.5 6.7 6.9

Cons tant health s cenario 5.1 5.1 5.3 5.3 5 .3 5.3 5.5 5.7 6.0 6.2 6.3

Death-related cos ts s cenario 5.1 5.1 5.3 5.4 5 .4 5.5 5.7 6.0 6.2 6.4 6.5 Incom e elas ticity of dem and 5.1 5.2 5.4 5.6 5 .7 5.8 6.1 6.4 6.7 7.0 7.2 Unit cos ts - GDP per worker 5.1 5.1 5.2 5.2 5 .3 5.6 6.0 6.5 7.1 7.6 7.9 AWG reference s cenario 5.1 5.1 5.4 5.5 5 .6 5.7 5.9 6.2 6.5 6.7 6.8 Long-term care spending as % of GDP

Pure ageing s cenario : : : : : : : : : : :

Unit cos ts - GDP per capita : : : : : : : : : : :

Cons tant dis ability s cenario : : : : : : : : : : : Increas e in form al care : : : : : : : : : : : AWG reference s cenario : : : : : : : : : : : Numbe r of de pe nde nt pe ople (in thous ands )

Pure ageing s cenario 254 26 2 3 08 3 46 366 386 419 461 503 543 57 8

Unit cos ts - GDP per capita 254 26 2 3 08 3 46 366 196 419 461 503 543 57 8

Cons tant dis ability s cenario 254 25 8 2 82 2 48 295 291 300 315 332 348 36 3 Increas e in form al care 254 26 2 3 08 3 46 366 386 419 461 503 543 57 8 AWG reference s cenario 254 26 0 2 95 3 22 330 339 360 388 417 446 47 1 of which re ce iving formal care

Pure ageing s cenario 0 0 0 0 0 0 0 0 0 0 0

Unit cos ts - GDP per capita 0 0 0 0 0 0 0 0 0 0 0

Cons tant dis ability s cenario 0 0 0 0 0 0 0 0 0 0 0

Increas e in form al care 0 13 82 1 49 205 216 235 258 281 304 32 4 AWG reference s cenario 0 0 0 0 0 0 0 0 0 0 0 of which re ce iving informal or no care

Pure ageing s cenario 254 26 2 3 08 3 46 366 386 419 461 503 543 57 8

Unit cos ts - GDP per capita 254 26 2 3 08 3 46 366 196 419 461 503 543 57 8

Cons tant dis ability s cenario 254 25 8 2 82 2 48 295 291 300 315 332 348 36 3 Increas e in form al care 254 24 9 2 26 1 97 161 170 185 203 221 239 25 4 AWG reference s cenario 254 26 0 2 95 3 22 330 339 360 388 417 446 47 1 Education spending as % of GDP

Total 3.5 3.4 3.1 2.9 2 .9 3.0 3.0 3.0 3.0 3.0 3.1 of which: Transfers : : : : : : : : : : :

Prim ary 1.0 1.0 1.0 1.0 1 .0 1.0 0.9 0.9 0.9 1.0 1.0 of which: Transfers : : : : : : : : : : :

Low s econdary 0.6 0.6 0.5 0.5 0 .5 0.5 0.5 0.5 0.5 0.5 0.5 of which: Transfers : : : : : : : : : : :

Upper s econdary 0.6 0.6 0.6 0.5 0 .5 0.6 0.6 0.6 0.5 0.5 0.6 of which: Transfers : : : : : : : : : : :

Tertiary education 1.3 1.2 1.0 0.9 0 .9 0.9 1.0 1.0 1.0 1.0 1.0 of which: Transfers : : : : : : : : : : : Number of s tudents (in thous ands )

Total 1924 1888 1768 1733 174 1 172 4 16 60 15 76 1 505 1 464 1444 Prim ary 645 63 6 6 22 6 55 659 625 578 547 536 536 53 2

Low s econdary 337 33 6 3 19 3 13 329 329 310 287 273 268 26 9

Upper s econdary 391 38 0 3 57 3 37 345 358 350 327 305 294 29 1

Tertiary education 551 53 6 4 70 4 28 408 412 422 414 391 367 35 2 Memo

Population aged 15 64 (in thous ands ) 7472 7481 7557 7500 741 4 728 6 71 10 68 23 6 494 6 156 5877 Unemployment benefit spending as % of GDP

0.3 0.3 0.3 0.2 0 .2 0.2 0.2 0.2 0.2 0.2 0.2

Spain Main demographic and macroeconomic assumptions (BA SELINE SCENA RIO)

Budgetary Projection: A WG variant population scenario

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 De mogra phic a ssumptions

Fe rtility rate 1.3 1.3 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 Life e xpe ctancy at bir th

m ale s 76.6 76.7 77.6 78.4 79.1 79.7 80.2 80.6 81.0 81.3 81.7

fe m ale s 83.4 83.6 84.3 85.0 85.6 86.1 86.5 86.7 87.0 87.2 87.3 Life e xpe ctancy at 65

m ale s 16.7 16.8 17.4 17.9 18.4 18.8 19.1 19.4 19.6 19.8 20.0

fe m ale s 20.7 20.8 21.4 21.9 22.4 22.7 23.0 23.2 23.4 23.6 23.7

Ne t m igr ation (thous and) 507.5 460.1 112.2 112.5 110.3 107.3 105.3 105.3 104.5 102.8 101.6 Ne t m igr ation as % of population 1.20 1.07 0.25 0.25 0.24 0.24 0.23 0.23 0.23 0.23 0.24 Population (m illion) 42.3 42.9 44.6 45.3 45.6 45.6 45.4 45.1 44.7 44.0 43.0

Population age d 0-14 as % of total 14.5 14.6 14.9 15.1 14.4 13.0 11.9 11.3 11.4 11.6 11.6

Prim e age population (25-54) as % of total 45.6 45.9 46.5 45.0 42.7 39.9 37.4 35.0 33.8 33.4 33.4 Work ing age population (15-64) as % of total 68.6 68.6 67.9 66.6 66.0 65.3 63.8 61.3 58.1 54.9 53.4 Elde rly population age d 65+ as % of total 16.9 16.8 17.2 18.3 19.6 21.7 24.4 27.4 30.5 33.5 35.0

V e ry e lde rly population age d 80 and ove r as % of total 4.2 4.3 4.9 5.7 6.0 6.3 7.1 7.9 9.2 10.7 12.3

Elde rly population age d 55+ as % of w or k ing age pop.15-64 25.7 26.1 28.3 30.9 32.8 34.6 37.1 40.8 44.3 46.9 47.0 Ma croe conomic a ssumptions

Re al GDP (grow th r ate ) 3.1 3.1 2.8 2.7 2.0 1.5 1.0 0.7 0.4 0.5 1.0

Labour input (grow th r ate ) 2.4 2.3 1.2 0.7 0.1 -0.4 -0.7 -1.0 -1.3 -1.2 -0.7

Labour pr oductivity (gr ow th rate ) 0.6 0.8 1.6 2.0 2.0 1.9 1.7 1.7 1.7 1.7 1.7 TFP (gr ow th rate ) 0.0 0.1 0.7 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1

Capital de e pe ning (c ontribution to labour productivity grow th) 0.6 0.7 1.0 0.9 0.9 0.8 0.6 0.6 0.6 0.6 0.6 GDP pe r capita (grow th r ate ) 1.2 1.7 2.4 2.5 2.0 1.6 1.1 0.8 0.6 0.9 1.6

GDP in 2004 price s (in billions of e uro) 838 863 1002 1154 1286 1401 1490 1552 1589 1623 1689 GDP pe r w ork e r 17.1 17.4 19.4 22.0 24.4 26.6 28.4 29.7 30.7 31.9 34.0 Re al inte re s t r ate 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 La bour force a ssum ptions

Population grow th (w ork ing age :15-64) 1.4 0.0 -0.1 0.0 -0.3 -0.7 -1.0 -1.4 -1.4 -0.8

Labour force (thous ands ) 19933 20462 22033 22555 22727 22507 21906 20938 19672 18432 17613 Participation rate (15-64) 68.6 69.5 72.7 74.8 75.5 75.6 75.6 75.7 75.7 76.3 76.8

young (15-24) 45.3 45.2 43.7 42.7 40.9 41.7 43.1 44.0 43.8 42.9 42.1

prim e -age (25-54) 80.6 81.5 85.1 87.6 89.0 89.9 90.0 89.7 89.6 89.7 89.9 olde r (55-64) 44.4 45.1 47.9 52.4 57.8 60.9 63.3 64.6 63.5 63.1 63.9 olde s t (65-71) 3.9 5.0 9.8 10.9 11.2 12.6 12.8 13.0 13.3 13.1 12.5 Em ploym e nt rate (15-64) 61.2 62.3 66.4 69.6 70.2 70.3 70.3 70.4 70.4 71.0 71.4 Em ploym e nt rate (15-71) 56.2 57.5 61.7 64.1 64.4 63.8 62.9 62.1 61.3 60.9 61.8 Em ploym e nt grow th (15-64) 3.2 1.2 0.7 0.1 -0.4 -0.7 -1.0 -1.3 -1.2 -0.7

Une m ploym e nt rate (15-64) 10.8 10.4 8.7 7.0 7.0 7.0 7.0 7.0 7.0 7.0 7.0 De pe nde ncy ra tios:

Share of olde r w or k e rs 9.7 9.9 10.7 12.6 15.7 18.3 20.9 23.1 22.6 20.0 18.3

Old-age de pe nde ncy ratio (1) 24.6 24.5 25.3 27.5 29.8 33.2 38.2 44.6 52.5 61.1 65.6 Total de pe nde ncy ratio (2) 45.8 45.7 47.2 50.2 51.5 53.1 56.8 63.1 72.2 82.3 87.4

Total e conom ic de pe nde ncy ratio 138.2 134.0 121.8 115.9 115.8 117.9 123.0 131.8 144.4 156.8 162.4 Econom ic old-age de pe nde ncy ratio (15-64) 39.6 38.6 36.9 38.0 40.7 44.9 51.6 60.4 71.0 82.2 88.4 Econom ic old-age de pe nde ncy ratio (15-71) 39.4 38.3 36.4 37.4 40.0 44.0 50.3 58.6 68.6 79.1 85.5 LEGENDA :

S h a r e o f o ld e r wo r k e r s = P o p u la t io n a g e d 5 5 t o 6 4 a s % o f p o p u la t io n a g e d 15 - 6 4

O ld - a g e d e p e n d e n c y ra t io ( 1) = P o p u la t io n a g e d 6 5 a n d o v e r a s a p e rc e n t a g e o f t h e p o p u la t io n a g e d 15 - 6 4

T o t a l d e p e n d e n c y r a t io ( 2 ) = P o p u la t io n u n d e r 15 a n d o v e r 6 4 a s a p e rc e n t a g e o f t h e p o p u la t io n a g e d 15 - 6 4

T o t a l e c o n o m ic d e p e n d e n c y r a t io = T o t a l p o p u la t io n le s s e m p lo ye d a s % o f e m p lo ye d p o p u la t io n ( 15 - 6 4 )

E c o n o m ic o ld - a g e d e p e n d e n c y ra t io ( 15 - 6 4 ) = In a c t iv e p o p u la t io n a g e d 6 5 + a s % o f e m p lo ye d p o p u la t io n ( 15 - 6 4 )

E c o n o m ic o ld - a g e d e p e n d e n c y ra t io ( 15 - 7 1) = In a c t iv e p o p u la t io n a g e d 6 5 + a s % o f e m p lo ye d p o p u la t io n ( 15 - 7 1)

Spain EPC-AW G Pension expenditure projections

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Baseline scenario; as % of GDP

Social security pensions, gross 8.6 8.7 8.9 8.8 9.3 10.4 11.8 13.4 15.2 16.2 15.7

Old-age and early pens ions , gros s 5.6 5.7 5.8 5.7 6.1 7.1 8.4 9.8 11.5 12.6 12.3 Of which: earnings -related pens ions , gros s : : : : : : : : : : :

Private s ector em ployees , gros s 5.1 5.2 5.2 5.1 5.5 6.4 7.7 9.1 10.9 12.0 11.8 Public s ector em ployees , gros s 0.5 0.5 0.5 0.6 0.6 0.7 0.7 0.7 0.7 0.6 0.5

Other pens ions (dis ability, s urvivors ), gros s 3.0 3.0 3.1 3.1 3.2 3.3 3.4 3.6 3.6 3.6 3.5 Occupational pensions, gross : : : : : : : : : : :

Private m andatory pensions, gross : : : : : : : : : : :

Total pension expenditure, gross 8.6 8.7 8.9 8.8 9.3 10.4 11.8 13.4 15.2 16.2 15.7 Social security pensions, net 8.2 8.2 8.4 8.4 8.8 9.8 11.3 12.7 14.4 15.4 14.9

Total pension expenditure, net 8.2 8.2 8.4 8.4 8.8 9.8 11.3 12.7 14.4 15.4 14.9 Social security pensions, contributions : : : : : : : : : : : Total pension contributions : : : : : : : : : : :

Social security pensions, assets : : : : : : : : : : : All pensions, assets : : : : : : : : : : : Additional indicators

Social security pensions, net / Social sec. pensions, gross,% 95 95 95 95 95 95 95 95 95 95 95 Total pension expenditure, net / Total pension exp., gross, % 95 95 95 95 95 95 95 95 95 95 95 Social security pensions, num ber of pensioners , 1000 pers. 8519 8624 9088 9676 10392 11389 12623 13801 14715 15273 15059 All pensions, pensioners , 1000 pers. 8519 8624 9088 9676 10392 11389 12623 13801 14715 15273 15059

Num ber of pensioners aged 65+ , 1000 pers. : : : : : : : : : : :

Share of pensioners below age 65 as % of all pensioners : : : : : : : : : : :

Average gross social sec. pension, 1000 in 2004 prices 8.4 8.7 9.8 10.5 11.5 12.7 14.0 15.1 16.4 17.2 17.6 Average gross total pensions, 1000 in 2004 prices 8.4 8.7 9.8 10.5 11.5 12.7 14.0 15.1 16.4 17.2 17.6 Output / W orker, 1000 in 2004 prices 49.2 49.6 49.8 55.0 60.9 66.9 73.2 79.7 86.9 94.7 103.1 Social sec. benefit ratio 17.2 17.5 19.6 19.1 18.9 19.0 19.1 18.9 18.8 18.2 17.1

Total pension benefit ratio 17.2 17.5 19.6 19.1 18.9 19.0 19.1 18.9 18.8 18.2 17.1 Social security pensions, num of contributors, in 1000 : : : : : : : : : : :

Average social sec. pension contribution, 1000 in 2004 prices : : : : : : : : : : : Average total pension contribution, 1000 in 2004 prices : : : : : : : : : : :

Support ratio (contributors /100 pensioners, social sec. pens.) : : : : : : : : : : : High life expectancy; as % of GDP

Social security pensions, gross 8.6 8.7 8.9 8.8 9.3 10.4 11.9 13.4 15.2 16.3 15.8 Old-age and early pensions, gross 5.6 5.7 5.8 5.7 6.1 7.1 8.4 9.9 11.6 12.7 12.3

Total pension expenditure, gross 8.6 8.7 8.9 8.8 9.3 10.4 11.9 13.4 15.2 16.3 15.8 All pensions, assets 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Higher labour productivity; as % of GDP

Social security pensions, gross 8.6 8.7 8.9 8.7 9.1 10.1 11.5 12.9 14.5 15.4 14.8 Old-age and early pensions, gross 5.6 5.7 5.7 5.7 6.0 6.9 8.1 9.4 11.0 11.9 11.5

Total pension expenditure, gross 8.6 8.7 8.9 8.7 9.1 10.1 11.5 12.9 14.5 15.4 14.8 All pensions, assets 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Lower labour productivity; as % of GDP

Social security pensions, gross 8.6 8.7 8.9 8.9 9.5 10.6 12.3 14.0 15.9 17.1 16.7 Old-age and early pensions, gross 5.6 5.7 5.8 5.8 6.3 7.3 8.7 10.3 12.1 13.3 13.0

Total pension expenditure, gross 8.6 8.7 8.9 8.9 9.5 10.6 12.3 14.0 15.9 17.1 16.7 All pensions, assets 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Higher employment rate (1 p.p.); as % of GDP

Social security pensions, gross 8.6 8.7 8.9 8.8 9.3 10.3 11.8 13.4 15.1 16.1 15.6 Old-age and early pensions, gross 5.6 5.7 5.8 5.7 6.1 7.1 8.4 9.8 11.5 12.5 12.2

Total pension expenditure, gross 8.6 8.7 8.9 8.8 9.3 10.3 11.8 13.4 15.1 16.1 15.6 All pensions, assets 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Higher older workers empl. rate (5 p.p.); as % of GDP

Social security pensions, gross 8.6 8.7 8.8 8.8 9.2 10.3 11.7 13.3 15.0 16.0 15.6 Old-age and early pensions, gross 5.6 5.7 5.7 5.7 6.1 7.0 8.3 9.7 11.4 12.5 12.2

Total pension expenditure, gross 8.6 8.7 8.8 8.8 9.2 10.3 11.7 13.3 15.0 16.0 15.6 All pensions, assets 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Lower interest rate; as % of GDP

Social security pensions, gross 8.6 8.7 8.9 8.8 9.3 10.4 11.8 13.4 15.2 16.2 15.7 Old-age and early pensions, gross 5.6 5.7 5.8 5.7 6.1 7.1 8.4 9.8 11.5 12.6 12.3

Total pension expenditure, gross 8.6 8.7 8.9 8.8 9.3 10.4 11.8 13.4 15.2 16.2 15.7 All pensions, assets 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Higher interest rate; as % of GDP

Social security pensions, gross 8.6 8.7 8.9 8.8 9.3 10.4 11.8 13.4 15.2 16.2 15.7 Old-age and early pensions, gross 5.6 5.7 5.8 5.7 6.1 7.1 8.4 9.8 11.5 12.6 12.3

Total pension expenditure, gross 8.6 8.7 8.9 8.8 9.3 10.4 11.8 13.4 15.2 16.2 15.7 All pensions, assets 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 : = data not provided

Spain OTHER AGE-RELATED EXPENDITURES as % of GDP

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Health care spending as % of GDP

Pure ageing s cenario 6.1 6.1 6.3 6.5 6.7 7.0 7.3 7.6 7.9 8.1 8.3

Cons tant health s cenario 6.1 6.1 6.1 6.2 6.3 6.5 6.8 7.0 7.3 7.5 7.7

Death-related cos ts s cenario 6.1 6.1 6.2 6.4 6.6 6.8 7.1 7.4 7.6 7.8 8.0 Incom e elas ticity of dem and 6.1 6.1 6.3 6.6 6.9 7.2 7.6 7.9 8.2 8.5 8.7 Unit cos ts - GDP per worker 6.1 6.1 5.9 6.0 6.2 6.5 7.0 7.6 8.3 9.0 9.4 AWG reference s cenario 6.1 6.1 6.3 6.5 6.7 7.0 7.3 7.6 7.9 8.1 8.3 Long-term care spending as % of GDP

Pure ageing s cenario 0.5 0.5 0.5 0.5 0.5 0.5 0.6 0.6 0.7 0.8 0.8

Unit cos ts - GDP per capita 0.5 0.5 0.5 0.6 0.6 0.5 0.6 0.6 0.7 0.7 0.8

Cons tant dis ability s cenario 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.6 0.6 0.7 0.7 Increas e in form al care 0.5 0.6 0.7 0.8 0.9 0.9 1.0 1.1 1.3 1.5 1.7 AWG reference s cenario 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.6 0.6 0.7 0.8 Numbe r of de pe nde nt pe ople (in thous ands )

Pure ageing s cenario 1449 1483 1652 1813 1937 2097 2337 2618 2938 3259 3494

Unit cos ts - GDP per capita 1449 1483 1652 1813 1937 1108 2337 2618 2938 3259 3494

Cons tant dis ability s cenario 1449 1463 1524 1331 1575 1603 1695 1811 1959 2114 2224 Increas e in form al care 1449 1483 1652 1813 1937 2097 2337 2618 2938 3259 3494 AWG reference s cenario 1449 1473 1588 1692 1756 1850 2016 2214 2449 2687 2859 of which re ce iving formal care

Pure ageing s cenario 444 453 497 532 570 625 693 779 872 958 1014

Unit cos ts - GDP per capita 444 453 497 532 570 625 693 779 872 958 1014

Cons tant dis ability s cenario 444 446 454 452 451 460 482 514 551 587 608

Increas e in form al care 444 505 803 1084 1335 1449 1614 1809 2029 2246 2403 AWG reference s cenario 444 450 476 492 510 542 588 646 711 772 811 of which re ce iving informal or no care

Pure ageing s cenario 1004 1030 1154 1281 1367 1473 1644 1839 2066 2301 2480

Unit cos ts - GDP per capita 1004 1030 1154 1281 1367 811 1644 1839 2066 2301 2480

Cons tant dis ability s cenario 1004 1017 1070 958 1124 1142 1213 1297 1408 1527 1616 Increas e in form al care 1004 978 848 729 602 648 723 809 909 1013 1091

AWG reference s cenario 1004 1023 1112 1200 1245 1307 1428 1568 1737 1914 2048 Education spending as % of GDP

Total 3.7 3.6 3.2 3.1 3.2 3.1 3.0 2.9 2.9 3.0 3.1

of which: Transfers 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 Prim ary 1.1 1.1 1.1 1.1 1.1 1.0 0.9 0.9 0.9 1.0 1.1

of which: Transfers 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Low s econdary 0.9 0.9 0.8 0.8 0.9 0.9 0.8 0.7 0.7 0.8 0.8

of which: Transfers 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Upper s econdary 0.7 0.7 0.6 0.5 0.6 0.6 0.6 0.6 0.5 0.5 0.6

of which: Transfers 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Tertiary education 0.9 0.9 0.7 0.6 0.6 0.6 0.7 0.7 0.7 0.6 0.6

of which: Transfers 0.1 0.1 0.1 0.0 0.0 0.0 0.1 0.1 0.1 0.0 0.0 Number of s tudents (in thous ands )

Total 7275 7211 7031 7161 7299 7089 6576 6037 5705 5601 5569

Prim ary 2494 2506 2740 2963 2885 2589 2287 2131 2128 2180 2164

Low s econdary 1961 1948 1853 1965 2132 2090 1885 1668 1551 1543 1579 Upper s econdary 1054 1034 953 904 986 1037 991 886 794 753 757

Tertiary education 1766 1723 1485 1330 1296 1373 1413 1351 1232 1125 1070 Memo

Population aged 15 64 (in thous ands ) 29050 29458 30301 30152 30100 29788 28979 27673 25972 24150 22937 Unemployment benefit spending as % of GDP

1.1 1.1 0.9 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7

France Main demographic and macroeconomic assumptions (BA SELINE SCENA RIO)

Budgetary Projection: A WG variant population scenario

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 De mogra phic a ssumptions

Fe rtility rate 1.9 1.9 1.9 1.9 1.9 1.9 1.9 1.9 1.9 1.9 1.9 Life e xpe ctancy at bir th

m ale s 76.2 76.4 77.4 78.4 79.3 80.0 80.6 81.2 81.6 82.0 82.3

fe m ale s 83.4 83.6 84.4 85.2 85.8 86.4 86.8 87.2 87.5 87.7 87.9 Life e xpe ctancy at 65

m ale s 17.0 17.1 17.7 18.2 18.8 19.2 19.5 19.9 20.1 20.3 20.5

fe m ale s 21.3 21.4 22.0 22.6 23.1 23.5 23.8 24.1 24.3 24.4 24.5

Ne t m igr ation (thous and) 63.9 63.2 61.6 62.1 60.3 59.2 58.9 58.9 58.8 58.8 58.7

Ne t m igr ation as % of population 0.11 0.11 0.10 0.10 0.09 0.09 0.09 0.09 0.09 0.09 0.09 Population (m illion) 59.9 60.2 61.5 62.6 63.5 64.3 64.9 65.5 65.6 65.5 65.1

Population age d 0-14 as % of total 18.6 18.5 18.2 17.9 17.2 16.7 16.4 16.2 16.1 16.0 15.9

Prim e age population (25-54) as % of total 41.6 41.3 40.0 38.8 37.4 36.3 35.6 35.4 35.1 34.8 34.9 Work ing age population (15-64) as % of total 65.1 65.1 65.0 63.5 62.3 61.0 59.6 58.4 57.5 57.5 57.5 Elde rly population age d 65+ as % of total 16.4 16.5 16.8 18.7 20.6 22.3 24.0 25.4 26.4 26.4 26.6

V e ry e lde rly population age d 80 and ove r as % of total 4.4 4.5 5.3 5.8 6.0 6.1 7.5 8.7 9.6 10.2 10.6

Elde rly population age d 55+ as % of w or k ing age pop.15-64 41.8 42.3 45.1 48.6 51.5 54.4 57.6 59.7 61.5 61.6 61.2 Ma croe conomic a ssumptions

Re al GDP (grow th r ate ) 2.1 2.2 2.4 1.9 1.6 1.8 1.6 1.6 1.6 1.6 1.6

Labour input (grow th r ate ) 1.0 1.0 0.7 0.3 -0.1 0.1 -0.1 -0.1 -0.1 -0.1 -0.1

Labour pr oductivity (gr ow th rate ) 1.1 1.2 1.6 1.7 1.8 1.7 1.7 1.7 1.7 1.7 1.7 TFP (gr ow th rate ) 0.9 0.9 1.3 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1

Capital de e pe ning (c ontribution to labour productivity grow th) 0.3 0.3 0.4 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 GDP pe r capita (grow th r ate ) 1.7 1.7 2.0 1.6 1.4 1.6 1.4 1.4 1.6 1.7 1.7

GDP in 2004 price s (in billions of e uro) 1625 1661 1852 2056 2234 2433 2645 2857 3091 3348 3619 GDP pe r w ork e r 21.2 21.6 23.5 25.7 27.5 29.6 31.8 34.1 36.8 39.9 43.4 Re al inte re s t r ate 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 La bour force a ssum ptions

Population grow th (w ork ing age :15-64) 0.5 0.2 -0.2 -0.1 -0.2 -0.3 -0.2 -0.2 -0.1 -0.1

Labour force (thous ands ) 27114 27372 28057 28238 28117 28112 28080 27860 27695 27557 27365 Participation rate (15-64) 69.6 69.9 70.2 71.1 71.1 71.7 72.5 72.8 73.4 73.1 73.1

young (15-24) 39.2 39.6 40.1 39.5 38.8 40.0 39.8 39.7 39.7 39.5 39.4

prim e -age (25-54) 86.4 86.7 87.9 88.9 89.3 89.6 89.9 90.0 90.0 90.0 90.1 olde r (55-64) 40.2 42.3 43.8 46.5 48.5 50.5 53.4 52.9 54.9 54.4 54.1 olde s t (65-71) 3.9 4.1 6.2 8.0 7.9 8.2 9.0 9.3 9.4 9.4 9.5 Em ploym e nt rate (15-64) 63.1 63.5 64.4 66.1 66.2 66.7 67.4 67.7 68.2 68.0 68.0 Em ploym e nt rate (15-71) 58.1 58.6 59.7 60.1 59.3 59.8 60.3 60.5 60.9 61.2 61.0 Em ploym e nt grow th (15-64) 1.1 0.7 0.3 -0.1 0.1 -0.1 -0.1 -0.1 -0.1 -0.1

Une m ploym e nt rate (15-64) 9.3 9.1 8.3 7.0 7.0 7.0 7.0 7.0 7.0 7.0 7.0 De pe nde ncy ra tios:

Share of olde r w or k e rs 9.3 10.1 12.2 13.1 14.0 14.6 15.4 14.6 14.8 15.1 14.8

Old-age de pe nde ncy ratio (1) 25.2 25.3 25.8 29.4 33.0 36.5 40.2 43.4 45.9 45.9 46.4 Total de pe nde ncy ratio (2) 53.7 53.7 53.8 57.5 60.6 63.9 67.7 71.1 73.9 73.8 74.0

Total e conom ic de pe nde ncy ratio 143.5 142.0 139.0 138.3 142.8 145.8 148.7 152.6 154.9 155.5 156.0 Econom ic old-age de pe nde ncy ratio (15-64) 39.3 39.3 39.3 43.1 48.3 53.2 57.8 62.1 65.3 65.7 66.3 Econom ic old-age de pe nde ncy ratio (15-71) 39.1 39.0 39.0 42.5 47.6 52.3 56.8 61.0 64.0 64.5 65.1 LEGENDA :

S h a r e o f o ld e r wo r k e r s = P o p u la t io n a g e d 5 5 t o 6 4 a s % o f p o p u la t io n a g e d 15 - 6 4

O ld - a g e d e p e n d e n c y ra t io ( 1) = P o p u la t io n a g e d 6 5 a n d o v e r a s a p e rc e n t a g e o f t h e p o p u la t io n a g e d 15 - 6 4

T o t a l d e p e n d e n c y r a t io ( 2 ) = P o p u la t io n u n d e r 15 a n d o v e r 6 4 a s a p e rc e n t a g e o f t h e p o p u la t io n a g e d 15 - 6 4

T o t a l e c o n o m ic d e p e n d e n c y r a t io = T o t a l p o p u la t io n le s s e m p lo ye d a s % o f e m p lo ye d p o p u la t io n ( 15 - 6 4 )

E c o n o m ic o ld - a g e d e p e n d e n c y ra t io ( 15 - 6 4 ) = In a c t iv e p o p u la t io n a g e d 6 5 + a s % o f e m p lo ye d p o p u la t io n ( 15 - 6 4 )

E c o n o m ic o ld - a g e d e p e n d e n c y ra t io ( 15 - 7 1) = In a c t iv e p o p u la t io n a g e d 6 5 + a s % o f e m p lo ye d p o p u la t io n ( 15 - 7 1)

France EPC-AW G Pension expenditure projections

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Baseline scenario; as % of GDP

Social security pensions, gross 12.8 12.8 12.9 13.2 13.7 14.0 14.3 14.8 15.0 14.9 14.8

Old-age and early pens ions , gros s 12.8 12.8 12.9 13.2 13.7 14.0 14.3 14.8 15.0 14.9 14.8 Of which: earnings -related pens ions , gros s : : : : : : : : : : : Private s ector em ployees , gros s : : : : : : : : : : : Public s ector em ployees , gros s : : : : : : : : : : :

Other pens ions (dis ability, s urvivors ), gros s : : : : : : : : : : : Occupational pensions, gross : : : : : : : : : : :

Private mandatory pensions, gross : : : : : : : : : : :

Total pension expenditure, gross 12.8 12.8 12.9 13.2 13.7 14.0 14.3 14.8 15.0 14.9 14.8 Social security pensions, net 12.2 12.1 12.3 12.5 13.0 13.3 13.6 14.1 14.2 14.1 14.0

Total pension expenditure, net 12.2 12.1 12.3 12.5 13.0 13.3 13.6 14.1 14.2 14.1 14.0

Social security pensions, contributions 12.8 12.8 12.9 12.9 12.9 12.9 12.9 12.9 12.9 12.9 12.9 Total pension contributions 12.8 12.8 12.9 12.9 12.9 12.9 12.9 12.9 12.9 12.9 12.9 Social security pensions, assets 1.2 1.5 2.0 2.9 4.0 3.5 2.8 2.2 1.5 0.8 : All pensions, assets 1.2 1.5 2.0 2.9 4.0 3.5 2.8 2.2 1.5 0.8 : Additional indicators

Social security pensions, net / Social sec. pensions, gross,% 95 95 95 95 95 95 95 95 95 95 95 Total pension expenditure, net / Total pension exp., gross, % 95 95 95 95 95 95 95 95 95 95 95 Social security pensions, num ber of pensioners , 1000 pers. 12925 12975 13815 15023 16288 17417 18484 19511 19948 20036 19931 All pensions, pensioners , 1000 pers. 12925 12975 13815 15023 16288 17417 18484 19511 19948 20036 19931

Num ber of pensioners aged 65+ , 1000 pers. : : : : : : : : : : :

Share of pensioners below age 65 as % of all pensioners : : : : : : : : : : :

Average gross social sec. pension, 1000 in 2004 prices 16.1 16.4 17.4 18.0 18.8 19.6 20.5 21.7 23.2 24.9 26.9 Average gross total pensions, 1000 in 2004 prices 16.1 16.4 17.4 18.0 18.8 19.6 20.5 21.7 23.2 24.9 26.9 Output / W orker, 1000 in 2004 prices 66.1 66.9 72.0 78.3 85.4 93.1 101.3 110.3 120.0 130.6 142.2 Social sec. benefit ratio 24.4 24.6 24.1 23.0 22.0 21.1 20.3 19.7 19.3 19.1 18.9

Total pension benefit ratio 24.4 24.6 24.1 23.0 22.0 21.1 20.3 19.7 19.3 19.1 18.9 Social security pensions, num of contributors, in 1000 24645 24904 25796 26342 26229 26224 26194 25989 25835 25706 25527

Average social sec. pension contribution, 1000 in 2004 prices 8.5 8.6 9.2 10.0 11.0 11.9 13.0 14.1 15.4 16.8 18.2 Average total pension contribution, 1000 in 2004 prices 8.5 8.6 9.2 10.0 11.0 11.9 13.0 14.1 15.4 16.8 18.2 Support ratio (contributors /100 pensioners, social sec. pens.) 191 192 187 175 161 151 142 133 130 128 128 High life expectancy; as % of GDP

Social security pensions, gross 12.8 12.8 13.0 13.2 13.8 14.2 14.6 15.2 15.4 15.4 15.4

Old-age and early pensions, gross 12.8 12.8 13.0 13.2 13.8 14.2 14.6 15.2 15.4 15.4 15.4 Total pension expenditure, gross 12.8 12.8 13.0 13.2 13.8 14.2 14.6 15.2 15.4 15.4 15.4 All pensions, assets 1.2 1.5 2.0 2.9 4.0 3.5 2.8 2.2 1.5 0.8 0.0 Higher labour productivity; as % of GDP

Social security pensions, gross 12.8 12.8 13.0 13.1 13.5 13.8 14.0 14.5 14.6 14.5 14.4

Old-age and early pensions, gross 12.8 12.8 13.0 13.1 13.5 13.8 14.0 14.5 14.6 14.5 14.4 Total pension expenditure, gross 12.8 12.8 13.0 13.1 13.5 13.8 14.0 14.5 14.6 14.5 14.4 All pensions, assets 1.2 1.5 2.0 2.9 4.0 3.4 2.8 2.1 1.5 0.8 0.0 Lower labour productivity; as % of GDP

Social security pensions, gross 12.8 12.8 13.0 13.3 13.9 14.3 14.7 15.3 15.4 15.4 15.3

Old-age and early pensions, gross 12.8 12.8 13.0 13.3 13.9 14.3 14.7 15.3 15.4 15.4 15.3 Total pension expenditure, gross 12.8 12.8 13.0 13.3 13.9 14.3 14.7 15.3 15.4 15.4 15.3 All pensions, assets 1.2 1.5 2.0 2.9 4.1 3.5 2.9 2.3 1.6 0.8 : Higher employment rate (1 p.p.); as % of GDP

Social security pensions, gross 12.8 12.8 12.9 13.1 13.6 13.9 14.2 14.7 14.9 14.8 14.7

Old-age and early pensions, gross 12.8 12.8 12.9 13.1 13.6 13.9 14.2 14.7 14.9 14.8 14.7 Total pension expenditure, gross 12.8 12.8 12.9 13.1 13.6 13.9 14.2 14.7 14.9 14.8 14.7 All pensions, assets 1.2 1.5 2.0 2.9 4.0 3.4 2.8 2.2 1.5 0.8 0.0 Higher older workers empl. rate (5 p.p.); as % of GDP

Social security pensions, gross 12.8 12.8 12.8 12.9 13.3 13.6 13.9 14.4 14.6 14.5 14.4

Old-age and early pensions, gross 12.8 12.8 12.8 12.9 13.3 13.6 13.9 14.4 14.6 14.5 14.4 Total pension expenditure, gross 12.8 12.8 12.8 12.9 13.3 13.6 13.9 14.4 14.6 14.5 14.4 All pensions, assets 1.2 1.5 2.0 2.9 4.0 3.4 2.8 2.2 1.5 0.8 0.0 Lower interest rate; as % of GDP

Social security pensions, gross 12.8 12.8 12.9 13.2 13.7 14.0 14.3 14.8 15.0 14.9 14.8

Old-age and early pensions, gross 12.8 12.8 12.9 13.2 13.7 14.0 14.3 14.8 15.0 14.9 14.8 Total pension expenditure, gross 12.8 12.8 12.9 13.2 13.7 14.0 14.3 14.8 15.0 14.9 14.8 All pensions, assets 1.2 1.5 1.9 2.7 3.7 3.1 2.5 1.9 1.3 0.6 0.0 Higher interest rate; as % of GDP

Social security pensions, gross 12.8 12.8 12.9 13.2 13.7 14.0 14.3 14.8 15.0 14.9 14.8

Old-age and early pensions, gross 12.8 12.8 12.9 13.2 13.7 14.0 14.3 14.8 15.0 14.9 14.8 Total pension expenditure, gross 12.8 12.8 12.9 13.2 13.7 14.0 14.3 14.8 15.0 14.9 14.8 All pensions, assets 1.2 1.5 2.1 3.1 4.5 3.9 3.3 2.6 1.8 1.0 0.0 : = data not provided

France OTHER AGE-RELATED EXPENDITURES as % of GDP

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Health care spending as % of GDP

Pure ageing s cenario 7.7 7.7 8.0 8.2 8.4 8.7 9.0 9.2 9.4 9.5 9.5

Cons tant health s cenario 7.7 7.7 7.8 7.9 8.0 8.2 8.4 8.6 8.7 8.8 8.8

Death-related cos ts s cenario 7.7 7.7 7.9 8.1 8.3 8.5 8.7 8.9 9.0 9.1 9.1 Incom e elas ticity of dem and 7.7 7.8 8.1 8.4 8.6 8.9 9.2 9.5 9.7 9.8 9.9

Unit cos ts - GDP per worker 7.7 7.7 7.8 8.0 8.4 8.8 9.2 9.6 9.9 10.0 10.1 AWG reference s cenario 7.7 7.7 8.0 8.2 8.4 8.6 8.9 9.2 9.3 9.4 9.5 Long-term care spending as % of GDP

Pure ageing s cenario : : : : : : : : : : :

Unit cos ts - GDP per capita : : : : : : : : : : :

Cons tant dis ability s cenario : : : : : : : : : : : Increas e in form al care : : : : : : : : : : : AWG reference s cenario : : : : : : : : : : : Numbe r of de pe nde nt pe ople (in thous ands )

Pure ageing s cenario 1973 2012 2185 2387 2624 2915 3281 3610 3844 3950 3983

Unit cos ts - GDP per capita 1973 2012 2185 2387 2624 1474 3281 3610 3844 3950 3983

Cons tant dis ability s cenario 1973 1984 2015 1734 2115 2194 2363 2509 2585 2583 2536 Increas e in form al care 1973 2012 2185 2387 2624 2915 3281 3610 3844 3950 3983 AWG reference s cenario 1973 1998 2100 2224 2369 2555 2822 3059 3215 3266 3259 of which re ce iving formal care

Pure ageing s cenario 0 0 0 0 0 0 0 0 0 0 0

Unit cos ts - GDP per capita 0 0 0 0 0 0 0 0 0 0 0

Cons tant dis ability s cenario 0 0 0 0 0 0 0 0 0 0 0

Increas e in form al care 0 101 579 1029 1469 1632 1837 2021 2152 2211 2230 AWG reference s cenario 0 0 0 0 0 0 0 0 0 0 0 of which re ce iving informal or no care

Pure ageing s cenario 1973 2012 2185 2387 2624 2915 3281 3610 3844 3950 3983

Unit cos ts - GDP per capita 1973 2012 2185 2387 2624 1474 3281 3610 3844 3950 3983

Cons tant dis ability s cenario 1973 1984 2015 1734 2115 2194 2363 2509 2585 2583 2536 Increas e in form al care 1973 1912 1606 1358 1155 1283 1444 1589 1692 1738 1753 AWG reference s cenario 1973 1998 2100 2224 2369 2555 2822 3059 3215 3266 3259 Education spending as % of GDP

Total 5.0 4.9 4.7 4.6 4.6 4.6 4.5 4.5 4.5 4.5 4.5

of which: Transfers 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 Prim ary 1.1 1.1 1.2 1.1 1.1 1.1 1.0 1.1 1.1 1.1 1.1

of which: Transfers 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Low s econdary 1.4 1.4 1.3 1.4 1.3 1.3 1.3 1.3 1.3 1.3 1.3

of which: Transfers 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Upper s econdary 1.4 1.4 1.3 1.2 1.3 1.3 1.2 1.2 1.2 1.2 1.2

of which: Transfers 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 Tertiary education 1.0 1.0 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9

of which: Transfers 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 Number of s tudents (in thous ands )

Total 11730 11673 11667 11703 11667 11475 11280 11156 11103 11076 11004 Prim ary 3779 3800 4033 3940 3843 3781 3731 3715 3734 3713 3652

Low s econdary 3250 3203 3141 3337 3240 3163 3113 3073 3062 3078 3059

Upper s econdary 2615 2610 2498 2508 2631 2548 2496 2459 2430 2428 2437

Tertiary education 2085 2060 1996 1918 1954 1982 1940 1909 1877 1857 1856 Memo

Population aged 15 64 (in thous ands ) 38969 39152 39961 39721 39526 39208 38729 38256 37750 37687 37440 Unemployment benefit spending as % of GDP

1.2 1.2 1.1 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9

Ireland Main demographic and macroeconomic assumptions (BA SELINE SCENA RIO)

Budgetary Projection: A WG variant population s cenario

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 De m ographic a ssum ptions

Fe r tility r ate 2.0 2.0 1.9 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 Life e xpe ctancy at birth

m ale s 75.5 75.7 76.8 77.8 78.7 79.5 80.2 80.8 81.3 81.7 82.2

fe m ale s 80.7 80.9 81.8 82.8 83.6 84.4 85.0 85.6 86.0 86.5 86.8 Life e xpe ctancy at 65

m ale s 15.4 15.5 16.2 17.0 17.6 18.2 18.7 19.1 19.5 19.9 20.2

fe m ale s 18.6 18.7 19.4 20.2 20.8 21.4 21.9 22.3 22.7 23.1 23.4

Ne t m igration (thous and) 16.4 16.1 15.3 15.0 14.0 13.4 12.9 12.8 12.6 12.5 12.4

Ne t m igration as % of population 0.41 0.40 0.35 0.33 0.30 0.27 0.26 0.25 0.24 0.23 0.23 Population (m illion) 4.0 4.1 4.3 4.6 4.8 4.9 5.1 5.2 5.3 5.4 5.5

Population age d 0-14 as % of total 20.9 20.8 21.0 20.8 19.8 18.2 16.8 16.2 16.1 16.2 16.0

Prim e age population (25-54) as % of total 42.7 43.0 43.9 43.3 41.9 40.7 39.4 38.1 36.9 36.2 36.0 Wor k ing age population (15-64) as % of total 68.0 68.0 67.3 66.0 65.4 65.3 64.8 63.7 61.7 59.5 57.8 Elde rly population age d 65+ as % of total 11.1 11.2 11.8 13.2 14.8 16.5 18.4 20.2 22.2 24.3 26.2

V e ry e lde r ly population age d 80 and ove r as % of total 2.6 2.7 2.8 3.0 3.3 3.8 4.7 5.6 6.4 7.2 8.0

Elde rly population age d 55+ as % of w ork ing age pop.15-64 2.5 2.5 2.8 3.1 3.3 3.5 3.8 4.1 4.5 4.9 5.1 Macroe conom ic assum ptions

Re al GDP (grow th rate ) 6.1 5.7 5.2 4.2 3.0 2.6 2.1 1.8 1.4 1.3 1.6

Labour input (grow th r ate ) 2.7 2.4 1.4 1.0 0.8 0.7 0.4 0.1 -0.3 -0.5 -0.2

Labour productivity (grow th r ate ) 3.3 3.3 3.8 3.2 2.2 1.9 1.7 1.7 1.7 1.7 1.7 TFP (grow th r ate ) 2.5 2.4 2.9 2.1 1.3 1.2 1.1 1.1 1.1 1.1 1.1

Capital de e pe ning (contribution to labour productivity grow th) 0.8 0.8 0.9 1.1 0.9 0.8 0.6 0.6 0.6 0.6 0.6 GDP pe r capita (grow th rate ) 4.4 4.5 4.0 3.2 2.2 2.0 1.6 1.3 1.0 0.9 1.4

GDP in 2004 price s (in billions of e uro) 146 154 200 251 298 342 384 423 456 488 523 GDP pe r w ork e r 26.6 27.8 34.0 40.4 46.0 51.0 55.6 59.7 63.1 66.2 70.1 Re al inte re s t rate 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 La bour force a ssum ptions

Population grow th (w ork ing age :15-64) 1.2 0.8 0.7 0.7 0.6 0.3 0.0 -0.3 -0.5 -0.2

Labour force (thous ands ) 1909 1955 2135 2258 2358 2449 2517 2549 2529 2481 2444

Par ticipation rate (15-64) 69.7 70.6 73.4 75.1 75.7 76.1 76.7 77.0 77.1 77.0 77.2

young (15-24) 53.6 54.0 54.0 52.0 50.9 51.6 53.0 53.7 53.6 52.8 52.1

prim e -age (25-54) 79.9 80.6 83.3 84.8 85.8 86.4 86.7 86.8 86.8 86.7 86.8 olde r (55-64) 51.0 51.8 56.3 61.6 65.4 67.5 69.3 69.9 69.8 69.1 69.5

olde s t (65-71) 16.3 16.6 18.0 19.3 19.7 20.4 20.6 20.8 21.1 21.0 20.5 Em ploym e nt rate (15-64) 66.7 67.7 70.9 72.5 73.2 73.6 74.0 74.4 74.5 74.4 74.6 Em ploym e nt rate (15-71) 63.5 64.5 67.2 68.1 68.4 68.5 68.6 68.5 68.0 67.3 67.0 Em ploym e nt grow th (15-64) 2.7 1.4 1.0 0.8 0.7 0.4 0.1 -0.3 -0.5 -0.2

Une m ploym e nt rate (15-64) 4.3 4.0 3.4 3.4 3.4 3.4 3.4 3.4 3.4 3.4 3.4 De pendency ra tios:

Shar e of olde r w ork e rs 10.1 10.4 12.0 13.4 15.0 16.2 17.8 19.6 20.6 19.6 18.1

Old-age de pe nde ncy ratio (1) 16.4 16.5 17.5 20.0 22.5 25.2 28.3 31.7 36.0 40.9 45.2 Total de pe nde ncy r atio (2) 47.1 47.1 48.7 51.5 52.8 53.1 54.3 57.1 62.1 68.1 72.9

Total e conom ic de pe nde ncy ratio 120.4 117.2 109.6 108.9 108.9 108.1 108.4 111.2 117.7 125.9 132.0 Econom ic old-age de pe nde ncy ratio (15-64) 22.9 22.7 22.8 25.1 28.2 31.4 35.1 39.2 44.4 50.6 56.3 Econom ic old-age de pe nde ncy ratio (15-71) 22.5 22.3 22.4 24.5 27.4 30.5 34.0 37.9 42.8 48.5 53.9 LEGENDA :

S h a r e o f o ld e r wo r k e rs = P o p u la t io n a g e d 5 5 t o 6 4 a s % o f p o p u la t io n a g e d 15 - 6 4

O ld - a g e d e p e n d e n c y ra t io ( 1) = P o p u la t io n a g e d 6 5 a n d o v e r a s a p e r c e n t a g e o f t h e p o p u la t io n a g e d 15 - 6 4

T o t a l d e p e n d e n c y ra t io ( 2 ) = P o p u la t io n u n d e r 15 a n d o v e r 6 4 a s a p e rc e n t a g e o f t h e p o p u la t io n a g e d 15 - 6 4

T o t a l e c o n o m ic d e p e n d e n c y r a t io = T o t a l p o p u la t io n le s s e m p lo ye d a s % o f e m p lo ye d p o p u la t io n ( 15 - 6 4 )

E c o n o m ic o ld - a g e d e p e n d e n c y r a t io ( 15 - 6 4 ) = In a c t iv e p o p u la t io n a g e d 6 5 + a s % o f e m p lo ye d p o p u la t io n ( 15 - 6 4 )

E c o n o m ic o ld - a g e d e p e n d e n c y r a t io ( 15 - 7 1) = In a c t iv e p o p u la t io n a g e d 6 5 + a s % o f e m p lo ye d p o p u la t io n ( 15 - 7 1)

Ireland EPC-AW G Pension expenditure projections

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Baseline scenario; as % of GDP

Social security pensions, gross 4.7 4.6 5.2 5.9 6.5 7.2 7.9 8.5 9.3 10.3 11.1

Old-age and early pens ions , gros s 3.5 3.5 4.0 4.7 5.2 6.0 6.6 7.2 8.0 9.0 9.9 Of which: earnings -related pens ions , gros s : : : : : : : : : : : Private s ector em ployees , gros s : : : : : : : : : : : Public s ector em ployees , gros s : : : : : : : : : : :

Other pens ions (dis ability, s urvivors ), gros s 1.3 1.1 1.2 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3 Occupational pensions, gross : : : : : : : : : : :

Private mandatory pensions, gross : : : : : : : : : : : Total pension expenditure, gross : : : : : : : : : : : Social security pensions, net : : : : : : : : : : :

Total pension expenditure, net : : : : : : : : : : :

Social security pensions, contributions 3.6 3.5 3.4 3.4 3.4 3.4 3.4 3.4 3.4 3.4 3.4 Total pension contributions : : : : : : : : : : :

Social security pensions, assets 7.3 8.0 11.1 14.4 18.1 22.5 26.0 27.9 28.3 26.5 21.9 All pensions, assets : : : : : : : : : : : Additional indicators

Social security pensions, net / Social sec. pensions, gross,% : : : : : : : : : : : Total pension expenditure, net / Total pension exp., gross, % : : : : : : : : : : :

Social security pensions, num ber of pensioners , 1000 pers. 606 658 721 814 916 1033 1162 1283 1416 1550 1674 All pensions, pensioners , 1000 pers. : : : : : : : : : : :

Number of pensioners aged 65+ , 1000 pers. : : : : : : : : : : :

Share of pensioners below age 65 as % of all pensioners : : : : : : : : : : :

Average gross social sec. pension, 1000 in 2004 prices 11.4 10.8 14.5 18.2 21.1 23.9 26.0 28.1 30.1 32.4 34.8 Average gross total pensions, 1000 in 2004 prices : : : : : : : : : : :

Output / W orker, 1000 in 2004 prices 79.8 82.4 97.0 114.9 130.7 144.4 157.8 171.6 186.8 203.4 221.5 Social sec. benefit ratio 14.3 13.1 14.9 15.9 16.2 16.6 16.5 16.4 16.1 15.9 15.7 Total pension benefit ratio : : : : : : : : : : :

Social security pensions, num of contributors, in 1000 2661 2733 3003 3175 3317 3445 3541 3585 3557 3489 3437 Average social sec. pension contribution, 1000 in 2004 prices 2.0 2.0 2.3 2.7 3.0 3.3 3.6 4.0 4.3 4.7 5.1 Average total pension contribution, 1000 in 2004 prices : : : : : : : : : : :

Support ratio (contributors /100 pensioners, social sec. pens.) 439 415 416 390 362 333 305 279 251 225 205 High life expectancy; as % of GDP

Social security pensions, gross 4.7 4.6 5.2 5.9 6.5 7.3 8.0 8.7 9.5 10.5 11.5

Old-age and early pensions, gross 3.5 3.5 4.0 4.7 5.3 6.0 6.7 7.4 8.2 9.2 10.2 Total pension expenditure, gross : : : : : : : : : : : All pensions, assets : : : : : : : : : : : Higher labour productivity; as % of GDP

Social security pensions, gross 4.7 4.6 5.2 5.9 6.5 7.3 7.9 8.6 9.4 10.3 11.2 Old-age and early pensions, gross 3.5 3.5 4.0 4.7 5.2 6.0 6.6 7.3 8.1 9.0 9.9 Total pension expenditure, gross : : : : : : : : : : : All pensions, assets : : : : : : : : : : : Lower labour productivity; as % of GDP

Social security pensions, gross 4.7 4.6 5.2 5.9 6.5 7.2 7.9 8.5 9.3 10.3 11.1 Old-age and early pensions, gross 3.5 3.5 4.0 4.7 5.2 6.0 6.6 7.2 8.0 9.0 9.8 Total pension expenditure, gross : : : : : : : : : : : All pensions, assets : : : : : : : : : : : Higher employment rate (1 p.p.); as % of GDP

Social security pensions, gross 4.7 4.6 5.2 5.9 6.5 7.2 7.8 8.5 9.3 10.2 11.1 Old-age and early pensions, gross 3.5 3.5 4.0 4.6 5.2 5.9 6.6 7.2 8.0 8.9 9.8 Total pension expenditure, gross : : : : : : : : : : : All pensions, assets : : : : : : : : : : : Higher older workers empl. rate (5 p.p.); as % of GDP

Social security pensions, gross 4.7 4.6 5.2 5.9 6.5 7.2 7.8 8.5 9.3 10.2 11.0 Old-age and early pensions, gross 3.5 3.5 4.0 4.7 5.2 5.9 6.6 7.2 8.0 8.9 9.8 Total pension expenditure, gross : : : : : : : : : : : All pensions, assets : : : : : : : : : : : Lower interest rate; as % of GDP

Social security pensions, gross 4.7 4.6 5.2 5.9 6.5 7.2 7.9 8.5 9.3 10.3 11.1 Old-age and early pensions, gross 3.5 3.5 4.0 4.7 5.2 6.0 6.6 7.2 8.0 9.0 9.9

Total pension expenditure, gross 4.7 4.6 5.2 5.9 6.5 7.2 7.9 8.5 9.3 10.3 11.1 All pensions, assets : : : : : : : : : : : Higher interest rate; as % of GDP

Social security pensions, gross 4.7 4.6 5.2 5.9 6.5 7.2 7.9 8.5 9.3 10.3 11.1 Old-age and early pensions, gross 3.5 3.5 4.0 4.7 5.2 6.0 6.6 7.2 8.0 9.0 9.9 Total pension expenditure, gross : : : : : : : : : : : All pensions, assets : : : : : : : : : : : : = data not provided

Ireland OTHER AGE-RELATED EXPENDITURES as % of GDP

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Health care spending as % of GDP

Pure ageing s cenario 5.3 5.3 5.5 5.7 5.9 6.1 6.4 6.6 6.9 7.1 7.3

Cons tant health s cenario 5.3 5.3 5.3 5.4 5.5 5.6 5.8 6.0 6.1 6.3 6.4

Death-related cos ts s cenario 5.3 5.3 5.4 5.5 5.7 5.9 6.1 6.3 6.5 6.6 6.8 Incom e elas ticity of dem and 5.3 5.3 5.6 5.9 6.1 6.4 6.8 7.1 7.3 7.5 7.7 Unit cos ts - GDP per worker 5.3 5.3 5.2 5.4 5.6 5.8 6.1 6.4 6.8 7.3 7.7 AWG reference s cenario 5.3 5.3 5.5 5.7 5.9 6.2 6.4 6.7 6.9 7.1 7.3 Long-term care spending as % of GDP

Pure ageing s cenario 0.6 0.6 0.6 0.6 0.6 0.7 0.8 0.9 1.0 1.2 1.3

Unit cos ts - GDP per capita 0.6 0.6 0.6 0.6 0.7 0.5 0.8 0.9 1.0 1.1 1.2

Cons tant dis ability s cenario 0.6 0.6 0.6 0.6 0.6 0.6 0.7 0.8 0.8 0.9 1.0 Increas e in form al care 0.6 0.6 0.6 0.7 0.7 0.8 1.0 1.1 1.2 1.4 1.6 AWG reference s cenario 0.6 0.6 0.6 0.6 0.6 0.6 0.7 0.8 0.9 1.1 1.2 Numbe r of de pe nde nt pe ople (in thous ands )

Pure ageing s cenario 91 93 103 118 137 162 193 223 254 287 319

Unit cos ts - GDP per capita 91 93 103 118 137 81 193 223 254 287 319

Cons tant dis ability s cenario 91 92 94 83 109 122 138 153 168 184 199 Increas e in form al care 91 93 103 118 137 162 193 223 254 287 319 AWG reference s cenario 91 92 98 109 123 142 165 188 211 236 259 of which re ce iving formal care

Pure ageing s cenario 49 50 55 62 72 87 106 125 144 164 184

Unit cos ts - GDP per capita 49 50 55 62 72 87 106 125 144 164 184 Cons tant dis ability s cenario 49 50 52 55 60 68 81 92 102 114 124 Increas e in form al care 49 52 68 86 109 129 154 180 206 233 259 AWG reference s cenario 49 50 54 59 66 78 93 108 123 139 154 of which re ce iving informal or no care

Pure ageing s cenario 42 43 47 55 65 76 87 98 111 123 135

Unit cos ts - GDP per capita 42 43 47 55 65 30 87 98 111 123 135 Cons tant dis ability s cenario 42 42 43 36 49 53 57 61 66 71 75 Increas e in form al care 42 41 35 31 29 33 38 43 49 54 60 AWG reference s cenario 42 42 45 50 57 64 72 80 88 97 105 Education spending as % of GDP

Total 4.1 4.0 3.5 3.5 3.4 3.4 3.2 3.0 3.0 3.0 3.1

of which: Transfers 0.3 0.3 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 Prim ary 1.4 1.3 1.3 1.4 1.3 1.2 1.1 1.0 1.1 1.1 1.2

of which: Transfers 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Low s econdary 0.7 0.7 0.6 0.6 0.7 0.6 0.6 0.5 0.5 0.6 0.6

of which: Transfers 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Upper s econdary 0.9 0.8 0.7 0.7 0.7 0.7 0.7 0.6 0.6 0.6 0.6

of which: Transfers 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 Tertiary education 1.2 1.1 0.9 0.8 0.8 0.8 0.8 0.8 0.8 0.7 0.8

of which: Transfers 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 Number of s tudents (in thous ands )

Total 992 983 983 1029 1065 1061 1021 981 967 977 992 Prim ary 450 453 494 533 531 502 470 458 469 486 489

Low s econdary 174 172 166 179 199 199 189 175 170 174 181

Upper s econdary 192 187 170 175 189 200 198 186 175 173 177

Tertiary education 177 171 154 143 146 159 164 161 152 146 145 Memo

Population aged 15 64 (in thousands ) 2738 2771 2908 3008 3113 3216 3284 3311 3281 3220 3166 Unemployment benefit spending as % of GDP

0.7 0.7 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6

Italy Main demographic and macroeconomic assumptions (BA SELINE SCENA RIO)

Budgetary Projection: A WG variant population s cenario

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 De m ographic a ssum ptions

Fe r tility r ate 1.3 1.3 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 Life e xpe ctancy at birth

m ale s 77.3 77.5 78.3 79.1 79.9 80.5 81.1 81.6 82.1 82.4 82.8

fe m ale s 83.2 83.3 84.0 84.7 85.3 85.9 86.4 86.8 87.2 87.5 87.8 Life e xpe ctancy at 65

m ale s 16.7 16.8 17.3 17.8 18.3 18.8 19.2 19.5 19.8 20.1 20.4

fe m ale s 20.6 20.7 21.2 21.7 22.2 22.6 23.0 23.3 23.6 23.9 24.1

Ne t m igration (thous and) 150.0 150.0 150.0 150.0 150.0 150.0 150.0 150.0 150.0 150.0 150.0 Ne t m igration as % of population 0.26 0.26 0.26 0.26 0.26 0.26 0.26 0.26 0.27 0.27 0.28 Population (m illion) 57.9 58.0 58.5 58.6 58.4 58.0 57.5 56.9 56.1 55.1 53.8

Population age d 0-14 as % of total 14.2 14.2 13.9 13.7 13.0 12.2 11.8 11.6 11.6 11.6 11.5

Prim e age population (25-54) as % of total 43.9 43.8 43.1 41.9 39.9 37.5 35.5 34.4 34.0 33.9 33.7 Wor k ing age population (15-64) as % of total 66.6 66.3 65.5 64.3 63.8 63.0 61.1 58.5 56.1 54.7 54.6 Elde rly population age d 65+ as % of total 19.2 19.5 20.6 22.0 23.2 24.7 27.1 29.9 32.3 33.7 33.9

V e ry e lde r ly population age d 80 and ove r as % of total 4.8 5.0 5.8 6.6 7.3 7.7 8.6 9.2 10.1 11.7 13.3

Elde rly population age d 55+ as % of w ork ing age pop.15-64 39.5 40.1 41.9 44.1 46.0 48.4 51.7 55.0 57.3 57.9 56.8 Macroe conom ic assum ptions

Re al GDP (grow th rate ) 1.9 1.5 1.9 1.9 1.6 1.2 0.9 0.7 0.8 1.1 1.2

Labour input (grow th r ate ) 1.6 0.8 0.7 0.2 -0.2 -0.5 -0.8 -1.0 -0.9 -0.6 -0.5 Labour productivity (grow th r ate ) 0.3 0.7 1.2 1.7 1.7 1.8 1.7 1.7 1.7 1.7 1.7 TFP (grow th r ate ) 0.2 0.3 0.8 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1

Capital de e pe ning (contribution to labour productivity grow th) 0.1 0.4 0.4 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 GDP pe r capita (grow th rate ) 0.9 1.3 1.7 1.9 1.7 1.4 1.1 1.0 1.1 1.5 1.7

GDP in 2004 price s (in billions of e uro) 1351 1371 1509 1655 1802 1927 2036 2118 2199 2310 2450 GDP pe r w ork e r 20.1 20.4 22.2 24.3 26.6 28.6 30.5 32.1 33.8 36.1 39.2 Re al inte re s t rate 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 La bour force a ssum ptions

Population grow th (w ork ing age :15-64) -0.2 -0.1 -0.3 -0.3 -0.5 -1.0 -1.1 -1.1 -0.7 -0.5

Labour force (thous ands ) 24148 24180 25209 25395 25393 24871 24116 23026 21935 21157 20609 Par ticipation rate (15-64) 62.6 62.9 65.8 67.4 68.1 68.0 68.6 69.2 69.7 70.2 70.2

young (15-24) 37.2 36.8 37.0 37.3 36.5 37.1 37.8 37.8 37.5 37.2 37.1

prim e -age (25-54) 77.4 77.6 80.9 82.2 83.2 83.7 83.9 83.9 84.0 84.1 84.1 olde r (55-64) 31.2 32.1 36.8 41.7 47.4 50.0 53.2 54.4 54.2 54.8 55.3 olde s t (65-71) 5.8 6.1 6.0 7.0 7.2 7.8 8.2 8.1 8.2 7.9 8.0 Em ploym e nt rate (15-64) 57.4 57.7 61.0 63.0 63.7 63.6 64.2 64.7 65.2 65.6 65.7 Em ploym e nt rate (15-71) 52.2 52.4 55.3 56.8 57.2 56.8 56.3 55.7 55.8 56.5 57.5 Em ploym e nt grow th (15-64) 0.4 0.7 0.2 -0.2 -0.5 -0.8 -1.0 -0.9 -0.6 -0.5

Une m ploym e nt rate (15-64) 8.4 8.2 7.3 6.5 6.5 6.5 6.5 6.5 6.5 6.5 6.5 De pendency ra tios:

Shar e of olde r w ork e rs 9.0 9.3 10.6 12.2 15.4 18.2 20.4 20.3 18.6 17.6 17.7

Old-age de pe nde ncy ratio (1) 28.9 29.5 31.4 34.2 36.4 39.2 44.4 51.0 57.6 61.5 62.2 Total de pe nde ncy r atio (2) 50.2 50.8 52.7 55.5 56.7 58.6 63.6 70.8 78.2 82.7 83.2

Total e conom ic de pe nde ncy ratio 161.7 161.3 150.1 146.8 145.9 149.4 155.0 164.2 173.5 178.4 179.0 Econom ic old-age de pe nde ncy ratio (15-64) 49.2 49.9 50.3 53.0 55.7 60.0 67.1 76.6 85.8 91.5 92.7 Econom ic old-age de pe nde ncy ratio (15-71) 48.6 49.3 49.8 52.3 54.9 59.1 65.7 74.8 83.8 89.5 90.9 LEGENDA :

S h a r e o f o ld e r wo r k e rs = P o p u la t io n a g e d 5 5 t o 6 4 a s % o f p o p u la t io n a g e d 15 - 6 4

O ld - a g e d e p e n d e n c y ra t io ( 1) = P o p u la t io n a g e d 6 5 a n d o v e r a s a p e r c e n t a g e o f t h e p o p u la t io n a g e d 15 - 6 4

T o t a l d e p e n d e n c y ra t io ( 2 ) = P o p u la t io n u n d e r 15 a n d o v e r 6 4 a s a p e rc e n t a g e o f t h e p o p u la t io n a g e d 15 - 6 4

T o t a l e c o n o m ic d e p e n d e n c y r a t io = T o t a l p o p u la t io n le s s e m p lo ye d a s % o f e m p lo ye d p o p u la t io n ( 15 - 6 4 )

E c o n o m ic o ld - a g e d e p e n d e n c y r a t io ( 15 - 6 4 ) = In a c t iv e p o p u la t io n a g e d 6 5 + a s % o f e m p lo ye d p o p u la t io n ( 15 - 6 4 )

E c o n o m ic o ld - a g e d e p e n d e n c y r a t io ( 15 - 7 1) = In a c t iv e p o p u la t io n a g e d 6 5 + a s % o f e m p lo ye d p o p u la t io n ( 15 - 7 1)

Italy EPC-AW G Pension expenditure projections

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Baseline scenario; as % of GDP

Social security pensions, gross 14.2 14.3 14.0 13.8 14.0 14.4 15.0 15.6 15.9 15.4 14.7

Old-age and early pens ions , gros s 13.9 14.0 13.7 13.6 13.7 14.2 14.9 15.5 15.7 15.3 14.5

Of which: earnings -related pens ions , gros s 13.7 13.7 13.4 13.3 13.4 13.8 14.4 14.9 15.2 14.8 14.0 Private s ector em ployees , gros s 10.5 10.5 10.2 10.0 10.0 10.3 10.9 11.4 11.7 11.4 10.8 Public s ector em ployees , gros s 3.2 3.3 3.2 3.3 3.4 3.5 3.5 3.5 3.5 3.4 3.2

Other pens ions (dis ability, s urvivors ), gros s 0.3 0.3 0.3 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 Occupational pensions, gross : : : : : : : : : : :

Private m andatory pensions, gross : : : : : : : : : : :

Total pension expenditure, gross 14.2 14.3 14.0 13.8 14.0 14.4 15.0 15.6 15.9 15.4 14.7 Social security pensions, net 12.2 12.2 11.9 11.8 11.9 12.3 13.0 13.6 13.8 13.4 12.6

Total pension expenditure, net 12.2 12.2 11.9 11.8 11.9 12.3 13.0 13.6 13.8 13.4 12.6

Social security pensions, contributions 10.2 10.2 10.3 10.4 10.4 10.4 10.3 10.3 10.5 10.6 10.6 Total pension contributions 10.2 10.2 10.3 10.4 10.4 10.4 10.3 10.3 10.5 10.6 10.6 Social security pensions, assets : : : : : : : : : : : All pensions, assets : : : : : : : : : : : Additional indicators

Social security pensions, net / Social sec. pensions, gross,% 86 86 85 85 85 86 86 87 87 87 86 Total pension expenditure, net / Total pension exp., gross, % 86 86 85 85 85 86 86 87 87 87 86 Social security pensions, number of pensioners , 1000 pers. 15595 15619 15665 16088 16783 17777 19131 20188 20774 20639 20206 All pensions, pensioners , 1000 pers. 15595 15619 15665 16088 16783 17777 19131 20188 20774 20639 20206

Num ber of pensioners aged 65+ , 1000 pers. 11318 11486 12003 12908 13516 14280 15524 16808 17826 18060 17638

Share of pensioners below age 65 as % of all pensioners 27.4 26.5 23.4 19.8 19.5 19.7 18.9 16.7 14.2 12.5 12.7 Average gross social sec. pension, 1000 in 2004 prices 12.3 12.5 13.4 14.2 15.0 15.6 16.0 16.4 16.8 17.3 17.8 Average gross total pensions, 1000 in 2004 prices 12.3 12.5 13.4 14.2 15.0 15.6 16.0 16.4 16.8 17.3 17.8 Output / W orker, 1000 in 2004 prices 61.8 62.2 64.5 69.7 75.9 82.8 90.3 98.4 107.2 116.8 127.2 Social sec. benefit ratio 20.0 20.1 20.8 20.4 19.8 18.8 17.7 16.7 15.7 14.8 14.0

Total pension benefit ratio 20.0 20.1 20.8 20.4 19.8 18.8 17.7 16.7 15.7 14.8 14.0 Social security pensions, num of contributors, in 1000 22777 22951 24247 24755 24775 24323 23378 22373 21440 20830 20340

Average social sec. pension contribution, 1000 in 2004 prices 6.0 6.1 6.4 6.9 7.6 8.2 8.9 9.8 10.7 11.7 12.8 Average total pension contribution, 1000 in 2004 prices : : : : : : : : : : :

Support ratio (contributors /100 pensioners, social sec. pens.) 146 147 155 154 148 137 122 111 103 101 101 High life expectancy; as % of GDP

Social security pensions, gross 14.2 14.3 14.0 13.9 14.1 14.5 15.2 15.8 16.1 15.7 14.9

Old-age and early pensions, gross 13.9 14.0 13.7 13.6 13.8 14.3 15.0 15.6 15.9 15.5 14.8 Total pension expenditure, gross 14.2 14.3 14.0 13.9 14.1 14.5 15.2 15.8 16.1 15.7 14.9 All pensions, assets : : : : : : : : : : : Higher labour productivity; as % of GDP

Social security pensions, gross 14.2 14.3 14.0 13.7 13.7 14.0 14.6 15.1 15.4 14.9 14.1

Old-age and early pensions, gross 13.9 14.0 13.7 13.5 13.5 13.8 14.4 15.0 15.2 14.7 14.0 Total pension expenditure, gross 14.2 14.3 14.0 13.7 13.7 14.0 14.6 15.1 15.4 14.9 14.1 All pensions, assets : : : : : : : : : : : Lower labour productivity; as % of GDP

Social security pensions, gross 14.2 14.3 14.0 13.9 14.2 14.7 15.5 16.1 16.5 16.0 15.2

Old-age and early pensions, gross 13.9 14.0 13.7 13.7 14.0 14.5 15.3 16.0 16.3 15.9 15.1 Total pension expenditure, gross 14.2 14.3 14.0 13.9 14.2 14.7 15.5 16.1 16.5 16.0 15.2 All pensions, assets : : : : : : : : : : : Higher employment rate (1 p.p.); as % of GDP

Social security pensions, gross 14.2 14.3 13.9 13.7 13.9 14.3 14.9 15.5 15.8 15.4 14.7

Old-age and early pensions, gross 13.9 14.0 13.6 13.5 13.6 14.1 14.8 15.4 15.7 15.3 14.5 Total pension expenditure, gross 14.2 14.3 13.9 13.7 13.9 14.3 14.9 15.5 15.8 15.4 14.7 All pensions, assets : : : : : : : : : : : Higher older workers empl. rate (5 p.p.); as % of GDP

Social security pensions, gross 14.2 14.3 13.9 13.7 13.8 14.2 14.9 15.6 16.0 15.6 14.8

Old-age and early pensions, gross 13.9 14.0 13.6 13.5 13.6 14.0 14.7 15.5 15.8 15.4 14.7 Total pension expenditure, gross 14.2 14.3 13.9 13.7 13.8 14.2 14.9 15.6 16.0 15.6 14.8 All pensions, assets : : : : : : : : : : : Lower interest rate; as % of GDP

Social security pensions, gross 14.2 14.3 14.0 13.8 14.0 14.4 15.0 15.6 15.9 15.4 14.7

Old-age and early pensions, gross 13.9 14.0 13.7 13.6 13.7 14.2 14.9 15.5 15.7 15.3 14.5 Total pension expenditure, gross 14.2 14.3 14.0 13.8 14.0 14.4 15.0 15.6 15.9 15.4 14.7 All pensions, assets : : : : : : : : : : : Higher interest rate; as % of GDP

Social security pensions, gross 14.2 14.3 14.0 13.8 14.0 14.4 15.0 15.6 15.9 15.4 14.7

Italy OTHER AGE-RELATED EXPENDITURES as % of GDP

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Health care spending as % of GDP

Pure ageing s cenario 5.8 5.8 6.0 6.1 6.3 6.5 6.7 6.9 7.0 7.1 7.2

Cons tant health s cenario 5.8 5.8 5.8 5.9 6.0 6.1 6.3 6.4 6.5 6.6 6.6

Death-related cos ts s cenario 5.8 5.8 5.9 6.0 6.2 6.3 6.5 6.7 6.8 6.8 6.8 Incom e elas ticity of dem and 5.8 5.8 6.0 6.2 6.4 6.7 6.9 7.1 7.3 7.4 7.4 Unit cos ts - GDP per worker 5.8 5.8 5.7 5.8 5.9 6.2 6.5 7.0 7.4 7.7 7.8 AWG reference s cenario 5.8 5.8 6.0 6.1 6.3 6.5 6.7 6.9 7.0 7.1 7.1 Long-term care spending as % of GDP

Pure ageing s cenario 1.5 1.5 1.5 1.6 1.6 1.7 1.8 1.9 2.0 2.2 2.4

Unit cos ts - GDP per capita 1.5 1.6 1.6 1.7 1.7 1.5 1.8 1.9 2.0 2.1 2.2

Cons tant dis ability s cenario 1.5 1.5 1.5 1.5 1.5 1.6 1.6 1.7 1.8 1.9 2.0 Increas e in form al care 1.5 1.6 1.7 1.9 2.1 2.2 2.3 2.5 2.8 3.0 3.3 AWG reference s cenario 1.5 1.5 1.5 1.5 1.6 1.6 1.7 1.8 1.9 2.1 2.2 Numbe r of de pe nde nt pe ople (in thous ands )

Pure ageing s cenario 2214 2267 2494 2702 2880 3050 3286 3557 3859 4131 4 272

Unit cos ts - GDP per capita 2214 2267 2494 2702 2880 1568 3286 3557 3859 4131 4 272

Cons tant dis ability s cenario 2214 2234 2290 1935 2319 2309 2362 2431 2531 2645 2 698 Increas e in form al care 2214 2267 2494 2702 2880 3050 3286 3557 3859 4131 4 272 AWG reference s cenario 2214 2250 2392 2510 2600 2680 2824 2994 3195 3388 3 485 of which re ce iving formal care

Pure ageing s cenario 1126 1155 1274 1392 1485 1570 1703 1835 1976 2114 2 201

Unit cos ts - GDP per capita 1126 1155 1274 1392 1485 1570 1703 1835 1976 2114 2 201

Cons tant dis ability s cenario 1126 1139 1175 1202 1208 1203 1241 1274 1321 1383 1 423 Increas e in form al care 1126 1211 1597 1957 2266 2399 2589 2799 3030 3243 3 360 AWG reference s cenario 1126 1147 1225 1297 1346 1386 1472 1554 1648 1749 1 812 of which re ce iving informal or no care

Pure ageing s cenario 1088 1112 1220 1310 1395 1481 1583 1722 1883 2017 2 071

Unit cos ts - GDP per capita 1088 1112 1220 1310 1395 732 1583 1722 1883 2017 2 071

Cons tant dis ability s cenario 1088 1095 1116 922 1112 1106 1121 1157 1210 1262 1 275 Increas e in form al care 1088 1056 897 745 614 652 697 758 829 888 912

AWG reference s cenario 1088 1103 1168 1213 1253 1293 1352 1440 1547 1639 1 673 Education spending as % of GDP

Total 4.3 4.2 3.9 3.8 3.7 3.6 3.5 3.5 3.6 3.7 3.7

of which: Transfers 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 Prim ary 1.2 1.2 1.1 1.1 1.1 1.0 1.0 1.0 1.0 1.1 1.1

of which: Transfers 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Low s econdary 0.9 0.9 0.8 0.8 0.8 0.8 0.7 0.7 0.8 0.8 0.8

of which: Transfers 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Upper s econdary 1.3 1.3 1.2 1.1 1.2 1.2 1.1 1.1 1.1 1.1 1.1

of which: Transfers 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Tertiary education 0.9 0.9 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7

of which: Transfers 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 Number of s tudents (in thous ands )

Total 9313 9243 8953 8881 8702 8313 7860 7498 7279 7147 7 005

Prim ary 2766 2753 2836 2836 2652 2449 2325 2273 2254 2227 2 155

Low s econdary 1857 1834 1747 1807 1784 1658 1536 1469 1442 1433 1 412

Upper s econdary 2741 2739 2676 2622 2691 2616 2432 2270 2186 2150 2 133

Tertiary education 1949 1916 1695 1617 1575 1590 1568 1485 1397 1337 1 304 Memo

Population aged 15 64 (in thous ands ) 3 8549 384 54 38295 37687 37265 36563 35138 33288 31467 30146 29342 Unemployment benefit spending as % of GDP

0.4 0.4 0.4 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3

Cyprus Main demographic and macroeconomic assumptions (BA SELINE SCENA RIO)

Budgetary Projection: A WG variant population s cenario

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 De m ographic a ssum ptions

Fe r tility r ate 1.5 1.5 1.4 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 Life e xpe ctancy at birth

m ale s 76.3 76.5 77.5 78.3 79.0 79.6 80.2 80.7 81.1 81.5 81.9

fe m ale s 80.8 80.9 81.6 82.3 82.8 83.3 83.7 84.1 84.5 84.8 85.1 Life e xpe ctancy at 65

m ale s 16.2 16.3 16.9 17.4 17.9 18.3 18.7 19.0 19.3 19.6 19.9

fe m ale s 18.3 18.5 19.0 19.5 19.9 20.3 20.6 20.9 21.2 21.4 21.7

Ne t m igration (thous and) 6.1 6.2 6.3 5.5 4.5 4.5 4.6 4.7 4.8 4.8 4.9

Ne t m igration as % of population 0.83 0.83 0.81 0.67 0.53 0.50 0.50 0.50 0.50 0.50 0.50 Population (m illion) 0.7 0.7 0.8 0.8 0.9 0.9 0.9 0.9 1.0 1.0 1.0

Population age d 0-14 as % of total 20.0 19.4 16.6 15.2 15.4 15.6 15.3 14.3 13.4 13.1 13.3

Prim e age population (25-54) as % of total 42.5 42.6 43.8 43.9 43.5 42.7 41.4 40.1 38.1 36.8 35.9 Wor k ing age population (15-64) as % of total 68.1 68.4 70.0 69.5 67.4 65.2 63.8 63.6 63.6 62.9 60.5 Elde rly population age d 65+ as % of total 11.9 12.1 13.4 15.3 17.2 19.1 21.0 22.0 22.9 24.0 26.1

V e ry e lde r ly population age d 80 and ove r as % of total 2.6 2.7 2.9 3.2 3.8 4.5 5.4 6.3 7.2 8.0 8.2

Elde rly population age d 55+ as % of w ork ing age pop.15-64 0.4 0.5 0.5 0.5 0.6 0.6 0.7 0.7 0.8 0.8 0.9 Macroe conom ic assum ptions

Re al GDP (grow th rate ) 3.9 3.3 4.5 4.2 3.4 2.9 2.8 2.2 2.0 1.5 1.2

Labour input (grow th r ate ) 1.9 0.9 1.6 1.2 0.4 0.0 0.1 0.3 0.1 -0.3 -0.5

Labour productivity (grow th r ate ) 1.9 2.4 2.9 3.0 2.9 2.8 2.7 2.0 1.9 1.8 1.7 TFP (grow th r ate ) 1.1 1.2 1.5 1.7 1.7 1.7 1.8 1.3 1.2 1.2 1.1

Capital de e pe ning (contribution to labour productivity grow th) 0.8 1.2 1.5 1.3 1.2 1.1 0.9 0.7 0.7 0.6 0.6 GDP pe r capita (grow th rate ) 1.7 2.1 3.3 3.1 2.5 2.2 2.3 1.9 1.8 1.3 1.0

GDP in 2004 price s (in billions of e uro) 12 13 16 20 24 28 32 36 40 44 47 GDP pe r w ork e r 16.5 16.8 19.8 23.4 26.8 30.0 33.5 37.2 40.7 43.8 46.2 Re al inte re s t rate 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 La bour force a ssum ptions

Population grow th (w ork ing age :15-64) 1.7 1.5 0.5 0.2 0.0 0.2 0.4 0.2 -0.2 -0.6

Labour force (thous ands ) 360 371 422 458 474 478 480 485 490 487 476

Par ticipation rate (15-64) 72.3 73.4 76.8 79.6 81.2 81.7 81.6 81.2 80.9 80.4 80.7

young (15-24) 44.1 44.9 45.6 48.1 47.9 45.3 44.2 44.7 45.9 46.9 47.1

prim e -age (25-54) 86.9 87.9 91.0 93.0 94.0 94.5 94.6 94.5 94.3 94.2 94.2 olde r (55-64) 54.6 56.6 62.8 65.5 66.9 67.1 69.0 70.9 72.6 71.0 70.6

olde s t (65-71) 15.1 16.2 16.9 17.9 17.4 17.7 17.2 17.0 17.9 18.6 18.8 Em ploym e nt rate (15-64) 69.2 70.5 73.6 76.2 77.8 78.2 78.2 77.8 77.5 77.0 77.3 Em ploym e nt rate (15-71) 65.4 66.5 69.1 71.0 71.8 71.7 71.1 71.1 71.0 70.1 69.0 Em ploym e nt grow th (15-64) 3.5 1.6 1.2 0.4 0.0 0.1 0.3 0.1 -0.3 -0.5

Une m ploym e nt rate (15-64) 4.2 4.0 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 De pendency ra tios:

Shar e of olde r w ork e rs 11.0 11.5 13.3 14.7 15.8 15.7 15.9 17.1 20.1 21.4 21.1

Old-age de pe nde ncy ratio (1) 17.5 17.7 19.1 22.1 25.5 29.3 32.9 34.7 36.1 38.2 43.2 Total de pe nde ncy r atio (2) 46.9 46.1 42.8 44.0 48.4 53.3 56.8 57.2 57.2 59.0 65.2

Total e conom ic de pe nde ncy ratio 112.1 107.4 94.0 88.9 90.7 96.0 100.6 102.0 102.9 106.4 113.6

Econom ic old-age de pe nde ncy ratio (15-64) 23.6 23.4 24.1 26.6 30.3 34.8 39.2 41.9 43.8 46.4 51.9 Econom ic old-age de pe nde ncy ratio (15-71) 23.2 23.0 23.6 26.0 29.6 33.8 38.1 40.8 42.6 45.0 49.9 LEGENDA :

S h a r e o f o ld e r wo r k e rs = P o p u la t io n a g e d 5 5 t o 6 4 a s % o f p o p u la t io n a g e d 15 - 6 4

O ld - a g e d e p e n d e n c y ra t io ( 1) = P o p u la t io n a g e d 6 5 a n d o v e r a s a p e r c e n t a g e o f t h e p o p u la t io n a g e d 15 - 6 4

T o t a l d e p e n d e n c y ra t io ( 2 ) = P o p u la t io n u n d e r 15 a n d o v e r 6 4 a s a p e rc e n t a g e o f t h e p o p u la t io n a g e d 15 - 6 4

T o t a l e c o n o m ic d e p e n d e n c y r a t io = T o t a l p o p u la t io n le s s e m p lo ye d a s % o f e m p lo ye d p o p u la t io n ( 15 - 6 4 )

E c o n o m ic o ld - a g e d e p e n d e n c y r a t io ( 15 - 6 4 ) = In a c t iv e p o p u la t io n a g e d 6 5 + a s % o f e m p lo ye d p o p u la t io n ( 15 - 6 4 )

E c o n o m ic o ld - a g e d e p e n d e n c y r a t io ( 15 - 7 1) = In a c t iv e p o p u la t io n a g e d 6 5 + a s % o f e m p lo ye d p o p u la t io n ( 15 - 7 1)

Cyprus EPC-AW G Pension expenditure projections

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Baseline scenario; as % of GDP

Social security pensions, gross 6.9 7.0 8.0 8.8 9.9 10.8 12.2 13.5 15.0 16.7 19.8

Old-age and early pens ions , gros s 6.9 7.0 8.0 8.8 9.9 10.8 12.2 13.5 15.0 16.7 19.8 Of which: earnings -related pens ions , gros s : : : : : : : : : : : Private s ector em ployees , gros s : : : : : : : : : : : Public s ector em ployees , gros s : : : : : : : : : : :

Other pens ions (dis ability, s urvivors ), gros s : : : : : : : : : : : Occupational pensions, gross : : : : : : : : : : :

Private mandatory pensions, gross : : : : : : : : : : :

Total pension expenditure, gross 6.9 7.0 8.0 8.8 9.9 10.8 12.2 13.5 15.0 16.7 19.8 Social security pensions, net : : : : : : : : : : :

Total pension expenditure, net : : : : : : : : : : :

Social security pensions, contributions 5.5 5.7 6.4 6.9 7.2 7.2 7.2 7.3 7.4 7.3 7.1 Total pension contributions 5.5 5.7 6.4 6.9 7.2 7.2 7.2 7.3 7.4 7.3 7.1

Social security pensions, assets 39.3 38.7 39.6 39.7 37.9 33.4 25.1 14.7 1.9 : : All pensions, assets 39.3 38.7 39.6 39.7 37.9 33.4 25.1 14.7 1.9 : : Additional indicators

Social security pensions, net / Social sec. pensions, gross,% : : : : : : : : : : : Total pension expenditure, net / Total pension exp., gross, % : : : : : : : : : : :

Social security pensions, number of pensioners , 1000 pers. 89 91 113 138 166 194 218 232 243 260 293 All pensions, pensioners , 1000 pers. 89 91 113 138 166 194 218 232 243 260 293 Number of pensioners aged 65+ , 1000 pers. : : : : : : : : : : :

Share of pensioners below age 65 as % of all pensioners : : : : : : : : : : :

Average gross social sec. pension, 1000 in 2004 prices 9.6 9.8 11.4 12.7 14.2 15.5 17.9 21.0 24.7 28.0 31.4 Average gross total pensions, 1000 in 2004 prices 9.6 9.8 11.4 12.7 14.2 15.5 17.9 21.0 24.7 28.0 31.4 Output / W orker, 1000 in 2004 prices 37.5 38.4 39.8 45.7 52.8 60.8 69.6 77.8 85.5 93.5 102.0 Social sec. benefit ratio 25.6 25.6 28.6 27.9 26.9 25.5 25.7 27.0 28.9 29.9 30.8

Total pension benefit ratio 25.6 25.6 28.6 27.9 26.9 25.5 25.7 27.0 28.9 29.9 30.8

Social security pensions, num of contributors, in 1000 344 356 404 438 454 458 459 465 469 467 456

Average social sec. pension contribution, 1000 in 2004 prices 2.0 2.0 2.5 3.2 3.8 4.4 5.0 5.7 6.3 6.8 7.3 Average total pension contribution, 1000 in 2004 prices : : : : : : : : : : :

Support ratio (contributors /100 pensioners, social sec. pens.) 387 390 359 317 273 235 211 200 193 180 156 High life expectancy; as % of GDP

Social security pensions, gross : : : : : : : : : : :

Old-age and early pensions, gross : : : : : : : : : : : Total pension expenditure, gross : : : : : : : : : : : All pensions, assets : : : : : : : : : : : Higher labour productivity; as % of GDP

Social security pensions, gross 6.9 7.0 8.0 8.8 9.7 10.6 11.7 12.8 14.1 15.6 18.4

Old-age and early pensions, gross 6.9 7.0 8.0 8.8 9.7 10.6 11.7 12.8 14.1 15.6 18.4 Total pension expenditure, gross 6.9 7.0 8.0 8.8 9.7 10.6 11.7 12.8 14.1 15.6 18.4 All pensions, assets 39.3 38.7 39.5 39.1 36.8 32.1 24.2 14.7 3.4 : : Lower labour productivity; as % of GDP

Social security pensions, gross 6.9 7.0 8.0 8.9 10.0 11.1 12.6 14.1 15.8 17.8 21.4

Old-age and early pensions, gross 6.9 7.0 8.0 8.9 10.0 11.1 12.6 14.1 15.8 17.8 21.4 Total pension expenditure, gross 6.9 7.0 8.0 8.9 10.0 11.1 12.6 14.1 15.8 17.8 21.4 All pensions, assets 39.3 38.7 39.5 39.6 37.4 32.1 22.6 10.4 : : : Higher employment rate (1 p.p.); as % of GDP

Social security pensions, gross 6.9 7.0 7.9 8.8 9.8 10.8 12.1 13.4 14.9 16.5 19.7

Old-age and early pensions, gross 6.9 7.0 7.9 8.8 9.8 10.8 12.1 13.4 14.9 16.5 19.7 Total pension expenditure, gross 6.9 7.0 7.9 8.8 9.8 10.8 12.1 13.4 14.9 16.5 19.7 All pensions, assets 39.3 38.7 40.0 40.5 39.0 34.4 26.2 15.7 2.7 : : Higher older workers empl. rate (5 p.p.); as % of GDP

Social security pensions, gross 7.3 7.8 10.0 12.2 15.0 18.4 23.2 28.7 35.1 42.5 54.1

Old-age and early pensions, gross 7.3 7.8 10.0 12.2 15.0 18.4 23.2 28.7 35.1 42.5 54.1 Total pension expenditure, gross 7.3 7.8 10.0 12.2 15.0 18.4 23.2 28.7 35.1 42.5 54.1 All pensions, assets 39.3 39.2 42.1 44.0 42.6 35.0 17.3 : : : : Lower interest rate; as % of GDP

Social security pensions, gross 6.9 7.0 8.0 8.8 9.9 10.8 12.2 13.5 15.0 16.7 19.8

Old-age and early pensions, gross 6.9 7.0 8.0 8.8 9.9 10.8 12.2 13.5 15.0 16.7 19.8 Total pension expenditure, gross 6.9 7.0 8.0 8.8 9.9 10.8 12.2 13.5 15.0 16.7 19.8 All pensions, assets : : : : : : : : : : : Higher interest rate; as % of GDP

Social security pensions, gross 6.9 7.0 8.0 8.8 9.9 10.8 12.2 13.5 15.0 16.7 19.8

Cyprus OTHER AGE-RELATED EXPENDITURES as % of GDP

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Health care spending as % of GDP

Pure ageing s cenario 2.9 2.9 3.1 3.2 3.3 3.5 3 .6 3.7 3.8 3.9 4.0

Cons tant health s cenario 2.9 2.9 3.0 3.1 3.2 3.3 3 .3 3.4 3.5 3.6 3.6

Death-related cos ts s cenario 2.9 2.9 3.0 3.2 3.3 3.3 3 .4 3.5 3.6 3.7 3.8 Incom e elas ticity of dem and 2.9 2.9 3.1 3.3 3.5 3.6 3 .8 3.9 4.0 4.1 4.2 Unit cos ts - GDP per worker 2.9 2.9 2.9 3.0 3.1 3.4 3 .5 3.7 3.8 4.0 4.2 AWG reference s cenario 2.9 2.9 3.1 3.3 3.4 3.5 3 .6 3.8 3.9 4.0 4.0 Long-term care spending as % of GDP

Pure ageing s cenario : : : : : : : : : : :

Unit cos ts - GDP per capita : : : : : : : : : : :

Cons tant dis ability s cenario : : : : : : : : : : : Increas e in form al care : : : : : : : : : : : AWG reference s cenario : : : : : : : : : : : Numbe r of de pe nde nt pe ople (in thous ands )

Pure ageing s cenario 1 4 15 17 21 25 29 34 3 8 41 44 47

Unit cos ts - GDP per capita 1 4 15 17 21 25 14 34 3 8 41 44 47

Cons tant dis ability s cenario 1 4 15 16 14 19 22 24 2 6 27 28 29 Increas e in form al care 1 4 15 17 21 25 29 34 3 8 41 44 47 AWG reference s cenario 1 4 15 16 19 22 25 29 3 2 34 36 38 of which re ce iving formal care

Pure ageing s cenario 0 0 0 0 0 0 0 0 0 0 0

Unit cos ts - GDP per capita 0 0 0 0 0 0 0 0 0 0 0

Cons tant dis ability s cenario 0 0 0 0 0 0 0 0 0 0 0

Increas e in form al care 0 1 5 9 14 16 19 2 1 23 25 26 AWG reference s cenario 0 0 0 0 0 0 0 0 0 0 0 of which re ce iving informal or no care

Pure ageing s cenario 1 4 15 17 21 25 29 34 3 8 41 44 47

Unit cos ts - GDP per capita 1 4 15 17 21 25 14 34 3 8 41 44 47

Cons tant dis ability s cenario 1 4 15 16 14 19 22 24 2 6 27 28 29 Increas e in form al care 1 4 14 13 12 11 13 15 1 7 18 19 21 AWG reference s cenario 1 4 15 16 19 22 25 29 3 2 34 36 38 Education spending as % of GDP

Total 6.3 6.2 5.1 4.3 4.0 4.1 4 .3 4.4 4.2 4.0 4.0

of which: Transfers 0.9 0.9 0.8 0.7 0.6 0.6 0 .6 0.6 0.6 0.6 0.6 Prim ary 1.7 1.7 1.3 1.1 1.2 1.2 1 .3 1.2 1.1 1.1 1.1

of which: Transfers 0.0 0.0 0.0 0.0 0.0 0.0 0 .0 0.0 0.0 0.0 0.0 Low s econdary 1.5 1.5 1.2 0.9 0.9 1.0 1 .1 1.1 1.0 0.9 0.9

of which: Transfers 0.0 0.0 0.0 0.0 0.0 0.0 0 .0 0.0 0.0 0.0 0.0 Upper s econdary 1.6 1.5 1.4 1.1 0.9 1.0 1 .1 1.1 1.1 1.0 1.0

of which: Transfers 0.0 0.0 0.0 0.0 0.0 0.0 0 .0 0.0 0.0 0.0 0.0 Tertiary education 1.5 1.5 1.3 1.1 1.0 0.9 0 .9 1.0 1.0 1.0 1.0

of which: Transfers 0.9 0.9 0.8 0.7 0.6 0.6 0 .6 0.6 0.6 0.6 0.6 Number of s tudents (in thous ands )

Total 145 143 130 117 116 12 3 129 130 125 1 19 117 Prim ary 6 2 59 49 48 51 56 57 5 4 50 48 50

Low s econdary 3 3 34 30 25 25 28 30 3 0 29 27 26

Upper s econdary 3 2 32 32 27 24 26 28 3 0 29 27 26

Tertiary education 1 8 18 18 17 15 14 14 1 5 16 16 15 Memo

Population aged 15 64 (in thous ands ) 497 506 549 575 583 58 5 588 597 606 6 06 590 Unemployment benefit spending as % of GDP

0.4 0.3 0.4 0.4 0.4 0.4 0 .4 0.4 0.4 0.4 0.4

Latv ia Main demographic and macroeconomic assumptions (BA SELINE SCENA RIO)

Budgetary Projection: A WG variant population s cenario

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 De m ographic a ssum ptions

Fe r tility r ate 1.3 1.3 1.4 1.5 1.5 1.6 1.6 1.6 1.6 1.6 1.6 Life e xpe ctancy at birth

m ale s 64.9 65.0 65.8 66.8 68.0 69.5 70.9 72.0 72.9 73.6 74.3

fe m ale s 76.2 76.3 76.9 77.7 78.6 79.5 80.4 81.0 81.6 82.1 82.5 Life e xpe ctancy at 65

m ale s 12.3 12.4 12.8 13.4 14.1 14.9 15.6 16.2 16.7 17.1 17.5

fe m ale s 16.6 16.7 17.1 17.6 18.2 18.8 19.3 19.8 20.2 20.5 20.7

Ne t m igration (thous and) -2.1 -2.1 -2.6 -4.1 -0.7 2.5 3.0 3.0 2.9 2.9 2.8

Ne t m igration as % of population -0.09 -0.09 -0.12 -0.19 -0.03 0.12 0.15 0.15 0.15 0.15 0.15 Population (m illion) 2.3 2.3 2.2 2.2 2.1 2.1 2.0 2.0 1.9 1.9 1.9

Population age d 0-14 as % of total 15.4 14.8 13.7 15.1 16.2 16.2 15.1 13.8 13.4 14.0 14.8

Prim e age population (25-54) as % of total 41.7 41.8 43.0 43.8 43.0 41.1 39.4 38.5 37.3 35.7 35.0 Wor k ing age population (15-64) as % of total 68.4 68.6 68.9 67.2 65.5 64.1 63.7 63.9 63.0 61.4 59.1 Elde rly population age d 65+ as % of total 16.2 16.5 17.4 17.7 18.4 19.7 21.3 22.3 23.5 24.5 26.1

V e ry e lde r ly population age d 80 and ove r as % of total 2.9 3.0 3.9 4.5 5.2 5.4 5.6 6.2 7.2 8.0 8.3

Elde rly population age d 55+ as % of w ork ing age pop.15-64 1.5 1.4 1.4 1.5 1.5 1.6 1.6 1.5 1.6 1.7 1.8 Macroe conom ic assum ptions

Re al GDP (grow th rate ) 7.5 8.1 7.4 4.2 2.9 2.4 2.1 1.4 1.2 0.7 0.4

Labour input (grow th r ate ) 1.1 1.5 0.8 -0.6 -1.1 -0.9 -0.6 -0.5 -0.7 -1.1 -1.3 Labour productivity (grow th r ate ) 6.4 6.5 6.5 4.8 4.0 3.3 2.7 2.0 1.9 1.8 1.7 TFP (grow th r ate ) 3.0 3.0 3.3 2.2 2.0 1.9 1.8 1.3 1.2 1.2 1.1

Capital de e pe ning (contribution to labour productivity grow th) 3.3 3.5 3.2 2.6 2.0 1.4 0.9 0.7 0.7 0.6 0.6 GDP pe r capita (grow th rate ) 8.1 8.7 8.0 4.9 3.4 2.9 2.6 1.9 1.6 1.1 0.8

GDP in 2004 price s (in billions of e uro) 11 12 17 22 26 30 33 36 39 41 41 GDP pe r w ork e r 8.4 9.1 13.6 18.2 22.1 25.6 29.2 32.5 35.4 37.6 39.2 Re al inte re s t rate 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 La bour force a ssum ptions

Population grow th (w ork ing age :15-64) -0.3 -0.7 -1.3 -1.0 -0.8 -0.4 -0.4 -0.7 -0.9 -1.2

Labour force (thous ands ) 1112 1121 1168 1157 1097 1043 1005 979 950 907 850

Par ticipation rate (15-64) 70.1 70.8 75.6 79.1 79.2 78.6 78.1 77.4 77.6 77.4 76.8

young (15-24) 39.8 40.4 45.7 48.0 40.9 39.9 40.4 42.0 43.9 44.4 42.5

prim e -age (25-54) 87.1 87.8 90.9 92.0 92.8 93.5 93.8 93.6 93.1 92.7 92.9 olde r (55-64) 48.4 49.8 56.3 61.2 61.6 61.5 63.3 62.9 64.4 63.8 60.5

olde s t (65-71) 15.1 16.1 14.6 17.1 17.2 17.6 17.1 17.4 17.6 17.6 18.1 Em ploym e nt rate (15-64) 63.2 64.4 69.9 73.6 73.7 73.1 72.6 72.0 72.2 71.9 71.4 Em ploym e nt rate (15-71) 58.5 59.7 64.6 68.6 68.0 66.9 66.0 65.9 65.8 65.3 64.1 Em ploym e nt grow th (15-64) 1.5 0.8 -0.6 -1.1 -0.9 -0.6 -0.5 -0.7 -1.1 -1.3

Une m ploym e nt rate (15-64) 9.8 9.1 7.6 7.0 7.0 7.0 7.0 7.0 7.0 7.0 7.0 De pendency ra tios:

Shar e of olde r w ork e rs 11.4 11.5 12.3 14.5 15.9 15.9 16.4 16.9 18.6 20.8 19.6

Old-age de pe nde ncy ratio (1) 23.6 24.1 25.2 26.3 28.0 30.7 33.4 34.9 37.4 39.9 44.1 Total de pe nde ncy r atio (2) 46.1 45.7 45.1 48.7 52.7 55.9 57.1 56.5 58.7 62.8 69.1

Total e conom ic de pe nde ncy ratio 131.3 126.4 107.5 102.1 107.3 113.3 116.4 117.4 119.7 126.2 136.9 Econom ic old-age de pe nde ncy ratio (15-64) 35.1 34.9 34.0 33.6 35.6 39.1 42.9 45.5 48.6 52.2 57.8 Econom ic old-age de pe nde ncy ratio (15-71) 34.2 34.0 33.3 32.9 34.7 38.0 41.7 44.2 47.1 50.5 55.7 LEGENDA :

S h a r e o f o ld e r wo r k e rs = P o p u la t io n a g e d 5 5 t o 6 4 a s % o f p o p u la t io n a g e d 15 - 6 4

O ld - a g e d e p e n d e n c y ra t io ( 1) = P o p u la t io n a g e d 6 5 a n d o v e r a s a p e r c e n t a g e o f t h e p o p u la t io n a g e d 15 - 6 4

T o t a l d e p e n d e n c y ra t io ( 2 ) = P o p u la t io n u n d e r 15 a n d o v e r 6 4 a s a p e rc e n t a g e o f t h e p o p u la t io n a g e d 15 - 6 4

T o t a l e c o n o m ic d e p e n d e n c y r a t io = T o t a l p o p u la t io n le s s e m p lo ye d a s % o f e m p lo ye d p o p u la t io n ( 15 - 6 4 )

E c o n o m ic o ld - a g e d e p e n d e n c y r a t io ( 15 - 6 4 ) = In a c t iv e p o p u la t io n a g e d 6 5 + a s % o f e m p lo ye d p o p u la t io n ( 15 - 6 4 )

E c o n o m ic o ld - a g e d e p e n d e n c y r a t io ( 15 - 7 1) = In a c t iv e p o p u la t io n a g e d 6 5 + a s % o f e m p lo ye d p o p u la t io n ( 15 - 7 1)

Latv ia EPC-AW G Pension expenditure projections

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Baseline scenario; as % of GDP

Social security pensions, gross 6.8 6.4 4.9 4.6 4.9 5.3 5.6 5.9 5.9 5.7 5.6

Old-age and early pens ions , gros s 5.7 5.7 4.3 4.1 4.3 4.7 4.9 5.2 5.2 5.1 4.9

Of which: earnings -related pens ions , gros s 5.7 5.7 4.3 4.1 4.3 4.7 4.9 5.2 5.2 5.1 4.9 Private s ector em ployees , gros s : : : : : : : : : : : Public s ector em ployees , gros s : : : : : : : : : : :

Other pens ions (dis ability, s urvivors ), gros s 1.1 0.7 0.6 0.6 0.6 0.6 0.7 0.7 0.7 0.7 0.6 Occupational pensions, gross : : : : : : : : : : :

Private mandatory pensions, gross 0.0 0.0 0.0 0.0 0.1 0.2 0.4 0.7 1.1 1.8 2.7 Total pension expenditure, gross 6.8 6.4 4.9 4.6 5.0 5.6 6.0 6.5 7.0 7.5 8.3 Social security pensions, net 6.7 6.3 4.8 4.6 4.8 5.3 5.6 5.8 5.8 5.7 5.5

Total pension expenditure, net 6.7 6.3 4.8 4.6 4.9 5.5 5.9 6.4 6.9 7.3 8.0

Social security pensions, contributions 7.1 7.9 6.1 5.7 5.6 5.5 5.4 5.4 5.4 5.4 5.4 Total pension contributions 7.3 8.2 8.4 8.3 8.3 8.4 8.4 8.4 8.5 8.5 8.5 Social security pensions, assets : 0.8 5.2 7.8 9.3 8.7 6.5 3.4 0.2 : :

All pensions, assets 0.3 1.7 12.9 25.9 38.0 48.2 57.4 64.6 68.8 71.4 71.5 Additional indicators

Social security pensions, net / Social sec. pensions, gross,% 99 99 99 99 99 99 99 99 99 99 99 Total pension expenditure, net / Total pension exp., gross, % 99 99 99 99 99 99 98 98 98 97 97

Social security pensions, number of pensioners , 1000 pers. 599 592 533 529 544 567 575 583 588 595 611 All pensions, pensioners , 1000 pers. 599 592 533 529 544 567 575 583 588 595 611

Number of pensioners aged 65+ , 1000 pers. 375 386 394 395 400 417 429 434 443 449 467

Share of pensioners below age 65 as % of all pensioners 37.4 34.7 26.1 25.3 26.4 26.5 25.5 25.5 24.6 24.6 23.6 Average gross social sec. pension, 1000 in 2004 prices 1.2 1.3 1.6 2.0 2.4 2.8 3.3 3.6 3.9 3.9 3.8 Average gross total pensions, 1000 in 2004 prices 1.2 1.3 1.6 2.0 2.4 2.9 3.5 4.1 4.6 5.1 5.6 Output / W orker, 1000 in 2004 prices 11.0 11.7 15.9 20.8 25.8 30.8 35.6 39.9 43.9 48.0 52.5 Social sec. benefit ratio 11.4 11.0 9.9 9.4 9.2 9.1 9.1 9.2 8.9 8.1 7.2

Total pension benefit ratio 11.4 11.0 9.9 9.4 9.4 9.5 9.8 10.2 10.6 10.7 10.7

Social security pensions, num of contributors, in 1000 1089 1112 1183 1167 1111 1053 1013 988 963 922 872 Average social sec. pension contribution, 1000 in 2004 prices 0.7 0.8 0.9 1.1 1.3 1.6 1.8 2.0 2.2 2.4 2.6 Average total pension contribution, 1000 in 2004 prices 0.7 0.9 1.2 1.6 2.0 2.4 2.8 3.1 3.4 3.7 4.0

Support ratio (contributors /100 pensioners, social sec. pens.) 182 188 222 220 204 186 176 170 164 155 143 High life expectancy; as % of GDP

Social security pensions, gross 6.8 6.4 4.9 4.7 4.9 5.4 5.7 6.0 6.0 5.9 5.7

Old-age and early pensions, gross 5.7 5.7 4.3 4.1 4.3 4.7 5.0 5.2 5.3 5.2 5.1 Total pension expenditure, gross 6.8 6.4 4.9 4.7 5.0 5.6 6.1 6.6 7.2 7.7 8.4 All pensions, assets 0.3 1.7 12.9 25.9 38.0 48.2 57.3 64.3 68.0 69.9 70.2 Higher labour productivity; as % of GDP

Social security pensions, gross 6.8 6.4 4.9 4.6 4.8 5.3 5.5 5.8 5.8 5.6 5.4

Old-age and early pensions, gross 5.7 5.7 4.3 4.0 4.2 4.6 4.9 5.1 5.1 4.9 4.8 Total pension expenditure, gross 6.8 6.4 4.9 4.6 4.9 5.5 5.9 6.4 6.9 7.3 8.0 All pensions, assets 0.3 1.7 12.9 25.8 37.8 47.9 56.9 63.9 68.1 70.9 71.4 Lower labour productivity; as % of GDP

Social security pensions, gross 6.8 6.4 4.9 4.6 4.9 5.4 5.7 6.0 6.0 5.9 5.7

Old-age and early pensions, gross 5.7 5.7 4.3 4.1 4.3 4.8 5.0 5.3 5.3 5.2 5.1 Total pension expenditure, gross 6.8 6.4 4.9 4.6 5.0 5.6 6.1 6.7 7.2 7.8 8.6 All pensions, assets 0.3 1.7 12.9 26.0 38.3 48.7 58.1 65.5 69.7 72.2 72.4 Higher employment rate (1 p.p.); as % of GDP

Social security pensions, gross 6.8 6.4 4.9 4.6 4.9 5.3 5.6 5.8 5.9 5.7 5.6

Old-age and early pensions, gross 5.7 5.7 4.3 4.0 4.3 4.7 4.9 5.2 5.2 5.1 4.9 Total pension expenditure, gross 6.8 6.4 4.9 4.6 5.0 5.5 6.0 6.5 7.0 7.5 8.2 All pensions, assets 0.3 1.7 13.0 26.0 38.1 48.4 57.6 64.8 69.0 71.7 71.8 Higher older workers empl. rate (5 p.p.); as % of GDP

Social security pensions, gross 6.8 6.4 4.9 4.6 4.9 5.3 5.6 5.8 5.9 5.7 5.5

Old-age and early pensions, gross 5.7 5.7 4.3 4.0 4.3 4.7 4.9 5.1 5.2 5.0 4.9 Total pension expenditure, gross 6.8 6.4 4.9 4.6 5.0 5.5 6.0 6.5 7.0 7.5 8.2 All pensions, assets 0.3 1.7 12.9 25.9 37.8 47.9 57.0 64.1 68.2 70.6 70.7 Lower interest rate; as % of GDP

Social security pensions, gross 6.8 6.4 4.9 4.6 4.9 5.3 5.6 5.9 5.9 5.7 5.6

Old-age and early pensions, gross 5.7 5.7 4.3 4.1 4.3 4.7 4.9 5.2 5.2 5.1 4.9 Total pension expenditure, gross 6.8 6.4 4.9 4.6 5.0 5.5 6.0 6.4 6.8 7.2 7.7 All pensions, assets 0.3 1.7 12.7 25.2 36.3 45.3 52.7 57.9 60.4 61.8 61.4 Higher interest rate; as % of GDP

Social security pensions, gross 6.8 6.4 4.9 4.6 4.9 5.3 5.6 5.9 5.9 5.7 5.6

Old-age and early pensions, gross 5.7 5.7 4.3 4.1 4.3 4.7 4.9 5.2 5.2 5.1 4.9 Total pension expenditure, gross 6.8 6.4 4.9 4.6 5.0 5.6 6.1 6.6 7.3 8.0 9.0 All pensions, assets 0.3 1.7 13.1 26.6 39.8 51.6 62.8 72.3 78.7 82.9 83.5 : = data not provided

Latvia OTHER AGE-RELATED EXPENDITURES as % of GDP

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Health care spending as % of GDP

Pure ageing s cenario 5.1 5.2 5.3 5 .4 5.5 5.5 5.6 5.7 5.8 5 .9 5.9

Cons tant health s cenario 5.1 5.2 5.3 5 .3 5.3 5.2 5.2 5.2 5.3 5 .3 5.3

Death-related cos ts s cenario 5.1 5.2 5.3 5 .4 5.4 5.4 5.4 5.4 5.5 5 .5 5.5 Incom e elas ticity of dem and 5.1 5.2 5.6 5 .8 6.0 6.0 6.1 6.3 6.4 6 .5 6.5 Unit cos ts - GDP per worker 5.1 5.1 4.8 4 .8 4.9 5.1 5.2 5.4 5.5 5 .8 6.1 AWG reference s cenario 5.1 5.2 5.5 5 .8 5.8 5.9 5.9 6.0 6.1 6 .2 6.2 Long-term care spending as % of GDP

Pure ageing s cenario 0.4 0.4 0.4 0 .5 0.5 0.6 0.6 0.6 0.7 0 .8 0.8

Unit cos ts - GDP per capita 0.4 0.4 0.5 0 .5 0.6 0.4 0.6 0.7 0.7 0 .8 0.8

Cons tant dis ability s cenario 0.4 0.4 0.4 0 .4 0.5 0.5 0.5 0.5 0.6 0 .6 0.6 Increas e in form al care 0.4 0.5 0.9 1 .3 1.8 1.9 2.0 2.2 2.5 2 .8 3.0 AWG reference s cenario 0.4 0.4 0.4 0 .4 0.5 0.5 0.5 0.6 0.6 0 .7 0.7 Numbe r of de pe nde nt pe ople (in thous ands )

Pure ageing s cenario 65 6 6 72 74 76 79 82 8 6 92 96 99

Unit cos ts - GDP per capita 65 6 6 72 74 76 39 82 8 6 92 96 99

Cons tant dis ability s cenario 65 6 5 65 52 61 59 58 5 8 60 61 61 Increas e in form al care 65 6 6 72 74 76 79 82 8 6 92 96 99 AWG reference s cenario 65 6 6 68 68 69 69 70 7 2 76 79 80 of which re ce iving formal care

Pure ageing s cenario 8 9 9 10 10 11 11 1 2 12 13 13

Unit cos ts - GDP per capita 8 9 9 10 10 11 11 1 2 12 13 13 Cons tant dis ability s cenario 8 9 9 8 8 8 8 8 8 8 8

Increas e in form al care 8 1 2 26 37 47 49 51 5 3 57 59 61 AWG reference s cenario 8 9 9 9 9 9 9 1 0 10 11 11 of which re ce iving informal or no care

Pure ageing s cenario 57 5 8 62 64 66 68 71 7 5 80 83 85

Unit cos ts - GDP per capita 57 5 8 62 64 66 34 71 7 5 80 83 85

Cons tant dis ability s cenario 57 5 7 57 45 53 51 50 5 0 52 53 52 Increas e in form al care 57 5 5 46 37 29 30 31 3 3 35 36 38 AWG reference s cenario 57 5 7 59 59 59 59 60 6 3 66 68 69 Education spending as % of GDP

Total 4.9 4.6 3.5 3 .0 3.2 3.5 3.7 3.6 3.3 3 .3 3.5

of which: Transfers 0.4 0.4 0.4 0 .3 0.3 0.3 0.3 0.3 0.3 0 .3 0.3 Prim ary 0.9 0.8 0.7 0 .8 0.9 0.9 0.9 0.8 0.7 0 .8 0.9

of which: Transfers 0.0 0.0 0.0 0 .0 0.0 0.0 0.0 0.0 0.0 0 .0 0.0 Low s econdary 1.7 1.6 1.0 0 .9 1.1 1.2 1.3 1.2 1.1 1 .0 1.2

of which: Transfers 0.0 0.0 0.0 0 .0 0.0 0.0 0.0 0.0 0.0 0 .0 0.0 Upper s econdary 1.3 1.3 1.0 0 .6 0.7 0.8 0.9 0.9 0.8 0 .8 0.8

of which: Transfers 0.2 0.2 0.2 0 .1 0.1 0.1 0.1 0.2 0.1 0 .1 0.1 Tertiary education 1.0 0.9 0.8 0 .7 0.6 0.6 0.6 0.7 0.7 0 .7 0.7

of which: Transfers 0.2 0.2 0.2 0 .1 0.1 0.1 0.1 0.1 0.1 0 .1 0.1 Number of s tudents (in thous ands )

Total 487 468 379 331 3 29 34 3 345 325 297 280 2 80 Prim ary 93 8 5 80 87 95 97 88 7 5 69 72 77

Low s econdary 168 157 100 96 1 05 11 5 117 106 91 84 88 Upper s econdary 107 107 87 57 56 62 68 6 9 61 53 50

Tertiary education 119 118 112 91 73 69 71 7 5 76 71 64 Memo

Population aged 15 64 (in thous ands ) 1 587 15 82 154 4 1462 1385 1326 1 287 12 64 122 4 1173 1108 Unemployment benefit spending as % of GDP

0.3 0.3 0.2 0 .2 0.2 0.2 0.2 0.2 0.2 0 .2 0.2

Lithuania Main demographic and macroeconomic assumptions (BA SELINE SCENA RIO)

Budgetary Projection: A WG variant population scenario

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 De mogra phic a ssumptions

Fe rtility rate 1.3 1.3 1.3 1.4 1.4 1.5 1.6 1.6 1.6 1.6 1.6 Life e xpe ctancy at bir th

m ale s 66.5 66.7 67.4 68.4 69.6 71.0 72.3 73.4 74.3 74.9 75.5

fe m ale s 77.6 77.7 78.5 79.3 80.1 81.0 81.8 82.4 82.9 83.4 83.7 Life e xpe ctancy at 65

m ale s 13.3 13.3 13.5 14.0 14.6 15.4 16.1 16.7 17.1 17.5 17.9

fe m ale s 17.4 17.5 17.9 18.4 19.0 19.6 20.1 20.5 20.9 21.2 21.5

Ne t m igr ation (thous and) -5.6 -5.6 -6.0 -6.4 -1.2 3.8 4.6 4.6 4.5 4.4 4.3

Ne t m igr ation as % of population -0.16 -0.16 -0.18 -0.20 -0.04 0.12 0.15 0.15 0.15 0.15 0.15 Population (m illion) 3.4 3.4 3.3 3.3 3.2 3.1 3.1 3.0 3.0 2.9 2.9

Population age d 0-14 as % of total 17.7 17.1 14.9 14.5 15.0 15.1 14.7 13.9 13.4 13.3 13.7

Prim e age population (25-54) as % of total 41.8 41.9 43.1 43.8 43.2 42.0 40.4 39.4 37.9 36.0 34.6 Work ing age population (15-64) as % of total 67.3 67.6 69.0 68.9 67.5 65.7 63.9 63.1 62.2 61.4 59.6 Elde rly population age d 65+ as % of total 15.0 15.2 16.1 16.7 17.5 19.2 21.4 23.0 24.4 25.3 26.7

V e ry e lde rly population age d 80 and ove r as % of total 2.8 3.0 3.8 4.5 5.0 5.2 5.5 6.1 7.2 8.6 9.2

Elde rly population age d 55+ as % of w or k ing age pop.15-64 2.2 2.2 2.0 2.0 2.2 2.3 2.4 2.4 2.5 2.6 2.7 Ma croe conomic a ssumptions

Re al GDP (grow th r ate ) 6.3 6.7 6.1 4.2 3.0 2.2 1.9 1.3 1.3 0.9 0.4

Labour input (grow th r ate ) 0.1 0.4 1.1 0.2 -0.6 -0.9 -0.8 -0.7 -0.6 -0.9 -1.3

Labour pr oductivity (gr ow th rate ) 6.1 6.3 5.1 4.0 3.6 3.2 2.7 2.0 1.9 1.8 1.7 TFP (gr ow th rate ) 3.1 3.1 2.8 2.0 1.9 1.8 1.8 1.3 1.2 1.2 1.1

Capital de e pe ning (c ontribution to labour productivity grow th) 3.0 3.2 2.3 2.0 1.7 1.3 1.0 0.7 0.7 0.6 0.6 GDP pe r capita (grow th r ate ) 6.8 7.2 6.7 4.8 3.4 2.5 2.2 1.6 1.7 1.3 0.9

GDP in 2004 price s (in billions of e uro) 18 19 26 33 40 45 50 53 57 60 62 GDP pe r w ork e r 8.8 9.4 13.2 17.3 21.0 24.1 27.0 29.6 32.1 34.5 36.3 Re al inte re s t r ate 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 La bour force a ssum ptions

Population grow th (w ork ing age :15-64) 0.0 -0.2 -0.8 -0.8 -0.9 -0.7 -0.6 -0.5 -0.7 -1.2

Labour force (thous ands ) 1638 1652 1705 1721 1695 1626 1554 1499 1454 1401 1324 Participation rate (15-64) 70.6 71.2 73.8 76.7 78.9 79.0 78.6 78.1 78.0 77.6 77.1

young (15-24) 30.3 30.2 33.0 35.0 33.6 31.4 30.9 31.3 32.3 33.0 32.7

prim e -age (25-54) 89.8 90.7 92.3 92.8 93.3 93.8 94.1 94.0 93.8 93.5 93.4 olde r (55-64) 52.3 53.3 57.5 62.7 68.3 67.9 68.9 68.6 70.6 70.3 68.4 olde s t (65-71) 7.5 7.7 9.2 9.5 10.3 11.4 10.7 10.7 10.6 10.9 11.4 Em ploym e nt rate (15-64) 62.2 63.3 67.3 71.3 73.4 73.4 73.1 72.6 72.6 72.2 71.7 Em ploym e nt rate (15-71) 57.3 58.3 62.3 66.3 67.5 66.8 65.4 65.2 65.1 65.0 63.7 Em ploym e nt grow th (15-64) 1.7 1.1 0.2 -0.6 -0.9 -0.8 -0.7 -0.6 -0.9 -1.3

Une m ploym e nt rate (15-64) 11.9 11.2 8.9 7.0 7.0 7.0 7.0 7.0 7.0 7.0 7.0 De pe nde ncy ra tios:

Share of olde r w or k e rs 11.2 11.4 12.0 14.4 17.6 18.1 18.1 17.9 19.6 22.2 22.7

Old-age de pe nde ncy ratio (1) 22.3 22.5 23.4 24.2 26.0 29.2 33.4 36.5 39.3 41.2 44.9 Total de pe nde ncy ratio (2) 48.6 47.8 44.9 45.2 48.2 52.2 56.5 58.6 60.7 62.9 67.8

Total e conom ic de pe nde ncy ratio 138.9 133.7 115.3 103.6 101.9 107.3 114.0 118.4 121.4 125.7 134.1 Econom ic old-age de pe nde ncy ratio (15-64) 34.8 34.5 33.5 32.8 34.0 37.9 43.7 48.3 52.1 55.1 60.2 Econom ic old-age de pe nde ncy ratio (15-71) 34.4 34.1 33.1 32.4 33.5 37.2 42.8 47.3 51.1 54.0 58.7 LEGENDA :

S h a r e o f o ld e r wo r k e r s = P o p u la t io n a g e d 5 5 t o 6 4 a s % o f p o p u la t io n a g e d 15 - 6 4

O ld - a g e d e p e n d e n c y ra t io ( 1) = P o p u la t io n a g e d 6 5 a n d o v e r a s a p e rc e n t a g e o f t h e p o p u la t io n a g e d 15 - 6 4

T o t a l d e p e n d e n c y r a t io ( 2 ) = P o p u la t io n u n d e r 15 a n d o v e r 6 4 a s a p e rc e n t a g e o f t h e p o p u la t io n a g e d 15 - 6 4

T o t a l e c o n o m ic d e p e n d e n c y r a t io = T o t a l p o p u la t io n le s s e m p lo ye d a s % o f e m p lo ye d p o p u la t io n ( 15 - 6 4 )

E c o n o m ic o ld - a g e d e p e n d e n c y ra t io ( 15 - 6 4 ) = In a c t iv e p o p u la t io n a g e d 6 5 + a s % o f e m p lo ye d p o p u la t io n ( 15 - 6 4 )

E c o n o m ic o ld - a g e d e p e n d e n c y ra t io ( 15 - 7 1) = In a c t iv e p o p u la t io n a g e d 6 5 + a s % o f e m p lo ye d p o p u la t io n ( 15 - 7 1)

Lithuania EPC-AW G Pension expenditure projections

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Baseline scenario; as % of GDP

Social security pensions, gross 6.7 6.7 6.6 6.6 7.0 7.6 7.9 8.1 8.2 8.3 8.6

Old-age and early pens ions , gros s 5.7 5.7 5.6 5.6 6.0 6.5 6.8 6.9 7.0 7.1 7.3

Of which: earnings -related pens ions , gros s 5.4 5.3 5.3 5.4 5.8 6.3 6.7 6.8 6.9 7.0 7.2 Private s ector em ployees , gros s : : : : : : : : : : : Public s ector em ployees , gros s : : : : : : : : : : :

Other pens ions (dis ability, s urvivors ), gros s 1.0 1.0 1.0 1.0 1.0 1.1 1.1 1.1 1.2 1.2 1.2 Occupational pensions, gross : : : : : : : : : : :

Private mandatory pensions, gross 0.0 0.0 0.0 0.0 0.1 0.2 0.4 0.7 1.0 1.4 1.8 Total pension expenditure, gross 6.7 6.7 6.6 6.6 7.1 7.8 8.3 8.8 9.2 9.7 10.4 Social security pensions, net 6.7 6.7 6.6 6.6 7.0 7.6 7.9 8.1 8.2 8.3 8.6

Total pension expenditure, net 6.7 6.7 6.6 6.6 7.1 7.8 8.3 8.8 9.2 9.7 10.4

Social security pensions, contributions 6.8 6.7 6.3 6.2 6.1 5.9 6.0 6.0 6.1 6.1 6.1 Total pension contributions 7.1 7.1 7.2 7.3 7.3 7.4 7.5 7.6 7.7 7.7 7.7 Social security pensions, assets : : : : : : : : : : :

All pensions, assets 0.3 0.7 4.3 8.6 14.0 20.7 27.9 35.0 41.5 47.2 52.7 Additional indicators

Social security pensions, number of pensioners , 1000 pers. 1248 1260 1292 1295 1314 1335 1357 1376 1388 1398 1402 All pensions, pensioners , 1000 pers. : : : : : : : : : : :

Number of pensioners aged 65+ , 1000 pers. : : : : : : : : : : :

Share of pensioners below age 65 as % of all pensioners : : : : : : : : : : :

Average gross social sec. pension, 1000 in 2004 prices 1.0 1.0 1.3 1.7 2.1 2.5 2.9 3.1 3.4 3.6 3.8 Average gross total pensions, 1000 in 2004 prices : : : : : : : : : : :

Output / W orker, 1000 in 2004 prices 12.6 13.4 16.8 20.9 25.2 29.7 34.3 38.3 42.2 46.2 50.4 Social sec. benefit ratio 7.7 7.6 7.9 8.1 8.4 8.6 8.4 8.2 8.0 7.7 7.5 Total pension benefit ratio : : : : : : : : : : :

Social security pensions, num of contributors, in 1000 1350 1371 1442 1464 1416 1339 1284 1246 1216 1171 1112 Average social sec. pension contribution, 1000 in 2004 prices 0.9 0.9 1.1 1.4 1.7 2.0 2.3 2.6 2.9 3.1 3.4 Average total pension contribution, 1000 in 2004 prices : : : : : : : : : : :

Support ratio (contributors /100 pensioners, social sec. pens.) 108 109 112 113 108 100 95 91 88 84 79 High life expectancy; as % of GDP

Social security pensions, gross 7.2 6.8 6.8 6.9 7.4 8.0 8.5 8.7 8.9 9.1 9.5

Old-age and early pensions, gross 6.0 5.7 5.6 5.7 6.1 6.7 7.0 7.2 7.3 7.5 7.7

Total pension expenditure, gross 7.2 6.8 6.8 6.9 7.5 8.2 8.8 9.3 9.8 10.5 11.3 All pensions, assets 0.3 0.7 4.3 8.7 14.2 21.1 28.5 35.7 42.5 48.5 54.2 Higher labour productivity; as % of GDP

Social security pensions, gross 7.0 6.7 6.6 6.6 7.0 7.6 7.9 8.0 8.1 8.3 8.5

Old-age and early pensions, gross 5.7 5.7 5.6 5.6 6.0 6.5 6.8 6.9 7.0 7.1 7.3 Total pension expenditure, gross 7.0 6.7 6.6 6.6 7.1 7.8 8.3 8.7 9.1 9.6 10.3 All pensions, assets 0.3 0.7 4.3 8.6 14.0 20.8 28.1 35.1 41.6 47.5 53.0 Lower labour productivity; as % of GDP

Social security pensions, gross 7.0 6.7 6.6 6.6 7.0 7.6 8.0 8.1 8.3 8.4 8.7

Old-age and early pensions, gross 5.7 5.7 5.6 5.6 6.0 6.5 6.9 7.0 7.1 7.2 7.5 Total pension expenditure, gross 7.0 6.7 6.6 6.6 7.1 7.8 8.4 8.8 9.3 9.8 10.6 All pensions, assets 0.3 0.7 4.3 8.6 14.0 20.8 28.0 35.0 41.5 47.4 53.0 Higher employment rate (1 p.p.); as % of GDP

Social security pensions, gross 7.0 6.7 6.6 6.6 7.0 7.6 7.9 8.1 8.2 8.3 8.6

Old-age and early pensions, gross 5.7 5.7 5.6 5.6 6.0 6.5 6.8 6.9 7.0 7.1 7.4 Total pension expenditure, gross 7.0 6.7 6.6 6.6 7.1 7.8 8.3 8.8 9.2 9.7 10.4 All pensions, assets 0.3 0.7 4.3 8.6 14.0 20.8 28.1 35.1 41.6 47.4 52.9 Higher older workers empl. rate (5 p.p.); as % of GDP

Social security pensions, gross 7.0 6.7 6.6 6.5 7.0 7.5 7.9 8.0 8.1 8.2 8.5

Old-age and early pensions, gross 5.7 5.7 5.6 5.6 6.0 6.5 6.8 6.9 7.0 7.1 7.3 Total pension expenditure, gross 7.0 6.7 6.6 6.6 7.1 7.8 8.3 8.8 9.2 9.7 10.2 All pensions, assets 0.3 0.7 4.3 8.6 14.0 20.7 27.9 34.9 41.4 47.1 52.5 Lower interest rate; as % of GDP

Social security pensions, gross 6.7 6.7 6.6 6.6 7.0 7.6 7.9 8.1 8.2 8.3 8.6

Old-age and early pensions, gross 5.7 5.7 5.6 5.6 6.0 6.5 6.8 6.9 7.0 7.1 7.3 Total pension expenditure, gross 6.7 6.7 6.6 6.6 7.1 7.7 8.2 8.6 9.0 9.4 10.0 All pensions, assets 0.3 0.7 4.2 8.3 13.2 19.2 25.4 31.3 36.6 41.3 45.6 Higher interest rate; as % of GDP

Social security pensions, gross 6.7 6.7 6.6 6.6 7.0 7.6 7.9 8.1 8.2 8.3 8.6

Old-age and early pensions, gross 5.7 5.7 5.6 5.6 6.0 6.5 6.8 6.9 7.0 7.1 7.3

Total pension expenditure, gross 6.7 6.7 6.6 6.6 7.1 7.8 8.4 8.9 9.4 10.1 10.9 All pensions, assets 0.3 0.7 4.4 9.0 14.9 22.4 30.8 39.2 47.1 54.3 61.1 : = data not provided

Lithuania OTHER AGE-RELATED EXPENDITURES as % of GDP

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Health care spending as % of GDP

Pure ageing s cenario 3 .7 3.7 3 .8 4.0 4.0 4.1 4.1 4.2 4.3 4 .3 4.4

Cons tant health s cenario 3 .7 3.7 3 .8 3.9 3.9 3.9 3.9 3.9 4.0 4 .0 4.0

Death-related cos ts s cenario 3 .7 3.7 3 .8 3.9 4.0 4.0 4.0 4.0 4.1 4 .1 4.1 Incom e elas ticity of dem and 3 .7 3.7 4 .0 4.2 4.3 4.4 4.5 4.6 4.7 4 .8 4.8 Unit cos ts - GDP per worker 3 .7 3.7 3 .5 3.4 3.5 3.6 3.8 3.9 4.1 4 .2 4.4 AWG reference s cenario 3 .7 3.7 4 .0 4.2 4.3 4.3 4.4 4.4 4.5 4 .6 4.6 Long-term care spending as % of GDP

Pure ageing s cenario 0 .5 0.5 0 .6 0.6 0.6 0.6 0.7 0.7 0.8 0 .9 1.0

Unit cos ts - GDP per capita 0 .5 0.6 0 .6 0.7 0.7 0.5 0.7 0.8 0.8 0 .9 1.0

Cons tant dis ability s cenario 0 .5 0.5 0 .5 0.5 0.5 0.6 0.6 0.6 0.7 0 .7 0.8 Increas e in form al care 0 .5 0.6 0 .7 0.8 0.9 0.9 1.0 1.1 1.2 1 .4 1.5 AWG reference s cenario 0 .5 0.5 0 .6 0.6 0.6 0.6 0.6 0.7 0.7 0 .8 0.9 Numbe r of de pe nde nt pe ople (in thous ands )

Pure ageing s cenario 103 10 5 1 15 121 1 25 131 14 1 154 16 7 178 184

Unit cos ts - GDP per capita 103 10 5 1 15 121 1 25 6 5 14 1 154 16 7 178 184

Cons tant dis ability s cenario 103 10 3 1 05 85 1 00 9 8 10 0 103 10 9 114 114 Increas e in form al care 103 10 5 1 15 121 1 25 131 14 1 154 16 7 178 184 AWG reference s cenario 103 10 4 1 10 112 1 12 115 12 0 128 13 8 146 149 of which re ce iving formal care

Pure ageing s cenario 29 30 33 35 36 3 8 41 4 4 49 52 54

Unit cos ts - GDP per capita 29 30 33 35 36 3 8 41 4 4 49 52 54

Cons tant dis ability s cenario 29 29 30 30 29 2 9 29 3 0 33 34 35 Increas e in form al care 29 33 55 72 86 9 0 97 106 11 5 122 127 AWG reference s cenario 29 29 32 32 33 3 3 35 3 7 41 43 44 of which re ce iving informal or no care

Pure ageing s cenario 74 76 82 86 89 9 3 10 1 109 11 9 125 129

Unit cos ts - GDP per capita 74 76 82 86 89 4 5 10 1 109 11 9 125 129 Cons tant dis ability s cenario 74 74 75 60 71 6 9 70 7 3 77 80 80 Increas e in form al care 74 72 60 49 39 4 1 44 4 8 52 55 57 AWG reference s cenario 74 75 79 79 80 8 1 86 9 1 98 102 105 Education spending as % of GDP

Total 5 .0 4.9 4 .2 3.5 3.2 3.2 3.3 3.4 3.3 3 .3 3.3

of which: Transfers 0 .4 0.4 0 .3 0.3 0.3 0.3 0.3 0.3 0.3 0 .3 0.3 Prim ary 0 .9 0.9 0 .7 0.7 0.7 0.7 0.7 0.7 0.7 0 .7 0.7

of which: Transfers 0 .1 0.1 0 .0 0.0 0.0 0.0 0.0 0.0 0.0 0 .0 0.0 Low s econdary 1 .8 1.8 1 .3 1.1 1.0 1.1 1.2 1.2 1.1 1 .1 1.1

of which: Transfers 0 .1 0.1 0 .1 0.1 0.1 0.1 0.1 0.1 0.1 0 .1 0.1 Upper s econdary 0 .7 0.7 0 .6 0.4 0.4 0.4 0.4 0.4 0.4 0 .4 0.4

of which: Transfers 0 .0 0.0 0 .0 0.0 0.0 0.0 0.0 0.0 0.0 0 .0 0.0 Tertiary education 1 .5 1.5 1 .5 1.3 1.1 1.0 1.0 1.1 1.1 1 .1 1.1

of which: Transfers 0 .2 0.2 0 .2 0.2 0.1 0.1 0.1 0.1 0.1 0 .1 0.1 Number of s tudents (in thous ands )

Total 792 77 7 6 78 581 5 28 518 51 9 508 48 2 455 440

Prim ary 170 16 1 1 34 127 1 31 134 13 0 119 10 9 107 108

Low s econdary 330 32 0 2 49 205 1 92 198 20 3 198 18 3 169 164 Upper s econdary 121 12 1 1 14 86 70 6 9 71 7 3 71 65 61

Tertiary education 172 17 6 1 82 163 1 36 117 11 5 117 11 9 115 107 Memo

Population aged 15 64 (in thous ands ) 231 9 2 320 230 8 2 243 2148 20 59 1976 19 20 1 863 180 5 1 717 Unemployment benefit spending as % of GDP

0 .1 0.1 0 .1 0.1 0.1 0.1 0.1 0.1 0.1 0 .1 0.1

Luxembourg Main demographic and macroeconomic assumptions (BA SELINE SCENA RIO)

Budgetary Projection: A WG variant population scenario

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 De mogra phic a ssumptions

Fe rtility rate 1.7 1.7 1.7 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 Life e xpe ctancy at bir th

m ale s 75.0 75.2 76.4 77.5 78.4 79.3 79.9 80.5 81.0 81.4 81.8

fe m ale s 81.4 81.5 82.4 83.2 83.9 84.6 85.1 85.6 86.0 86.4 86.7 Life e xpe ctancy at 65

m ale s 15.7 15.9 16.5 17.1 17.7 18.2 18.7 19.0 19.4 19.7 19.9

fe m ale s 19.6 19.8 20.3 20.9 21.4 21.9 22.3 22.6 22.9 23.2 23.4

Ne t m igr ation (thous and) 2.9 2.9 2.8 2.8 2.8 2.8 2.8 2.8 2.8 2.8 2.8

Ne t m igr ation as % of population 0.63 0.64 0.59 0.57 0.54 0.51 0.49 0.47 0.46 0.44 0.43 Population (m illion) 0.5 0.5 0.5 0.5 0.5 0.5 0.6 0.6 0.6 0.6 0.6

Population age d 0-14 as % of total 18.8 18.7 17.9 17.2 17.0 17.1 17.3 17.3 17.0 16.7 16.6

Prim e age population (25-54) as % of total 45.5 45.3 44.2 42.8 41.3 39.8 38.9 38.6 38.5 38.4 38.2 Work ing age population (15-64) as % of total 67.1 67.1 67.5 67.4 66.6 64.9 62.8 61.2 60.7 61.0 61.3 Elde rly population age d 65+ as % of total 14.1 14.2 14.6 15.4 16.5 18.0 19.8 21.5 22.3 22.3 22.1

V e ry e lde rly population age d 80 and ove r as % of total 3.1 3.2 3.9 4.2 4.4 4.6 5.1 5.8 6.7 7.6 8.3

Elde rly population age d 55+ as % of w or k ing age pop.15-64 0.3 0.3 0.3 0.3 0.4 0.4 0.5 0.5 0.5 0.5 0.5 Ma croe conomic a ssumptions

Re al GDP (grow th r ate ) 4.0 4.0 3.9 3.1 2.7 2.9 3.0 3.0 3.0 3.0 3.0

Labour input (grow th r ate ) 2.9 2.6 1.6 1.0 0.8 1.1 1.3 1.3 1.3 1.3 1.3

Labour pr oductivity (gr ow th rate ) 1.1 1.4 2.3 2.1 1.9 1.8 1.7 1.7 1.7 1.7 1.7 TFP (gr ow th rate ) 0.5 0.6 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1

Capital de e pe ning (c ontribution to labour productivity grow th) 0.6 0.8 1.2 1.0 0.8 0.7 0.6 0.6 0.6 0.6 0.6 GDP pe r capita (grow th r ate ) 3.2 3.0 2.9 2.2 1.8 2.0 2.1 2.3 2.4 2.4 2.5

GDP in 2004 price s (in billions of e uro) 26 27 32 38 44 51 58 68 78 91 105 GDP pe r w ork e r 39.3 40.4 47.0 53.0 58.2 64.2 71.1 79.4 89.1 100.3 113.2 Re al inte re s t r ate 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 La bour force a ssum ptions

Population grow th (w ork ing age :15-64) 1.0 1.1 0.8 0.5 0.3 0.1 0.3 0.6 0.7 0.6

Labour force (thous ands ) 199 202 217 228 236 239 242 247 254 262 269

Participation rate (15-64) 65.5 66.0 67.2 67.8 67.9 67.8 67.9 68.4 68.6 68.5 68.3

young (15-24) 28.2 27.6 28.0 28.9 29.6 29.5 28.9 28.5 28.5 28.8 29.1

prim e -age (25-54) 82.4 83.2 86.0 87.2 87.7 88.1 88.3 88.2 88.2 88.2 88.1 olde r (55-64) 31.7 32.9 35.7 39.5 41.1 40.5 39.7 40.4 41.6 42.1 42.2 olde s t (65-71) 3.2 2.9 2.8 3.1 3.2 3.3 3.3 3.3 3.3 3.3 3.3 Em ploym e nt rate (15-64) 63.0 63.3 64.4 64.9 65.1 64.9 65.0 65.5 65.7 65.6 65.4 Em ploym e nt rate (15-71) 58.4 58.7 59.6 59.8 59.3 58.6 58.0 58.0 58.7 59.4 59.3 Em ploym e nt grow th (15-64) 1.5 1.3 0.9 0.5 0.2 0.2 0.5 0.6 0.6 0.5

Une m ploym e nt rate (15-64) 3.8 4.0 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 De pe nde ncy ra tios:

Share of olde r w or k e rs 7.3 7.6 8.8 10.5 11.9 12.5 11.9 11.0 10.8 11.1 11.6

Old-age de pe nde ncy ratio (1) 21.0 21.2 21.6 22.8 24.7 27.7 31.6 35.1 36.7 36.6 36.1 Total de pe nde ncy ratio (2) 49.0 49.0 48.1 48.3 50.2 54.1 59.1 63.3 64.7 64.0 63.3

Total e conom ic de pe nde ncy ratio 136.5 135.2 130.0 128.4 130.9 137.3 144.8 149.4 150.5 149.8 149.5 Econom ic old-age de pe nde ncy ratio (15-64) 32.9 33.0 33.1 34.7 37.5 42.1 47.9 53.0 55.3 55.2 54.7 Econom ic old-age de pe nde ncy ratio (15-71) 32.8 32.9 33.0 34.5 37.3 41.8 47.6 52.6 54.9 54.9 54.4 LEGENDA :

S h a r e o f o ld e r wo r k e r s = P o p u la t io n a g e d 5 5 t o 6 4 a s % o f p o p u la t io n a g e d 15 - 6 4

O ld - a g e d e p e n d e n c y ra t io ( 1) = P o p u la t io n a g e d 6 5 a n d o v e r a s a p e rc e n t a g e o f t h e p o p u la t io n a g e d 15 - 6 4

T o t a l d e p e n d e n c y r a t io ( 2 ) = P o p u la t io n u n d e r 15 a n d o v e r 6 4 a s a p e rc e n t a g e o f t h e p o p u la t io n a g e d 15 - 6 4

T o t a l e c o n o m ic d e p e n d e n c y r a t io = T o t a l p o p u la t io n le s s e m p lo ye d a s % o f e m p lo ye d p o p u la t io n ( 15 - 6 4 )

E c o n o m ic o ld - a g e d e p e n d e n c y ra t io ( 15 - 6 4 ) = In a c t iv e p o p u la t io n a g e d 6 5 + a s % o f e m p lo ye d p o p u la t io n ( 15 - 6 4 )

E c o n o m ic o ld - a g e d e p e n d e n c y ra t io ( 15 - 7 1) = In a c t iv e p o p u la t io n a g e d 6 5 + a s % o f e m p lo ye d p o p u la t io n ( 15 - 7 1)

Luxembourg EPC-AW G Pension expenditure projections

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Baseline scenario; as % of GDP

Social security pensions, gross 10.0 10.0 9.8 10.9 11.9 13.7 15.0 16.4 17.0 17.7 17.4 Old-age and early pens ions , gros s 6.1 6.1 6.1 7.0 8.1 9.8 11.3 12.7 13.4 14.0 13.9 Of which: earnings -related pens ions , gros s : : : : : : : : : : :

Private s ector em ployees , gros s 4.5 4.5 4.6 5.4 6.4 8.1 9.7 11.1 11.8 12.6 12.5 Public s ector em ployees , gros s 1.6 1.6 1.5 1.6 1.7 1.7 1.6 1.6 1.5 1.5 1.4

Other pens ions (dis ability, s urvivors ), gros s 3.9 3.9 3.7 3.9 3.9 3.9 3.7 3.7 3.6 3.6 3.5 Occupational pensions, gross : : : : : : : : : : :

Private mandatory pensions, gross : : : : : : : : : : :

Total pension expenditure, gross 10.0 10.0 9.8 10.9 11.9 13.7 15.0 16.4 17.0 17.7 17.4 Social security pensions, net 9.0 9.0 8.9 9.8 10.8 12.4 13.6 14.9 15.5 16.1 15.9

Total pension expenditure, net 9.0 9.0 8.9 9.8 10.8 12.4 13.6 14.9 15.5 16.1 15.9

Social security pensions, contributions 9.9 9.9 10.0 10.1 10.1 10.1 10.0 10.0 10.0 10.0 10.0 Total pension contributions 9.9 9.9 10.0 10.1 10.1 10.1 10.0 10.0 10.0 10.0 10.0 Social security pensions, assets 23.6 24.8 31.7 37.4 39.2 32.9 17.8 : : : : All pensions, assets 23.6 24.8 31.7 37.4 39.2 32.9 17.8 : : : : Additional indicators

Social security pensions, net / Social sec. pensions, gross,% 90 90 90 90 91 91 91 91 91 91 92 Total pension expenditure, net / Total pension exp., gross, % 90 90 90 90 91 91 91 91 91 91 92

Social security pensions, num ber of pensioners , 1000 pers. 128 130 142 158 178 204 235 265 293 315 335 All pensions, pensioners , 1000 pers. 128 130 142 158 178 204 235 265 293 315 335

Number of pensioners aged 65+ , 1000 pers. 88 90 96 104 116 132 156 187 216 237 253

Share of pensioners below age 65 as % of all pensioners 31.1 30.9 32.7 34.1 34.8 35.2 33.5 29.6 26.2 24.8 24.4 Average gross social sec. pension, 1000 in 2004 prices 20.1 20.6 22.4 26.2 29.4 33.9 37.2 41.8 45.5 50.9 54.8 Average gross total pensions, 1000 in 2004 prices 20.1 20.6 22.4 26.2 29.4 33.9 37.2 41.8 45.5 50.9 54.8 Output / W orker, 1000 in 2004 prices 85.3 86.5 95.6 106.4 117.5 128.6 140.0 152.2 165.5 179.9 195.6 Social sec. benefit ratio 23.5 23.8 23.4 24.7 25.0 26.4 26.6 27.5 27.5 28.3 28.0

Total pension benefit ratio 23.5 23.8 23.4 24.7 25.0 26.4 26.6 27.5 27.5 28.3 28.0

Social security pensions, num of contributors, in 1000 307 314 344 364 378 398 421 448 477 508 541

Average social sec. pension contribution, 1000 in 2004 prices 8.3 8.4 9.4 10.6 11.8 12.8 13.9 15.0 16.4 17.9 19.5 Average total pension contribution, 1000 in 2004 prices : : : : : : : : : : :

Support ratio (contributors /100 pensioners, social sec. pens.) 240 242 242 230 212 195 179 169 163 161 162 High life expectancy; as % of GDP

Social security pensions, gross : : : : : : : : : : :

Old-age and early pensions, gross : : : : : : : : : : : Total pension expenditure, gross : : : : : : : : : : : All pensions, assets : : : : : : : : : : : Higher labour productivity; as % of GDP

Social security pensions, gross 10.0 10.0 9.8 10.8 11.8 13.6 14.9 16.3 16.9 17.6 17.3 Old-age and early pensions, gross 6.1 6.1 6.1 7.0 8.0 9.8 11.2 12.7 13.3 14.0 13.8

Total pension expenditure, gross 10.0 10.0 9.8 10.8 11.8 13.6 14.9 16.3 16.9 17.6 17.3 All pensions, assets 23.6 24.8 31.6 37.2 38.9 32.4 17.4 : : : : Lower labour productivity; as % of GDP

Social security pensions, gross 10.0 10.0 9.8 10.9 12.0 13.8 15.1 16.5 17.1 17.7 17.5 Old-age and early pensions, gross 6.1 6.1 6.1 7.0 8.1 9.9 11.4 12.8 13.4 14.1 14.0

Total pension expenditure, gross 10.0 10.0 9.8 10.9 12.0 13.8 15.1 16.5 17.1 17.7 17.5 All pensions, assets 23.6 24.8 31.7 37.6 39.6 33.4 18.3 : : : : Higher employment rate (1 p.p.); as % of GDP

Social security pensions, gross : : : : : : : : : : :

Old-age and early pensions, gross : : : : : : : : : : : Total pension expenditure, gross : : : : : : : : : : : All pensions, assets : : : : : : : : : : : Higher older workers empl. rate (5 p.p.); as % of GDP

Social security pensions, gross : : : : : : : : : : :

Old-age and early pensions, gross : : : : : : : : : : : Total pension expenditure, gross : : : : : : : : : : : All pensions, assets : : : : : : : : : : : Lower interest rate; as % of GDP

Social security pensions, gross 10.0 10.0 9.8 10.9 11.9 13.7 15.0 16.4 17.0 17.7 17.4 Old-age and early pensions, gross 6.1 6.1 6.1 7.0 8.1 9.8 11.3 12.7 13.4 14.0 13.9

Total pension expenditure, gross 10.0 10.0 9.8 10.9 11.9 13.7 15.0 16.4 17.0 17.7 17.4 All pensions, assets 23.6 24.6 30.2 34.4 34.5 26.6 10.5 : : : : Higher interest rate; as % of GDP

Social security pensions, gross 10.0 10.0 9.8 10.9 11.9 13.7 15.0 16.4 17.0 17.7 17.4 Old-age and early pensions, gross 6.1 6.1 6.1 7.0 8.1 9.8 11.3 12.7 13.4 14.0 13.9

Total pension expenditure, gross 10.0 10.0 9.8 10.9 11.9 13.7 15.0 16.4 17.0 17.7 17.4 All pensions, assets 23.6 25.1 33.2 40.7 44.6 40.5 27.2 4.9 : : : : = data not provided

Luxembourg OTHER AGE-RELATED EXPENDITURES as % of GDP

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Health care spending as % of GDP

Pure ageing s cenario 5.1 5.1 5.2 5 .4 5.5 5.7 5.8 5.9 6.1 6 .1 6.2

Cons tant health s cenario 5.1 5.1 5.1 5 .2 5.2 5.3 5.4 5.5 5.6 5 .6 5.6

Death-related cos ts s cenario 5.1 5.1 5.2 5 .3 5.4 5.5 5.7 5.8 5.9 5 .9 6.0 Incom e elas ticity of dem and 5.1 5.1 5.4 5 .6 5.8 6.0 6.2 6.4 6.5 6 .6 6.7 Unit cos ts - GDP per worker 5.1 5.0 4.9 5 .0 5.1 5.2 5.2 5.2 5.2 5 .1 4.9 AWG reference s cenario 5.1 5.1 5.3 5 .4 5.6 5.7 5.9 6.1 6.2 6 .3 6.3 Long-term care spending as % of GDP

Pure ageing s cenario 0.9 0.9 1.0 1 .0 1.1 1.1 1.2 1.3 1.5 1 .6 1.7

Unit cos ts - GDP per capita 0.9 0.9 1.0 1 .1 1.2 0.8 1.3 1.5 1.7 2 .0 2.1

Cons tant dis ability s cenario 0.9 0.9 0.9 1 .0 1.0 1.0 1.0 1.1 1.1 1 .2 1.3 Increas e in form al care 0.9 0.9 1.1 1 .2 1.4 1.4 1.5 1.7 1.8 2 .0 2.1 AWG reference s cenario 0.9 0.9 1.0 1 .0 1.0 1.0 1.1 1.2 1.3 1 .4 1.5 Numbe r of de pe nde nt pe ople (in thous ands )

Pure ageing s cenario 13 1 3 15 17 18 20 24 2 7 31 34 35

Unit cos ts - GDP per capita 13 1 3 15 17 18 11 24 2 7 31 34 35

Cons tant dis ability s cenario 13 1 3 14 12 15 15 17 1 9 20 22 23 Increas e in form al care 13 1 3 15 17 18 20 24 2 7 31 34 35 AWG reference s cenario 13 1 3 14 15 17 18 20 2 3 26 28 29 of which re ce iving formal care

Pure ageing s cenario 7 8 9 10 11 12 14 1 6 18 20 22

Unit cos ts - GDP per capita 7 8 9 10 11 12 14 1 6 18 20 22 Cons tant dis ability s cenario 7 7 8 9 9 9 10 1 1 13 14 15 Increas e in form al care 7 8 10 13 15 17 19 2 2 25 28 29 AWG reference s cenario 7 8 8 9 10 11 12 1 4 15 17 18 of which re ce iving informal or no care

Pure ageing s cenario 6 6 6 7 8 9 10 1 1 12 13 14

Unit cos ts - GDP per capita 6 6 6 7 8 4 10 1 1 12 13 14 Cons tant dis ability s cenario 6 6 6 5 6 6 7 7 8 8 8 Increas e in form al care 6 5 5 4 3 4 4 5 5 6 6

AWG reference s cenario 6 6 6 6 7 7 8 9 10 11 11 Education spending as % of GDP

Total 3.3 3.2 3.1 2 .9 2.8 2.8 2.7 2.7 2.6 2 .5 2.4

of which: Transfers 0.1 0.1 0.1 0 .1 0.1 0.1 0.1 0.1 0.1 0 .1 0.0 Prim ary 1.4 1.4 1.3 1 .2 1.2 1.2 1.2 1.2 1.1 1 .0 1.0

of which: Transfers 0.0 0.0 0.0 0 .0 0.0 0.0 0.0 0.0 0.0 0 .0 0.0 Low s econdary 0.8 0.8 0.8 0 .8 0.7 0.7 0.7 0.7 0.7 0 .7 0.6

of which: Transfers 0.0 0.0 0.0 0 .0 0.0 0.0 0.0 0.0 0.0 0 .0 0.0 Upper s econdary 1.0 1.0 1.0 1 .0 0.9 0.9 0.9 0.9 0.9 0 .8 0.8

of which: Transfers 0.0 0.0 0.0 0 .0 0.0 0.0 0.0 0.0 0.0 0 .0 0.0 Tertiary education 0.0 0.0 0.0 0 .0 0.0 0.0 0.0 0.0 0.0 0 .0 0.0

of which: Transfers 0.0 0.0 0.0 0 .0 0.0 0.0 0.0 0.0 0.0 0 .0 0.0 Number of s tudents (in thous ands )

Total 69 7 0 73 74 73 76 80 8 4 87 88 89

Prim ary 34 3 5 35 34 35 37 39 4 1 41 42 42

Low s econdary 17 1 7 18 18 18 18 19 2 0 21 22 22

Upper s econdary 18 1 8 20 21 21 21 22 2 3 24 25 25 Tertiary education 0 0 0 0 0 0 0 0 0 0 0 Memo

Population aged 15 64 (in thous ands ) 303 306 322 336 3 47 35 3 357 361 369 382 3 94 Unemployment benefit spending as % of GDP

0.3 0.3 0.3 0 .3 0.3 0.3 0.3 0.2 0.2 0 .2 0.2

Hungary Main demographic and macroeconomic assumptions (BA SELINE SCENA RIO)

Budgetary Projection: A WG variant population scenario

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 De m ogra phic a ssumptions

Fe rtility rate 1.3 1.3 1.3 1.4 1.5 1.6 1.6 1.6 1.6 1.6 1.6 Life e xpe ctancy at birth

m ale s 68.5 68.8 70.1 71.5 72.8 74.1 75.2 76.2 77.0 77.6 78.1

fe m ale s 76.8 77.0 78.0 78.9 79.8 80.7 81.5 82.1 82.6 83.1 83.4 Life e xpe ctancy at 65

m ale s 13.1 13.2 13.9 14.6 15.4 16.1 16.8 17.4 17.9 18.3 18.6

fe m ale s 16.7 16.8 17.3 17.9 18.5 19.1 19.7 20.1 20.5 20.8 21.1

Ne t m igration (thous and) 14.8 14.7 13.3 7.1 13.8 20.4 21.2 21.1 20.8 20.4 20.1

Ne t m igration as % of population 0.15 0.15 0.13 0.07 0.14 0.21 0.22 0.22 0.22 0.23 0.22 Population (m illion) 10.1 10.1 10.0 9.8 9.7 9.6 9.5 9.4 9.2 9.1 8.9

Population age d 0-14 as % of total 15.9 15.7 14.6 14.4 14.4 14.3 14.1 13.8 13.6 13.6 13.8

Pr im e age population (25-54) as % of total 43.5 43.6 42.7 42.1 42.6 41.6 39.7 37.1 36.1 35.4 34.9 Work ing age population (15-64) as % of total 68.6 68.7 68.6 67.5 65.2 63.7 63.6 62.9 61.6 59.2 58.1 Elde rly population age d 65+ as % of total 15.5 15.6 16.7 18.0 20.3 22.0 22.3 23.2 24.8 27.2 28.1

V e r y e lde r ly population age d 80 and ove r as % of total 3.2 3.3 3.9 4.3 4.7 5.4 6.2 7.6 8.3 8.1 8.5 Elde rly population age d 55+ as % of w ork ing age pop.15-64 6.4 6.4 6.5 6.8 7.0 7.3 7.5 7.8 8.0 8.3 8.5 Ma croe conom ic a ssumptions

Re al GDP (gr ow th rate ) 3.9 3.8 3.3 2.8 2.5 2.4 2.1 1.0 0.8 1.0 1.1

Labour input (gr ow th rate ) 0.6 0.5 0.2 -0.3 -0.5 -0.3 -0.6 -1.0 -1.1 -0.8 -0.6 Labour productivity (gr ow th rate ) 3.2 3.3 3.1 3.1 2.9 2.8 2.7 2.0 1.9 1.8 1.7 TFP (grow th r ate ) 1.1 1.1 1.2 1.6 1.6 1.7 1.8 1.3 1.2 1.2 1.1

Capital de e pe ning (c ontribution to labour productivity grow th) 2.1 2.1 1.9 1.6 1.3 1.1 0.9 0.7 0.7 0.6 0.6 GDP pe r capita (gr ow th r ate ) 4.1 4.0 3.6 3.1 2.7 2.6 2.3 1.3 1.1 1.4 1.5

GDP in 2004 price s (in billions of e uro) 80 83 99 115 131 148 165 178 185 194 205 GDP pe r w ork e r 10.9 11.3 13.7 16.1 18.6 21.2 23.9 26.0 27.6 29.3 31.5 Re al inte r e s t rate 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 La bour force a ssumptions

Population grow th (w ork ing age :15-64) -0.1 -0.4 -0.9 -1.2 -0.4 -0.2 -0.6 -1.1 -1.0 -0.6

Labour force (thous ands ) 4245 4276 4373 4350 4269 4188 4089 3924 3723 3554 3440 Participation rate (15-64) 61.1 61.6 63.8 65.5 67.5 68.5 67.8 66.6 65.6 66.2 66.4

young (15-24) 31.1 31.0 31.7 33.3 31.9 31.1 31.4 31.4 31.5 31.9 31.7

prim e -age (25-54) 78.4 78.8 80.7 82.2 82.7 82.9 82.8 82.5 82.5 82.4 82.5 olde r (55-64) 31.3 32.8 40.2 41.4 44.6 50.4 51.7 52.0 48.6 49.7 50.1 olde s t (65-71) 2.5 3.0 5.9 7.8 8.2 8.0 8.8 9.8 9.8 9.4 8.9 Em ploym e nt rate (15-64) 57.7 58.4 60.8 62.4 64.3 65.3 64.6 63.5 62.4 63.1 63.2 Em ploym e nt rate (15-71) 53.0 53.6 55.7 56.9 57.5 58.2 58.8 57.5 55.6 54.9 55.6 Em ploym e nt grow th (15-64) 1.0 0.2 -0.3 -0.5 -0.3 -0.6 -1.0 -1.1 -0.8 -0.6

Une m ploym e nt rate (15-64) 5.5 5.3 4.8 4.8 4.8 4.8 4.8 4.8 4.8 4.8 4.8 De pe nde ncy ra tios:

Share of olde r w ork e rs 8.7 9.3 12.4 13.2 12.6 13.8 16.2 19.1 18.2 17.2 17.2

Old-age de pe nde ncy ratio (1) 22.6 22.8 24.3 26.7 31.2 34.5 35.1 36.9 40.3 45.9 48.3 Total de pe nde ncy ratio (2) 45.7 45.5 45.7 48.1 53.3 56.9 57.4 59.0 62.4 69.0 72.0

Total e conom ic de pe nde ncy r atio 152.3 149.3 139.7 137.4 138.4 140.4 143.5 150.5 160.1 168.1 172.1 Econom ic old-age de pe nde ncy ratio (15-64) 38.7 38.5 39.1 41.4 46.7 51.1 52.8 56.3 62.2 70.2 74.2 Econom ic old-age de pe nde ncy ratio (15-71) 38.5 38.3 38.7 40.8 45.9 50.2 52.0 55.2 60.7 68.4 72.5 LEGENDA :

S h a r e o f o ld e r wo rk e rs = P o p u la t io n a g e d 5 5 t o 6 4 a s % o f p o p u la t io n a g e d 15 - 6 4

O ld - a g e d e p e n d e n c y ra t io ( 1) = P o p u la t io n a g e d 6 5 a n d o v e r a s a p e r c e n t a g e o f t h e p o p u la t io n a g e d 15 - 6 4

T o t a l d e p e n d e n c y r a t io ( 2 ) = P o p u la t io n u n d e r 15 a n d o v e r 6 4 a s a p e rc e n t a g e o f t h e p o p u la t io n a g e d 15 - 6 4

T o t a l e c o n o m ic d e p e n d e n c y r a t io = T o t a l p o p u la t io n le s s e m p lo ye d a s % o f e m p lo ye d p o p u la t io n ( 15 - 6 4 )

E c o n o m ic o ld - a g e d e p e n d e n c y ra t io ( 15 - 6 4 ) = In a c t iv e p o p u la t io n a g e d 6 5 + a s % o f e m p lo ye d p o p u la t io n ( 15 - 6 4 )

E c o n o m ic o ld - a g e d e p e n d e n c y ra t io ( 15 - 7 1) = In a c t iv e p o p u la t io n a g e d 6 5 + a s % o f e m p lo ye d p o p u la t io n ( 15 - 7 1)

Hungary EPC-AW G Pension expenditure projections

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Baseline scenario; as % of GDP

Social security pensions, gross 10.4 10.7 11.1 11.6 12.5 13.0 13.5 14.6 16.0 16.9 17.1

Old-age and early pens ions , gros s 8.3 8.6 9.1 10.0 11.3 11.8 12.2 13.2 14.7 15.6 15.8

Of which: earnings -related pens ions , gros s 8.3 8.6 9.1 10.0 11.3 11.8 12.2 13.2 14.7 15.6 15.8 Private s ector em ployees , gros s : : : : : : : : : : : Public s ector em ployees , gros s : : : : : : : : : : :

Other pens ions (dis ability, s urvivors ), gros s 2.1 2.0 2.1 1.6 1.3 1.2 1.3 1.4 1.3 1.3 1.3 Occupational pensions, gross : : : : : : : : : : :

Private mandatory pensions, gross 0.0 0.0 0.0 0.0 0.1 0.2 0.5 0.9 1.6 2.4 3.1

Total pension expenditure, gross 10.4 10.7 11.1 11.6 12.6 13.3 13.9 15.4 17.6 19.3 20.3 Social security pensions, net 10.4 10.7 11.1 11.2 11.7 11.8 11.9 12.6 13.8 14.5 14.6

Total pension expenditure, net 10.4 10.7 11.1 11.2 11.8 12.0 12.3 13.4 15.1 16.5 17.3 Social security pensions, contributions 7.7 7.6 6.8 6.6 6.6 6.5 6.6 6.7 6.7 6.8 6.8 Total pension contributions 8.8 8.9 8.8 8.9 9.0 9.2 9.3 9.5 9.5 9.6 9.6 Social security pensions, assets : : : : : : : : : : :

All pensions, assets 4.0 5.3 13.2 21.9 31.5 41.1 50.0 59.2 67.7 72.8 73.7 Additional indicators

Social security pensions, net / Social sec. pensions, gross,% 100 100 100 97 93 90 88 87 86 85 85 Total pension expenditure, net / Total pension exp., gross, % 100 100 100 97 93 90 88 87 86 85 85

Social security pensions, num ber of pensioners , 1000 pers. 3069 3080 3210 3262 3343 3353 3353 3417 3529 3541 3467 All pensions, pensioners , 1000 pers. 3069 3080 3210 3262 3343 3353 3353 3417 3529 3541 3467

Number of pensioners aged 65+ , 1000 pers. 1557 1580 1765 2008 2252 2386 2364 2378 2450 2614 2614

Share of pensioners below age 65 as % of all pensioners 49.3 48.7 45.0 38.4 32.7 28.9 29.5 30.4 30.6 26.2 24.6 Average gross social sec. pension, 1000 in 2004 prices 2.7 2.9 3.4 4.1 4.9 5.8 6.6 7.6 8.4 9.3 10.1 Average gross total pensions, 1000 in 2004 prices 2.7 2.9 3.4 4.1 5.0 5.9 6.9 8.0 9.3 10.6 12.0 Output / W orker, 1000 in 2004 prices 20.3 21.0 23.9 27.8 32.2 37.1 42.4 47.5 52.3 57.3 62.5 Social sec. benefit ratio 13.4 13.8 14.4 14.7 15.3 15.5 15.6 15.9 16.1 16.2 16.2

Total pension benefit ratio 13.4 13.8 14.4 14.7 15.4 15.8 16.2 16.9 17.7 18.4 19.1

Social security pensions, num of contributors, in 1000 4026 4070 4206 4201 4137 4057 3956 3810 3629 3475 3351 Average social sec. pension contribution, 1000 in 2004 prices 1.5 1.6 1.6 1.8 2.1 2.4 2.8 3.1 3.4 3.8 4.1 Average total pension contribution, 1000 in 2004 prices 1.7 1.8 2.1 2.4 2.9 3.3 3.9 4.4 4.9 5.4 5.8

Support ratio (contributors /100 pensioners, social sec. pens.) 131 132 131 129 124 121 118 111 103 98 97 High life expectancy; as % of GDP

Social security pensions, gross 10.4 10.7 11.0 11.4 12.4 12.8 13.2 14.3 15.7 16.6 16.8 Old-age and early pensions, gross 8.3 8.6 9.0 9.8 11.1 11.6 12.0 12.9 14.4 15.3 15.6

Total pension expenditure, gross 10.4 10.7 11.0 11.5 12.5 13.1 13.7 15.2 17.4 19.0 20.0 All pensions, assets 4.0 5.3 13.2 21.9 31.4 40.9 49.7 58.8 67.2 72.1 72.7 Higher labour productivity; as % of GDP

Social security pensions, gross 10.4 10.7 11.1 11.5 12.4 12.8 13.2 14.2 15.7 16.5 16.7 Old-age and early pensions, gross 8.3 8.7 9.0 9.9 11.1 11.6 11.9 12.9 14.3 15.2 15.4

Total pension expenditure, gross 10.4 10.7 11.1 11.5 12.5 13.1 13.7 15.1 17.2 18.7 19.6 All pensions, assets 4.0 5.3 13.2 21.8 31.0 40.2 48.6 57.3 65.2 69.9 70.5 Lower labour productivity; as % of GDP

Social security pensions, gross 10.4 10.7 11.1 11.6 12.6 13.2 13.6 14.7 16.2 17.1 17.3 Old-age and early pensions, gross 8.3 8.7 9.0 10.0 11.3 11.9 12.3 13.3 14.9 15.8 16.0

Total pension expenditure, gross 10.4 10.7 11.1 11.6 12.7 13.4 14.1 15.7 17.9 19.6 20.7 All pensions, assets 4.0 5.3 13.2 22.1 31.9 41.8 51.1 60.8 69.7 75.1 76.0 Higher employment rate (1 p.p.); as % of GDP

Social security pensions, gross 10.4 10.7 11.0 11.3 12.2 12.7 13.0 14.0 15.4 16.2 16.4 Old-age and early pensions, gross 8.3 8.6 9.0 9.7 11.0 11.5 11.8 12.7 14.1 15.0 15.2

Total pension expenditure, gross 10.4 10.7 11.0 11.3 12.3 12.9 13.5 14.9 17.0 18.6 19.5 All pensions, assets 4.0 5.3 13.2 21.9 31.5 41.0 49.9 59.1 67.6 72.8 73.7 Higher older workers empl. rate (5 p.p.); as % of GDP

Social security pensions, gross 10.4 10.7 10.9 11.2 11.9 12.3 12.7 13.7 15.0 15.8 16.0 Old-age and early pensions, gross 8.3 8.6 8.9 9.5 10.7 11.1 11.4 12.3 13.7 14.6 14.8

Total pension expenditure, gross 10.4 10.7 10.9 11.2 12.0 12.6 13.2 14.5 16.6 18.1 19.0 All pensions, assets 4.0 5.3 13.2 21.8 31.2 40.6 49.2 58.2 66.6 71.9 73.0 Lower interest rate; as % of GDP

Social security pensions, gross 10.4 10.7 11.1 11.6 12.5 13.0 13.5 14.6 16.0 16.9 17.1 Old-age and early pensions, gross 8.3 8.6 9.1 10.0 11.3 11.8 12.2 13.2 14.7 15.6 15.8

Total pension expenditure, gross 10.4 10.7 11.1 11.6 12.6 13.2 13.8 15.2 17.2 18.7 19.4 All pensions, assets 4.0 5.3 12.7 20.7 29.2 37.4 44.8 52.5 59.5 63.7 64.6 Higher interest rate; as % of GDP

Social security pensions, gross 10.4 10.7 11.1 11.6 12.5 13.0 13.5 14.6 16.0 16.9 17.1 Old-age and early pensions, gross 8.3 8.6 9.1 10.0 11.3 11.8 12.2 13.2 14.7 15.6 15.8

Total pension expenditure, gross 10.4 10.7 11.1 11.6 12.7 13.3 14.1 15.7 18.1 20.1 21.3 All pensions, assets 4.0 5.4 13.7 23.3 34.1 45.3 55.9 67.2 77.6 83.8 84.4 : = data not provided

Hungary OTHER AGE-RELATED EXPENDITURES as % of GDP

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Health care spending as % of GDP

Pure ageing s cenario 5.5 5.5 5.7 5 .8 5.9 6.1 6.2 6.3 6.4 6 .5 6.5

Cons tant health s cenario 5.5 5.5 5.5 5 .6 5.6 5.6 5.6 5.7 5.7 5 .7 5.8

Death-related cos ts s cenario 5.5 5.5 5.6 5 .6 5.7 5.8 5.8 5.9 5.9 5 .9 6.0 Incom e elas ticity of dem and 5.5 5.5 5.8 6 .0 6.2 6.4 6.6 6.7 6.8 6 .9 6.9 Unit cos ts - GDP per worker 5.5 5.5 5.4 5 .5 5.7 5.8 6.0 6.3 6.6 6 .9 7.1 AWG reference s cenario 5.5 5.5 5.7 5 .9 6.0 6.2 6.3 6.3 6.4 6 .5 6.5 Long-term care spending as % of GDP

Pure ageing s cenario : : : : : : : : : : :

Unit cos ts - GDP per capita : : : : : : : : : : :

Cons tant dis ability s cenario : : : : : : : : : : : Increas e in form al care : : : : : : : : : : : AWG reference s cenario : : : : : : : : : : : Numbe r of de pe nde nt pe ople (in thous ands )

Pure ageing s cenario 263 267 287 306 3 35 36 7 392 419 437 451 4 67

Unit cos ts - GDP per capita 263 267 287 306 3 35 17 8 392 419 437 451 4 67

Cons tant dis ability s cenario 263 263 263 215 2 64 27 3 278 289 291 285 2 86 Increas e in form al care 263 267 287 306 3 35 36 7 392 419 437 451 4 67 AWG reference s cenario 263 265 275 283 3 00 32 0 335 354 364 368 3 76 of which re ce iving formal care

Pure ageing s cenario 0 0 0 0 0 0 0 0 0 0 0

Unit cos ts - GDP per capita 0 0 0 0 0 0 0 0 0 0 0

Cons tant dis ability s cenario 0 0 0 0 0 0 0 0 0 0 0

Increas e in form al care 0 1 3 76 132 1 87 20 5 219 235 245 253 2 61 AWG reference s cenario 0 0 0 0 0 0 0 0 0 0 0 of which re ce iving informal or no care

Pure ageing s cenario 263 267 287 306 3 35 36 7 392 419 437 451 4 67

Unit cos ts - GDP per capita 263 267 287 306 3 35 17 8 392 419 437 451 4 67

Cons tant dis ability s cenario 263 263 263 215 2 64 27 3 278 289 291 285 2 86 Increas e in form al care 263 254 211 174 1 47 16 1 172 185 192 199 2 06 AWG reference s cenario 263 265 275 283 3 00 32 0 335 354 364 368 3 76 Education spending as % of GDP

Total 4.5 4.4 3.9 3 .7 3.5 3.5 3.5 3.6 3.7 3 .8 3.8

of which: Transfers 0.5 0.5 0.4 0 .4 0.4 0.4 0.4 0.4 0.4 0 .4 0.4 Prim ary 0.9 0.9 0.8 0 .8 0.8 0.8 0.8 0.8 0.8 0 .8 0.8

of which: Transfers 0.1 0.1 0.1 0 .1 0.1 0.1 0.1 0.1 0.1 0 .1 0.1 Low s econdary 1.0 0.9 0.8 0 .7 0.7 0.7 0.8 0.8 0.8 0 .8 0.8

of which: Transfers 0.1 0.1 0.1 0 .1 0.1 0.1 0.1 0.1 0.1 0 .1 0.1 Upper s econdary 1.3 1.3 1.2 1 .0 1.0 1.0 1.0 1.0 1.1 1 .1 1.1

of which: Transfers 0.1 0.1 0.1 0 .1 0.1 0.1 0.1 0.1 0.1 0 .1 0.1 Tertiary education 1.4 1.3 1.2 1 .1 1.0 1.0 1.0 1.0 1.1 1 .1 1.1

of which: Transfers 0.3 0.3 0.3 0 .2 0.2 0.2 0.2 0.2 0.2 0 .2 0.2 Number of s tudents (in thous ands )

Total 1 929 18 88 171 0 1576 1505 1475 1 457 14 29 139 0 1351 1324 Prim ary 448 432 391 390 3 82 37 5 372 356 342 338 3 36

Low s econdary 500 492 418 390 3 90 38 3 380 374 357 345 3 42

Upper s econdary 595 586 552 471 4 47 44 5 438 435 427 410 3 98

Tertiary education 385 379 349 324 2 86 27 1 267 264 263 259 2 49 Memo

Population aged 15 64 (in thous ands ) 6 944 69 36 685 2 6642 6325 6111 6 028 58 90 567 9 5368 5182 Unemployment benefit spending as % of GDP

0.2 0.2 0.2 0 .2 0.2 0.2 0.2 0.2 0.2 0 .2 0.2

Malta Main demographic and macroeconomic assumptions (BA SELINE SCENA RIO)

Budgetary Projection: A WG variant population scenario

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 De mogra phic a ssum ptions

Fe r tility rate 1.7 1.6 1.5 1.5 1.5 1.6 1.6 1.6 1.6 1.6 1.6 Life e xpe ctancy at birth

m ale s 76.2 76.5 77.4 78.3 79.0 79.6 80.1 80.6 81.0 81.4 81.8

fe m ale s 80.7 80.9 81.7 82.3 82.9 83.3 83.7 84.1 84.4 84.8 85.0 Life e xpe ctancy at 65

m ale s 15.2 15.4 16.0 16.6 17.1 17.6 18.0 18.3 18.7 19.0 19.2

fe m ale s 18.3 18.4 19.0 19.5 19.9 20.3 20.6 20.9 21.1 21.4 21.6

Ne t m igration (thous and) 2.6 2.6 2.4 2.2 2.3 2.3 2.4 2.4 2.5 2.5 2.5

Ne t m igration as % of population 0.64 0.64 0.58 0.51 0.50 0.50 0.50 0.50 0.50 0.50 0.50 Population (m illion) 0.4 0.4 0.4 0.4 0.5 0.5 0.5 0.5 0.5 0.5 0.5

Population age d 0-14 as % of total 18.2 17.8 16.2 15.6 15.7 15.6 15.4 15.0 14.6 14.4 14.5

Prim e age population (25-54) as % of total 42.2 42.1 41.8 41.1 40.7 40.9 40.0 38.9 37.8 37.1 36.5 Work ing age population (15-64) as % of total 68.7 69.0 69.6 67.1 64.8 63.1 62.2 62.7 62.9 62.0 60.8 Elde r ly population age d 65+ as % of total 13.0 13.2 14.2 17.3 19.4 21.3 22.4 22.3 22.5 23.6 24.7

V e ry e lde r ly population age d 80 and ove r as % of total 2.7 2.8 3.2 3.6 4.1 4.6 6.3 7.2 7.9 8.0 7.5

Elde rly population age d 55+ as % of w ork ing age pop.15-64 0.3 0.3 0.3 0.3 0.3 0.4 0.4 0.4 0.4 0.4 0.4 Ma croe conomic a ssumptions

Re al GDP (grow th rate ) 1.9 2.0 2.5 3.1 2.7 2.9 3.1 2.1 1.8 1.7 1.7

Labour input (gr ow th rate ) 0.5 0.5 1.6 1.1 0.3 0.4 0.4 0.2 0.0 -0.1 -0.1

Labour pr oductivity (grow th rate ) 1.4 1.5 0.8 2.0 2.3 2.5 2.7 2.0 1.9 1.8 1.7 TFP (grow th rate ) 0.0 0.0 0.3 1.3 1.5 1.6 1.8 1.3 1.2 1.2 1.1

Capital de e pe ning (contribution to labour productiv ity grow th) 1.4 1.5 0.6 0.7 0.9 0.9 0.9 0.7 0.7 0.6 0.6 GDP pe r capita (gr ow th rate ) 1.2 0.9 1.6 2.4 2.0 2.3 2.6 1.8 1.6 1.4 1.4 GDP in 2004 price s (in billions of e uro) 4 4 5 6 7 8 9 10 11 12 13

GDP pe r w or k e r 13.7 13.8 14.8 16.4 18.1 20.2 22.9 25.4 27.6 29.7 31.8 Re al inte r e s t r ate 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 La bour force a ssumptions

Population grow th (w or k ing age :15-64) 1.3 0.2 -0.1 0.2 0.0 0.4 0.6 0.2 -0.1 -0.1

Labour force (thous ands ) 163 167 182 190 195 198 203 205 205 205 204

Par ticipation rate (15-64) 59.5 60.1 61.8 64.6 66.1 67.1 68.0 67.1 66.0 65.8 66.0

young (15-24) 57.9 58.0 59.5 60.4 59.6 58.0 59.0 58.4 58.8 59.4 59.4

prim e -age (25-54) 67.2 68.6 73.4 77.0 79.1 79.7 79.7 79.7 79.6 79.6 79.9 olde r (55-64) 33.9 33.8 30.1 31.4 31.4 31.1 35.1 35.9 34.6 34.2 33.7 olde s t (65-71) 3.2 2.8 2.5 2.6 2.5 2.5 2.4 2.4 2.6 2.6 2.5 Em ploym e nt rate (15-64) 54.5 55.0 56.7 60.1 61.5 62.4 63.2 62.4 61.4 61.2 61.3 Em ploym e nt rate (15-71) 50.5 50.9 52.4 53.5 54.6 55.3 56.2 56.4 55.2 54.0 53.7 Em ploym e nt grow th (15-64) 2.3 1.6 1.1 0.3 0.4 0.4 0.2 0.0 -0.1 -0.1

Une m ploym e nt rate (15-64) 8.4 8.5 8.3 7.0 7.0 7.0 7.0 7.0 7.0 7.0 7.0 De pe nde ncy ra tios:

Shar e of olde r w ork e r s 9.9 10.1 10.0 9.9 9.6 8.5 9.3 10.9 11.5 11.6 11.4

Old-age de pe nde ncy ratio (1) 19.0 19.2 20.4 25.7 30.0 33.8 36.0 35.5 35.9 38.0 40.6 Total de pe nde ncy r atio (2) 45.5 45.0 43.6 48.9 54.2 58.4 60.7 59.4 59.1 61.4 64.6

Total e conom ic de pe nde ncy ratio 166.9 163.6 153.4 147.7 150.8 153.7 154.1 155.5 159.1 163.5 168.3 Econom ic old-age de pe nde ncy r atio (15-64) 34.3 34.5 35.6 42.3 48.2 53.5 56.4 56.5 57.9 61.5 65.6 Econom ic old-age de pe nde ncy r atio (15-71) 34.1 34.3 35.4 42.0 48.0 53.2 56.1 56.2 57.6 61.2 65.2 LEGENDA :

S h a re o f o ld e r wo rk e rs = P o p u la t io n a g e d 5 5 t o 6 4 a s % o f p o p u la t io n a g e d 15 - 6 4

O ld - a g e d e p e n d e n c y ra t io ( 1) = P o p u la t io n a g e d 6 5 a n d o v e r a s a p e r c e n t a g e o f t h e p o p u la t io n a g e d 15 - 6 4

T o t a l d e p e n d e n c y r a t io ( 2 ) = P o p u la t io n u n d e r 15 a n d o v e r 6 4 a s a p e r c e n t a g e o f t h e p o p u la t io n a g e d 15 - 6 4

T o t a l e c o n o m ic d e p e n d e n c y r a t io = T o t a l p o p u la t io n le s s e m p lo ye d a s % o f e m p lo ye d p o p u la t io n ( 15 - 6 4 )

E c o n o m ic o ld - a g e d e p e n d e n c y ra t io ( 15 - 6 4 ) = In a c t iv e p o p u la t io n a g e d 6 5 + a s % o f e m p lo ye d p o p u la t io n ( 15 - 6 4 )

E c o n o m ic o ld - a g e d e p e n d e n c y ra t io ( 15 - 7 1) = In a c t iv e p o p u la t io n a g e d 6 5 + a s % o f e m p lo ye d p o p u la t io n ( 15 - 7 1)

Malta EPC-AW G Pension expenditure projections

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Baseline scenario; as % of GDP

Social security pensions, gross 7.4 7.5 8.8 9.8 10.2 10.0 9.1 8.4 7.9 7.5 7.0

Old-age and early pens ions , gros s 3.9 3.9 5.2 6.3 7.0 7.3 7.0 6.6 6.6 6.6 6.5 Of which: earnings -related pens ions , gros s : : : : : : : : : : : Private s ector em ployees , gros s : : : : : : : : : : : Public s ector em ployees , gros s : : : : : : : : : : :

Other pens ions (dis ability, s urvivors ), gros s 3.6 3.6 3.6 3.5 3.2 2.7 2.2 1.7 1.3 1.0 0.5 Occupational pensions, gross : : : : : : : : : : :

Private mandatory pensions, gross : : : : : : : : : : :

Total pension expenditure, gross 7.4 7.5 8.8 9.8 10.2 10.0 9.1 8.4 7.9 7.5 7.0 Social security pensions, net : : : : : : : : : : :

Total pension expenditure, net : : : : : : : : : : :

Social security pensions, contributions 7.1 6.9 6.8 6.4 5.9 5.4 4.8 4.3 3.9 3.6 3.3 Total pension contributions 7.1 6.9 6.8 6.4 5.9 5.4 4.8 4.3 3.9 3.6 3.3 Social security pensions, assets : : : : : : : : : : : All pensions, assets : : : : : : : : : : : Additional indicators

Social security pensions, net / Social sec. pensions, gross,% : : : : : : : : : : : Total pension expenditure, net / Total pension exp., gross, % : : : : : : : : : : :

Social security pensions, num ber of pensioners , 1000 pers. 60 62 74 86 97 107 113 118 122 126 130 All pensions, pensioners , 1000 pers. 60 62 74 86 97 107 113 118 122 126 130 Number of pensioners aged 65+ , 1000 pers. 42 43 48 61 72 82 90 92 94 98 102

Share of pensioners below age 65 as % of all pensioners 29.9 29.9 34.4 29.1 26.3 23.3 20.7 21.8 23.1 22.4 21.3 Average gross social sec. pension, 1000 in 2004 prices 5.4 5.4 6.0 6.5 6.9 7.0 7.0 7.0 7.0 7.1 7.0 Average gross total pensions, 1000 in 2004 prices 5.4 5.4 6.0 6.5 6.9 7.0 7.0 7.0 7.0 7.1 7.0 Output / W orker, 1000 in 2004 prices 29.3 29.7 30.0 32.3 36.2 40.7 46.3 51.7 56.8 62.2 67.8 Social sec. benefit ratio 18.4 18.2 19.9 20.1 19.0 17.2 15.2 13.5 12.4 11.4 10.3

Total pension benefit ratio 18.4 18.2 19.9 20.1 19.0 17.2 15.2 13.5 12.4 11.4 10.3

Social security pensions, num of contributors, in 1000 159 162 171 177 181 185 191 196 199 202 205

Average social sec. pension contribution, 1000 in 2004 prices 2.0 1.9 2.0 2.1 2.1 2.2 2.2 2.2 2.2 2.1 2.1 Average total pension contribution, 1000 in 2004 prices : : : : : : : : : : :

Support ratio (contributors /100 pensioners, social sec. pens.) 264 262 233 206 186 173 168 166 163 160 158 High life expectancy; as % of GDP

Social security pensions, gross 7.5 7.6 9.0 10.1 10.6 10.5 9.6 8.9 8.4 8.1 7.6 Old-age and early pensions, gross 3.9 4.0 5.3 6.5 7.3 7.6 7.3 7.1 7.1 7.1 7.0

Total pension expenditure, gross 7.5 7.6 9.0 10.1 10.6 10.5 9.6 8.9 8.4 8.1 7.6 All pensions, assets : : : : : : : : : : : Higher labour productivity; as % of GDP

Social security pensions, gross 7.5 7.6 8.8 9.7 10.1 9.7 8.8 7.9 7.4 6.9 6.4

Old-age and early pensions, gross 3.9 3.9 5.2 6.3 6.9 7.1 6.7 6.3 6.1 6.1 5.9 Total pension expenditure, gross 7.5 7.6 8.8 9.7 10.1 9.7 8.8 7.9 7.4 6.9 6.4 All pensions, assets : : : : : : : : : : : Lower labour productivity; as % of GDP

Social security pensions, gross 7.4 7.5 8.8 9.8 10.4 10.3 9.6 8.8 8.5 8.2 7.7 Old-age and early pensions, gross 3.9 3.9 5.2 6.4 7.2 7.6 7.3 7.0 7.1 7.1 7.1

Total pension expenditure, gross 7.4 7.5 8.8 9.8 10.4 10.3 9.6 8.8 8.5 8.2 7.7 All pensions, assets : : : : : : : : : : : Higher employment rate (1 p.p.); as % of GDP

Social security pensions, gross 7.4 7.5 8.7 9.7 10.1 9.9 9.1 8.3 7.8 7.5 7.0

Old-age and early pensions, gross 3.9 3.9 5.2 6.2 7.0 7.3 6.9 6.6 6.5 6.5 6.4 Total pension expenditure, gross 7.4 7.5 8.7 9.7 10.1 9.9 9.1 8.3 7.8 7.5 7.0 All pensions, assets : : : : : : : : : : : Higher older workers empl. rate (5 p.p.); as % of GDP

Social security pensions, gross 7.4 7.5 8.8 9.7 10.2 10.0 9.1 8.4 7.9 7.5 7.1 Old-age and early pensions, gross 3.9 3.9 5.2 6.3 7.0 7.3 7.0 6.6 6.6 6.6 6.5

Total pension expenditure, gross 7.4 7.5 8.8 9.7 10.2 10.0 9.1 8.4 7.9 7.5 7.1 All pensions, assets : : : : : : : : : : : Lower interest rate; as % of GDP

Social security pensions, gross 7.4 7.5 8.8 9.8 10.2 10.0 9.1 8.4 7.9 7.5 7.0 Old-age and early pensions, gross 3.9 3.9 5.2 6.3 7.0 7.3 7.0 6.6 6.6 6.6 6.5

Total pension expenditure, gross 7.4 7.5 8.8 9.8 10.2 10.0 9.1 8.4 7.9 7.5 7.0 All pensions, assets : : : : : : : : : : : Higher interest rate; as % of GDP

Social security pensions, gross 7.4 7.5 8.8 9.8 10.2 10.0 9.1 8.4 7.9 7.5 7.0 Old-age and early pensions, gross 3.9 3.9 5.2 6.3 7.0 7.3 7.0 6.6 6.6 6.6 6.5

Total pension expenditure, gross 7.4 7.5 8.8 9.8 10.2 10.0 9.1 8.4 7.9 7.5 7.0 All pensions, assets : : : : : : : : : : : : = data not provided

M alta OTHER AGE-RELATED EXPENDITURES as % of GDP

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Health care spending as % of GDP

Pure ageing s cenario 4.2 4.3 4.5 4.8 5 .1 5.4 5.6 5.8 6.0 6.1 6.2

Cons tant health s cenario 4.2 4.3 4.4 4.6 4 .8 4.9 5.1 5.3 5.4 5.4 5.5

Death-related cos ts s cenario 4.2 4.2 4.4 4.6 4 .8 5.0 5.1 5.3 5.3 5.3 5.4 Incom e elas ticity of dem and 4.2 4.3 4.6 4.9 5 .2 5.5 5.8 6.0 6.2 6.4 6.5 Unit cos ts - GDP per worker 4.2 4.3 4.4 4.6 4 .9 5.2 5.5 5.7 6.0 6.2 6.4 AWG reference s cenario 4.2 4.3 4.5 4.8 5 .0 5.3 5.5 5.7 5.9 6.0 6.1 Long-term care spending as % of GDP

Pure ageing s cenario 0.9 0.9 0.9 0.9 0 .9 1.0 1.1 1.2 1.2 1.3 1.2

Unit cos ts - GDP per capita 0.9 0.9 0.9 0.9 1 .0 0.8 1.1 1.2 1.2 1.2 1.2

Cons tant dis ability s cenario 0.9 0.9 0.9 0.9 0 .9 0.9 1.0 1.0 1.1 1.1 1.0 Increas e in form al care 0.9 0.9 0.9 0.9 0 .9 1.0 1.1 1.2 1.3 1.3 1.3 AWG reference s cenario 0.9 0.9 0.9 0.9 0 .9 0.9 1.0 1.1 1.1 1.2 1.1 Numbe r of de pe nde nt pe ople (in thous ands )

Pure ageing s cenario 13 13 15 19 22 26 3 1 3 3 35 36 37

Unit cos ts - GDP per capita 13 13 15 19 22 13 3 1 3 3 35 36 37

Cons tant dis ability s cenario 13 13 14 13 18 19 2 2 2 4 24 24 23 Increas e in form al care 13 13 15 19 22 26 3 1 3 3 35 36 37 AWG reference s cenario 13 13 15 17 20 23 2 6 2 9 30 30 30 of which re ce iving formal care

Pure ageing s cenario 11 11 13 16 19 22 2 7 3 0 31 32 32

Unit cos ts - GDP per capita 11 11 13 16 19 22 2 7 3 0 31 32 32

Cons tant dis ability s cenario 11 11 12 14 15 17 2 0 2 1 22 22 21 Increas e in form al care 11 12 14 17 20 24 2 9 3 2 33 34 35 AWG reference s cenario 11 11 13 15 17 19 2 3 2 6 27 27 27 of which re ce iving informal or no care

Pure ageing s cenario 2 2 2 3 3 4 4 4 4 4 4

Unit cos ts - GDP per capita 2 2 2 3 3 1 4 4 4 4 4

Cons tant dis ability s cenario 2 2 2 2 2 3 2 2 2 2 2 Increas e in form al care 2 2 2 2 1 2 2 2 2 2 2 AWG reference s cenario 2 2 2 2 3 3 3 3 3 3 3 Education spending as % of GDP

Total 4.4 4.4 3.7 3.3 3 .2 3.3 3.3 3.3 3.3 3.3 3.3

of which: Transfers 0.5 0.5 0.4 0.4 0 .3 0.4 0.3 0.4 0.4 0.4 0.4 Prim ary 1.1 1.0 0.9 0.9 0 .9 0.9 0.9 0.9 0.8 0.8 0.9

of which: Transfers 0.0 0.0 0.0 0.0 0 .0 0.0 0.0 0.0 0.0 0.0 0.0 Low s econdary 1.6 1.5 1.3 1.1 1 .2 1.1 1.1 1.2 1.2 1.1 1.1

of which: Transfers 0.0 0.0 0.0 0.0 0 .0 0.0 0.0 0.0 0.0 0.0 0.0 Upper s econdary 0.6 0.6 0.6 0.5 0 .4 0.5 0.5 0.5 0.5 0.5 0.5

of which: Transfers 0.2 0.2 0.2 0.2 0 .1 0.2 0.2 0.2 0.2 0.2 0.2 Tertiary education 1.2 1.1 1.0 0.9 0 .8 0.8 0.8 0.8 0.8 0.8 0.8

of which: Transfers 0.3 0.3 0.2 0.2 0 .2 0.2 0.2 0.2 0.2 0.2 0.2 Number of s tudents (in thous ands )

Total 77 76 69 67 68 70 7 1 7 2 72 71 71

Prim ary 31 30 27 29 29 30 3 1 3 0 30 30 30

Low s econdary 29 29 25 22 25 25 2 6 2 6 26 25 25 Upper s econdary 9 9 9 8 7 8 8 8 8 8 8

Tertiary education 9 9 8 8 7 7 7 7 7 7 7 Memo

Population aged 15 64 (in thous ands ) 275 27 9 2 94 2 95 294 295 298 306 311 311 30 9 Unemployment benefit spending as % of GDP

1.2 1.2 1.2 1.0 1 .0 1.0 1.0 1.0 1.0 1.0 1.0

Netherlands Main demographic and macroeconomic assumptions (BA SELINE SCENA RIO)

Budgetary Projection: A WG variant population scenario

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 De mogra phic a ssumptions

Fe rtility rate 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 Life e xpe ctancy at bir th

m ale s 76.2 76.4 77.0 77.6 78.3 78.8 79.4 79.8 80.3 80.7 81.1

fe m ale s 80.8 80.9 81.4 82.0 82.5 83.0 83.5 83.9 84.4 84.8 85.2 Life e xpe ctancy at 65

m ale s 15.4 15.5 15.9 16.3 16.7 17.1 17.5 17.9 18.2 18.5 18.9

fe m ale s 19.0 19.0 19.4 19.8 20.1 20.5 20.8 21.2 21.5 21.8 22.1

Ne t m igr ation (thous and) 21.0 24.1 32.6 33.3 32.5 31.9 31.6 31.6 31.5 31.3 31.1

Ne t m igr ation as % of population 0.13 0.15 0.20 0.20 0.19 0.18 0.18 0.18 0.18 0.18 0.18 Population (m illion) 16.3 16.3 16.7 17.0 17.2 17.5 17.6 17.8 17.8 17.7 17.6

Population age d 0-14 as % of total 18.5 18.5 17.8 17.1 16.3 16.0 16.1 16.3 16.2 15.9 15.6

Prim e age population (25-54) as % of total 44.1 43.7 42.0 40.4 38.7 37.1 36.4 36.6 36.7 36.7 36.6 Work ing age population (15-64) as % of total 67.6 67.5 67.3 65.8 64.8 63.2 61.1 59.4 58.7 59.3 60.0 Elde rly population age d 65+ as % of total 13.8 14.0 14.9 17.1 18.9 20.8 22.7 24.4 25.1 24.8 24.4

V e ry e lde rly population age d 80 and ove r as % of total 3.4 3.5 3.7 3.9 4.2 4.8 6.0 6.8 7.6 8.5 9.2

Elde rly population age d 55+ as % of w or k ing age pop.15-64 10.6 10.7 11.3 12.2 13.0 14.1 15.1 15.7 15.8 15.5 15.2 Ma croe conomic a ssumptions

Re al GDP (grow th r ate ) 1.3 1.4 2.1 1.8 1.7 1.4 1.3 1.5 1.8 1.8 1.7

Labour input (grow th r ate ) 0.5 0.7 0.4 0.1 -0.1 -0.3 -0.4 -0.2 0.1 0.1 0.0

Labour pr oductivity (gr ow th rate ) 0.8 0.8 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 TFP (gr ow th rate ) 0.4 0.5 1.2 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1

Capital de e pe ning (c ontribution to labour productivity grow th) 0.3 0.3 0.5 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 GDP pe r capita (grow th r ate ) 0.9 1.0 1.7 1.5 1.4 1.1 1.1 1.4 1.8 1.9 1.8

GDP in 2004 price s (in billions of e uro) 465 472 517 568 620 668 713 765 833 912 996 GDP pe r w ork e r 21.9 22.1 23.7 25.6 27.5 29.2 30.9 32.9 35.8 39.4 43.2 Re al inte re s t r ate 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 La bour force a ssum ptions

Population grow th (w ork ing age :15-64) 0.3 0.2 0.0 -0.1 -0.4 -0.5 -0.5 0.0 0.2 0.1

Labour force (thous ands ) 8444 8504 8727 8808 8832 8728 8548 8424 8424 8481 8509 Participation rate (15-64) 76.8 77.1 77.8 78.9 79.1 79.1 79.3 79.9 80.8 80.7 80.5

young (15-24) 72.9 73.0 73.4 73.5 73.5 74.1 73.8 73.5 73.4 73.5 73.7

prim e -age (25-54) 85.8 86.3 88.0 89.1 89.8 90.2 90.4 90.4 90.5 90.5 90.5 olde r (55-64) 46.8 47.5 49.0 52.6 54.1 54.3 53.8 53.3 55.4 56.0 56.0 olde s t (65-71) 8.5 9.1 9.9 10.0 9.9 10.1 10.2 10.1 9.7 9.9 10.1 Em ploym e nt rate (15-64) 74.0 74.4 75.3 76.4 76.5 76.5 76.7 77.4 78.2 78.1 77.9 Em ploym e nt rate (15-71) 69.0 69.4 69.7 69.3 69.2 68.8 68.2 68.4 69.4 70.6 70.6 Em ploym e nt grow th (15-64) 0.9 0.4 0.1 -0.1 -0.3 -0.4 -0.2 0.1 0.1 0.0

Une m ploym e nt rate (15-64) 3.7 3.5 3.2 3.2 3.2 3.2 3.2 3.2 3.2 3.2 3.2 De pe nde ncy ra tios:

Share of olde r w or k e rs 10.4 10.8 12.1 13.2 14.6 15.4 14.9 13.3 12.7 13.1 13.7

Old-age de pe nde ncy ratio (1) 20.5 20.7 22.2 26.0 29.2 32.8 37.2 41.1 42.8 41.8 40.6 Total de pe nde ncy ratio (2) 47.9 48.1 48.7 52.0 54.3 58.2 63.7 68.5 70.3 68.6 66.7

Total e conom ic de pe nde ncy ratio 99.8 99.0 97.4 99.0 101.5 106.7 113.3 117.8 118.0 115.8 114.1

Econom ic old-age de pe nde ncy ratio (15-64) 26.7 26.8 28.3 32.5 36.5 41.2 46.6 51.1 53.0 51.9 50.6 Econom ic old-age de pe nde ncy ratio (15-71) 26.5 26.6 27.9 32.0 35.9 40.5 45.7 50.1 52.0 51.1 49.9 LEGENDA :

S h a r e o f o ld e r wo r k e r s = P o p u la t io n a g e d 5 5 t o 6 4 a s % o f p o p u la t io n a g e d 15 - 6 4

O ld - a g e d e p e n d e n c y ra t io ( 1) = P o p u la t io n a g e d 6 5 a n d o v e r a s a p e rc e n t a g e o f t h e p o p u la t io n a g e d 15 - 6 4

T o t a l d e p e n d e n c y r a t io ( 2 ) = P o p u la t io n u n d e r 15 a n d o v e r 6 4 a s a p e rc e n t a g e o f t h e p o p u la t io n a g e d 15 - 6 4

T o t a l e c o n o m ic d e p e n d e n c y r a t io = T o t a l p o p u la t io n le s s e m p lo ye d a s % o f e m p lo ye d p o p u la t io n ( 15 - 6 4 )

E c o n o m ic o ld - a g e d e p e n d e n c y ra t io ( 15 - 6 4 ) = In a c t iv e p o p u la t io n a g e d 6 5 + a s % o f e m p lo ye d p o p u la t io n ( 15 - 6 4 )

E c o n o m ic o ld - a g e d e p e n d e n c y ra t io ( 15 - 7 1) = In a c t iv e p o p u la t io n a g e d 6 5 + a s % o f e m p lo ye d p o p u la t io n ( 15 - 7 1)

Netherlands EPC-AW G Pension expenditure projections

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Baseline scenario; as % of GDP

Social security pensions, gross 7.7 7.4 7.6 8.3 9.0 9.7 10.7 11.4 11.7 11.4 11.2 Old-age and early pens ions , gros s 4.9 4.8 5.2 6.0 6.7 7.6 8.6 9.4 9.7 9.6 9.4 Of which: earnings -related pens ions , gros s : : : : : : : : : : : Private s ector em ployees , gros s : : : : : : : : : : : Public s ector em ployees , gros s : : : : : : : : : : :

Other pens ions (dis ability, s urvivors ), gros s 2.8 2.6 2.4 2.3 2.3 2.2 2.1 2.0 1.9 1.9 1.9 Occupational pensions, gross 4.6 4.8 4.7 5.2 5.8 6.7 7.7 8.6 9.0 8.8 8.7 Private mandatory pensions, gross : : : : : : : : : : :

Total pension expenditure, gross 12.4 12.2 12.3 13.6 14.8 16.4 18.4 20.0 20.6 20.3 20.0 Social security pensions, net 6.2 6.0 6.2 6.8 7.4 8.1 8.9 9.6 9.8 9.6 9.4

Total pension expenditure, net 9.6 9.4 9.6 10.6 11.5 12.8 14.4 15.6 16.1 15.8 15.5

Social security pensions, contributions 6.8 6.5 6.4 6.4 6.4 6.4 6.5 6.6 6.7 6.7 6.6 Total pension contributions 13.0 12.9 12.7 13.1 13.5 13.4 13.2 12.9 12.9 13.0 12.9 Social security pensions, assets : : : : : : : : : : :

All pensions, assets 135.5 140.4 160.6 177.5 195.6 214.5 230.1 239.2 241.0 241.4 243.7 Additional indicators

Social security pensions, net / Social sec. pensions, gross,% 81 81 81 82 83 83 83 84 84 84 84 Total pension expenditure, net / Total pension exp., gross, % 77 77 78 78 78 78 78 78 78 78 78

Social security pensions, number of pensioners , 1000 pers. 3317 3310 3437 3818 4156 4514 4879 5168 5291 5213 5120 All pensions, pensioners , 1000 pers. 3540 3548 3765 4139 4487 4872 5224 5468 5556 5477 5399 Number of pensioners aged 65+ , 1000 pers. : : : : : : : : : : :

Share of pensioners below age 65 as % of all pensioners : : : : : : : : : : :

Average gross social sec. pension, 1000 in 2004 prices 10.9 10.6 11.5 12.4 13.4 14.4 15.6 16.9 18.3 20.0 21.8 Average gross total pensions, 1000 in 2004 prices 16.3 16.2 16.9 18.6 20.4 22.5 25.1 28.0 30.9 33.8 36.8 Output / W orker, 1000 in 2004 prices 55.7 56.1 61.3 66.7 72.6 79.1 86.2 93.9 102.2 111.2 121.0 Social sec. benefit ratio 19.5 18.8 18.8 18.6 18.4 18.2 18.1 18.0 18.0 18.0 18.1

Total pension benefit ratio 29.2 28.9 27.6 27.9 28.2 28.5 29.2 29.9 30.3 30.4 30.4 Social security pensions, num of contributors, in 1000 12064 12105 12484 12844 13156 13454 13612 13664 13660 13641 13615

Average social sec. pension contribution, 1000 in 2004 prices 2.6 2.5 2.6 2.8 3.0 3.2 3.4 3.7 4.1 4.5 4.9 Average total pension contribution, 1000 in 2004 prices : : : : : : : : : : :

Support ratio (contributors /100 pensioners, social sec. pens.) 364 366 363 336 317 298 279 264 258 262 266 High life expectancy; as % of GDP

Social security pensions, gross 7.7 7.4 7.6 8.4 9.0 9.9 10.8 11.7 12.0 11.9 11.7 Old-age and early pensions, gross 4.9 4.8 5.2 6.0 6.8 7.7 8.7 9.7 10.1 10.0 9.9

Total pension expenditure, gross 12.4 12.2 12.3 13.5 14.8 16.5 18.5 20.3 21.1 20.9 20.7 All pensions, assets 135.5 140.4 161.0 178.3 197.0 217.5 235.9 247.4 251.4 253.7 257.4 Higher labour productivity; as % of GDP

Social security pensions, gross 7.7 7.4 7.7 8.3 9.0 9.7 10.7 11.4 11.6 11.4 11.2 Old-age and early pensions, gross 4.9 4.8 5.2 6.0 6.7 7.6 8.6 9.4 9.7 9.5 9.3

Total pension expenditure, gross 12.4 12.2 12.3 13.6 14.7 16.3 18.2 19.8 20.4 20.0 19.6 All pensions, assets 135.5 140.4 160.5 176.1 192.2 210.1 225.4 234.4 236.3 236.9 239.3 Lower labour productivity; as % of GDP

Social security pensions, gross 7.7 7.4 7.6 8.3 8.9 9.7 10.7 11.4 11.7 11.5 11.3 Old-age and early pensions, gross 4.9 4.8 5.2 6.0 6.7 7.6 8.6 9.4 9.8 9.6 9.4

Total pension expenditure, gross 12.4 12.2 12.3 13.6 14.8 16.5 18.6 20.2 20.9 20.6 20.3 All pensions, assets 135.5 140.4 160.7 178.9 198.6 218.0 234.1 243.5 245.3 245.6 247.8 Higher employment rate (1 p.p.); as % of GDP

Social security pensions, gross 7.7 7.4 7.6 8.3 8.9 9.7 10.6 11.3 11.6 11.4 11.1 Old-age and early pensions, gross 4.9 4.8 5.2 6.0 6.7 7.5 8.5 9.3 9.7 9.5 9.3

Total pension expenditure, gross 12.4 12.2 12.3 13.5 14.7 16.3 18.3 19.9 20.5 20.2 19.9 All pensions, assets 135.5 140.4 160.1 176.3 194.4 213.6 229.7 239.3 241.5 242.2 244.7 Higher older workers empl. rate (5 p.p.); as % of GDP

Social security pensions, gross 7.7 7.4 7.6 8.3 8.9 9.6 10.6 11.3 11.6 11.4 11.1 Old-age and early pensions, gross 4.9 4.8 5.2 6.0 6.7 7.5 8.5 9.3 9.7 9.5 9.3

Total pension expenditure, gross 12.4 12.2 12.3 13.5 14.7 16.3 18.3 20.0 20.6 20.3 19.9 All pensions, assets 135.5 140.4 160.3 176.9 194.6 213.4 229.7 239.5 241.7 242.1 244.3 Lower interest rate; as % of GDP

Social security pensions, gross 7.7 7.4 7.6 8.3 9.0 9.7 10.7 11.4 11.7 11.4 11.2 Old-age and early pensions, gross 4.9 4.8 5.2 6.0 6.7 7.6 8.6 9.4 9.7 9.6 9.4

Total pension expenditure, gross 12.4 12.2 12.2 13.2 14.3 15.8 17.8 19.4 20.1 19.9 19.7 All pensions, assets 135.5 140.4 166.9 189.2 211.4 235.2 256.1 270.1 275.9 279.5 284.3 Higher interest rate; as % of GDP

Social security pensions, gross 7.7 7.4 7.6 8.3 9.0 9.7 10.7 11.4 11.7 11.4 11.2 Old-age and early pensions, gross 4.9 4.8 5.2 6.0 6.7 7.6 8.6 9.4 9.7 9.6 9.4

Total pension expenditure, gross 12.4 12.2 12.5 13.9 15.2 16.9 18.9 20.5 21.1 20.6 20.2 All pensions, assets 135.5 140.4 152.1 165.6 180.8 196.1 208.1 213.9 212.9 211.0 211.2 : = data not provided

Netherlands OTHER AGE-RELATED EXPENDITURES as % of GDP

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Health care spending as % of GDP

Pure ageing s cenario 6 .1 6.1 6 .3 6.5 6.7 6.9 7.1 7.3 7.4 7 .4 7.4

Cons tant health s cenario 6 .1 6.1 6 .2 6.3 6.5 6.6 6.8 6.9 6.9 6 .9 6.9

Death-related cos ts s cenario 6 .1 6.1 6 .2 6.4 6.6 6.8 6.9 7.0 7.1 7 .1 7.1 Incom e elas ticity of dem and 6 .1 6.1 6 .3 6.6 6.8 7.1 7.3 7.5 7.6 7 .7 7.7 Unit cos ts - GDP per worker 6 .1 6.1 6 .2 6.4 6.7 7.1 7.6 7.9 8.0 7 .9 7.9 AWG reference s cenario 6 .1 6.1 6 .3 6.5 6.7 6.9 7.1 7.3 7.4 7 .4 7.4 Long-term care spending as % of GDP

Pure ageing s cenario 0 .5 0.5 0 .5 0.5 0.6 0.7 0.8 0.9 1.0 1 .1 1.2

Unit cos ts - GDP per capita 0 .5 0.5 0 .5 0.5 0.6 0.5 0.8 0.9 1.0 1 .1 1.1

Cons tant dis ability s cenario 0 .5 0.5 0 .5 0.5 0.5 0.6 0.7 0.8 0.8 0 .9 0.9 Increas e in form al care 0 .5 0.5 0 .7 0.9 1.1 1.2 1.5 1.8 1.9 2 .1 2.3 AWG reference s cenario 0 .5 0.5 0 .5 0.5 0.5 0.6 0.8 0.9 0.9 1 .0 1.1 Numbe r of de pe nde nt pe ople (in thous ands )

Pure ageing s cenario 362 36 7 3 96 441 4 90 561 65 2 721 77 5 813 833

Unit cos ts - GDP per capita 362 36 7 3 96 441 4 90 286 65 2 721 77 5 813 833

Cons tant dis ability s cenario 362 36 2 3 65 316 3 93 423 47 3 502 52 3 539 543 Increas e in form al care 362 36 7 3 96 441 4 90 561 65 2 721 77 5 813 833 AWG reference s cenario 362 36 5 3 80 410 4 42 492 56 3 612 64 9 676 688 of which re ce iving formal care

Pure ageing s cenario 79 80 87 97 1 10 128 14 9 166 18 0 190 194

Unit cos ts - GDP per capita 79 80 87 97 1 10 128 14 9 166 18 0 190 194 Cons tant dis ability s cenario 79 79 80 83 88 9 7 10 9 116 12 1 126 127 Increas e in form al care 79 94 1 68 245 3 23 370 43 1 477 51 3 539 552 AWG reference s cenario 79 79 83 90 99 113 12 9 141 15 1 158 161 of which re ce iving informal or no care

Pure ageing s cenario 283 28 7 3 09 344 3 81 432 50 3 555 59 6 623 639

Unit cos ts - GDP per capita 283 28 7 3 09 344 3 81 220 50 3 555 59 6 623 639

Cons tant dis ability s cenario 283 28 3 2 85 247 3 05 326 36 4 386 40 2 413 416 Increas e in form al care 283 27 3 2 27 196 1 68 190 22 1 244 26 2 274 281 AWG reference s cenario 283 28 5 2 97 320 3 43 379 43 3 471 49 9 518 527 Education spending as % of GDP

Total 4 .8 4.8 4 .7 4.7 4.6 4.5 4.6 4.7 4.7 4 .7 4.6

of which: Transfers 0 .5 0.5 0 .5 0.5 0.5 0.5 0.5 0.5 0.5 0 .5 0.5 Prim ary 1 .5 1.4 1 .5 1.4 1.3 1.3 1.4 1.4 1.4 1 .4 1.3

of which: Transfers 0 .0 0.0 0 .0 0.0 0.0 0.0 0.0 0.0 0.0 0 .0 0.0 Low s econdary 1 .2 1.2 1 .1 1.2 1.1 1.1 1.1 1.1 1.2 1 .2 1.1

of which: Transfers 0 .0 0.0 0 .0 0.0 0.0 0.0 0.0 0.0 0.0 0 .0 0.0 Upper s econdary 0 .9 0.9 0 .9 0.9 0.9 0.9 0.8 0.9 0.9 0 .9 0.9

of which: Transfers 0 .2 0.2 0 .2 0.2 0.2 0.2 0.2 0.2 0.2 0 .2 0.2 Tertiary education 1 .3 1.3 1 .2 1.2 1.3 1.3 1.3 1.2 1.2 1 .2 1.3

of which: Transfers 0 .3 0.3 0 .3 0.3 0.3 0.3 0.3 0.3 0.3 0 .3 0.3 Number of s tudents (in thous ands )

Total 323 2 3 237 330 1 3 298 3226 31 48 3125 31 50 3 179 317 0 3 126

Prim ary 128 2 1 283 133 2 1 276 1207 12 01 1229 12 54 1 258 123 4 1 197 Low s econdary 800 80 8 8 00 841 8 05 761 75 6 772 78 8 791 777

Upper s econdary 629 62 9 6 50 651 6 73 642 61 9 618 62 7 634 634

Tertiary education 522 51 7 5 18 530 5 41 544 52 2 506 50 6 511 517 Memo

Population aged 15 64 (in thous ands ) 1 0991 110 29 11 214 1115 8 11 167 11037 107 83 1 0538 104 31 1 0509 1057 5 Unemployment benefit spending as % of GDP

1 .8 1.7 1 .5 1.5 1.5 1.5 1.5 1.5 1.5 1 .5 1.5

Austria Main demographic and macroeconomic assumptions (BA SELINE SCENA RIO)

Budgetary Projection: A WG variant population scenario

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 De mogra phic a ssumptions

Fe rtility rate 1.4 1.4 1.4 1.4 1.4 1.5 1.5 1.5 1.5 1.5 1.5 Life e xpe ctancy at bir th

m ale s 76.2 76.4 77.4 78.4 79.3 80.1 80.8 81.4 81.9 82.3 82.8

fe m ale s 82.1 82.3 83.2 84.0 84.7 85.4 85.9 86.3 86.7 86.9 87.2 Life e xpe ctancy at 65

m ale s 16.2 16.3 16.9 17.5 18.1 18.6 19.1 19.5 19.8 20.1 20.4

fe m ale s 19.7 19.8 20.5 21.2 21.7 22.2 22.6 22.9 23.2 23.4 23.6

Ne t m igr ation (thous and) 25.0 24.7 23.6 22.8 20.6 19.6 19.1 19.4 19.7 20.0 20.3

Ne t m igr ation as % of population 0.31 0.30 0.29 0.27 0.24 0.23 0.22 0.23 0.23 0.24 0.25 Population (m illion) 8.1 8.1 8.3 8.4 8.4 8.5 8.5 8.5 8.4 8.3 8.2

Population age d 0-14 as % of total 16.3 16.1 14.9 14.2 14.0 13.8 13.5 13.1 12.6 12.4 12.4

Prim e age population (25-54) as % of total 44.0 43.9 43.8 42.7 40.8 38.4 37.1 36.6 35.9 35.4 34.8 Work ing age population (15-64) as % of total 68.2 67.9 67.4 66.9 66.0 64.1 61.5 59.2 58.2 58.1 57.5 Elde rly population age d 65+ as % of total 15.5 16.0 17.7 18.8 20.0 22.1 25.0 27.7 29.1 29.6 30.1

V e ry e lde rly population age d 80 and ove r as % of total 4.1 4.2 4.8 5.0 5.4 6.6 7.2 7.9 9.1 10.9 12.4

Elde rly population age d 55+ as % of w or k ing age pop.15-64 5.2 5.3 5.4 5.7 6.2 6.8 7.3 7.6 7.8 7.8 7.9 Ma croe conomic a ssumptions

Re al GDP (grow th r ate ) 1.8 1.9 2.6 2.0 1.7 1.1 1.0 1.1 1.4 1.3 1.2

Labour input (grow th r ate ) 0.3 0.5 0.9 0.2 -0.1 -0.7 -0.7 -0.6 -0.4 -0.4 -0.6

Labour pr oductivity (gr ow th rate ) 1.5 1.4 1.7 1.8 1.8 1.8 1.7 1.7 1.7 1.7 1.7 TFP (gr ow th rate ) 0.8 0.7 1.2 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1

Capital de e pe ning (c ontribution to labour productivity grow th) 0.8 0.7 0.5 0.7 0.7 0.7 0.6 0.6 0.6 0.6 0.6 GDP pe r capita (grow th r ate ) 1.2 1.6 2.3 1.8 1.5 1.0 1.1 1.3 1.5 1.6 1.5

GDP in 2004 price s (in billions of e uro) 232 236 265 297 326 348 367 387 413 441 468 GDP pe r w ork e r 23.5 23.9 26.5 29.3 31.8 33.7 35.6 37.6 40.5 43.8 47.2 Re al inte re s t r ate 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 La bour force a ssum ptions

Population grow th (w ork ing age :15-64) -0.1 0.2 -0.1 -0.2 -0.6 -0.9 -0.8 -0.4 -0.3 -0.5

Labour force (thous ands ) 4016 4049 4233 4331 4349 4234 4100 3967 3889 3815 3715 Participation rate (15-64) 72.6 73.3 76.1 77.4 78.1 77.7 78.3 79.1 79.5 79.1 79.1

young (15-24) 56.2 56.6 56.5 57.7 57.3 56.9 56.7 56.7 56.9 57.2 57.2

prim e -age (25-54) 88.1 88.6 90.5 91.5 92.0 92.3 92.5 92.6 92.6 92.6 92.5 olde r (55-64) 32.3 33.5 41.6 47.9 54.4 55.3 56.8 57.3 59.5 58.8 59.2 olde s t (65-71) 4.4 4.4 3.7 4.8 5.0 5.6 5.7 6.2 5.9 6.2 6.3 Em ploym e nt rate (15-64) 69.6 70.4 73.5 74.8 75.4 75.1 75.7 76.3 76.7 76.4 76.4 Em ploym e nt rate (15-71) 64.6 65.0 66.4 68.1 68.3 67.0 66.0 65.8 66.9 67.7 67.3 Em ploym e nt grow th (15-64) 1.1 0.9 0.2 -0.1 -0.7 -0.7 -0.6 -0.4 -0.4 -0.6

Une m ploym e nt rate (15-64) 4.2 3.9 3.4 3.4 3.4 3.4 3.4 3.4 3.4 3.4 3.4 De pe nde ncy ra tios:

Share of olde r w or k e rs 7.8 7.9 9.2 11.6 15.3 17.3 17.1 15.4 15.9 16.4 17.1

Old-age de pe nde ncy ratio (1) 22.8 23.6 26.3 28.1 30.3 34.4 40.6 46.8 50.0 50.9 52.4 Total de pe nde ncy ratio (2) 46.7 47.3 48.4 49.4 51.5 55.9 62.6 68.9 71.7 72.2 73.9

Total e conom ic de pe nde ncy ratio 110.8 109.2 101.9 99.8 100.9 107.7 114.9 121.2 123.8 125.4 127.7 Econom ic old-age de pe nde ncy ratio (15-64) 32.2 33.0 35.2 36.9 39.4 44.8 52.5 59.9 64.0 65.5 67.4 Econom ic old-age de pe nde ncy ratio (15-71) 32.1 32.8 35.0 36.6 39.1 44.4 51.8 59.0 63.2 64.8 66.6 LEGENDA :

S h a r e o f o ld e r wo r k e r s = P o p u la t io n a g e d 5 5 t o 6 4 a s % o f p o p u la t io n a g e d 15 - 6 4

O ld - a g e d e p e n d e n c y ra t io ( 1) = P o p u la t io n a g e d 6 5 a n d o v e r a s a p e rc e n t a g e o f t h e p o p u la t io n a g e d 15 - 6 4

T o t a l d e p e n d e n c y r a t io ( 2 ) = P o p u la t io n u n d e r 15 a n d o v e r 6 4 a s a p e rc e n t a g e o f t h e p o p u la t io n a g e d 15 - 6 4

T o t a l e c o n o m ic d e p e n d e n c y r a t io = T o t a l p o p u la t io n le s s e m p lo ye d a s % o f e m p lo ye d p o p u la t io n ( 15 - 6 4 )

E c o n o m ic o ld - a g e d e p e n d e n c y ra t io ( 15 - 6 4 ) = In a c t iv e p o p u la t io n a g e d 6 5 + a s % o f e m p lo ye d p o p u la t io n ( 15 - 6 4 )

E c o n o m ic o ld - a g e d e p e n d e n c y ra t io ( 15 - 7 1) = In a c t iv e p o p u la t io n a g e d 6 5 + a s % o f e m p lo ye d p o p u la t io n ( 15 - 7 1)

Austria EPC-AW G Pension expenditure projections

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Baseline scenario; as % of GDP

Social security pensions, gross 13.4 13.2 12.8 12.7 12.8 13.5 14.0 14.0 13.4 12.7 12.2

Old-age and early pens ions , gros s 11.2 11.0 10.9 11.0 11.3 12.1 12.6 12.7 12.3 11.7 11.3 Of which: earnings -related pens ions , gros s : : : : : : : : : : :

Private s ector em ployees , gros s 8.2 8.0 8.2 8.4 8.8 9.6 10.3 10.7 10.6 10.4 10.3 Public s ector em ployees , gros s 3.0 3.0 2.7 2.6 2.5 2.4 2.3 2.0 1.7 1.3 0.9

Other pens ions (dis ability, s urvivors ), gros s 2.2 2.2 1.9 1.7 1.6 1.5 1.3 1.3 1.2 1.1 0.9 Occupational pensions, gross : : : : : : : : : : :

Private mandatory pensions, gross : : : : : : : : : : :

Total pension expenditure, gross 13.4 13.2 12.8 12.7 12.8 13.5 14.0 14.0 13.4 12.7 12.2 Social security pensions, net 11.4 11.1 10.7 10.6 10.7 11.3 11.6 11.7 11.3 10.7 10.3

Total pension expenditure, net 11.4 11.1 10.7 10.6 10.7 11.3 11.6 11.7 11.3 10.7 10.3 Social security pensions, contributions 9.0 9.0 9.1 9.0 8.9 8.7 8.6 8.6 8.5 8.6 8.6 Total pension contributions 9.0 9.0 9.1 9.0 8.9 8.7 8.6 8.6 8.5 8.6 8.6 Social security pensions, assets : : : : : : : : : : : All pensions, assets : : : : : : : : : : : Additional indicators

Social security pensions, net / Social sec. pensions, gross,% 86 84 84 83 83 83 83 84 84 84 84 Total pension expenditure, net / Total pension exp., gross, % 86 84 84 83 83 83 83 84 84 84 84

Social security pensions, number of pensioners , 1000 pers. 2337 2392 2449 2525 2611 2777 2912 3021 3023 2971 2892 All pensions, pensioners , 1000 pers. 2337 2391 2449 2524 2613 2778 2912 3018 3019 2966 2888

Number of pensioners aged 65+ , 1000 pers. 1594 1646 1750 1857 1944 2099 2301 2464 2478 2397 2313

Share of pensioners below age 65 as % of all pensioners 31.8 31.1 28.5 26.4 25.6 24.4 21.0 18.4 17.9 19.2 19.9 Average gross social sec. pension, 1000 in 2004 prices 13.3 13.0 13.9 14.9 16.0 16.9 17.6 18.0 18.4 18.9 19.8 Average gross total pensions, 1000 in 2004 prices 13.3 13.0 13.9 14.9 16.0 16.9 17.6 18.0 18.4 19.0 19.8 Output / W orker, 1000 in 2004 prices 60.9 61.8 64.9 71.0 77.6 85.0 92.7 101.0 110.0 119.7 130.4 Social sec. benefit ratio 21.8 21.1 21.4 21.0 20.6 19.9 19.0 17.8 16.7 15.8 15.2

Total pension benefit ratio 21.8 21.1 21.4 21.0 20.6 19.9 19.0 17.8 16.7 15.8 15.2

Social security pensions, num of contributors, in 1000 3526 3638 3799 3864 3870 3764 3653 3557 3500 3445 3370 Average social sec. pension contribution, 1000 in 2004 prices 5.9 5.8 6.3 6.9 7.5 8.1 8.7 9.3 10.1 11.0 11.9 Average total pension contribution, 1000 in 2004 prices 5.9 5.8 6.3 6.9 7.5 8.1 8.7 9.3 10.1 11.0 11.9

Support ratio (contributors /100 pensioners, social sec. pens.) 151 152 155 153 148 136 125 118 116 116 117 High life expectancy; as % of GDP

Social security pensions, gross 13.4 13.2 12.9 12.7 12.9 13.7 14.2 14.3 13.8 13.1 12.6

Old-age and early pensions, gross 11.2 11.0 10.9 11.0 11.3 12.2 12.8 13.0 12.5 12.0 11.6 Total pension expenditure, gross 13.4 13.2 12.9 12.7 12.9 13.7 14.2 14.3 13.8 13.1 12.6 All pensions, assets : : : : : : : : : : : Higher labour productivity; as % of GDP

Social security pensions, gross 13.4 13.2 12.8 12.6 12.6 13.2 13.5 13.5 12.8 12.1 11.4

Old-age and early pensions, gross 11.2 11.0 10.9 10.9 11.1 11.8 12.2 12.3 11.7 11.1 10.6 Total pension expenditure, gross 13.4 13.2 12.8 12.6 12.6 13.2 13.5 13.5 12.8 12.1 11.4 All pensions, assets : : : : : : : : : : : Lower labour productivity; as % of GDP

Social security pensions, gross 13.4 13.2 12.8 12.8 13.1 13.9 14.5 14.7 14.2 13.6 13.2

Old-age and early pensions, gross 11.2 11.0 10.9 11.1 11.5 12.4 13.1 13.3 13.0 12.5 12.2 Total pension expenditure, gross 13.4 13.2 12.8 12.8 13.1 13.9 14.5 14.7 14.2 13.6 13.2 All pensions, assets : : : : : : : : : : : Higher employment rate (1 p.p.); as % of GDP

Social security pensions, gross 13.4 13.2 12.8 12.6 12.7 13.4 13.8 13.8 13.2 12.5 12.0

Old-age and early pensions, gross 11.2 11.0 10.9 10.9 11.1 11.9 12.4 12.6 12.1 11.5 11.1 Total pension expenditure, gross 13.4 13.2 12.8 12.6 12.7 13.4 13.8 13.8 13.2 12.5 12.0 All pensions, assets : : : : : : : : : : : Higher older workers empl. rate (5 p.p.); as % of GDP

Social security pensions, gross 13.4 13.2 12.8 12.6 12.6 13.2 13.6 13.7 13.1 12.3 11.8

Old-age and early pensions, gross 11.2 11.0 10.9 10.9 11.1 11.7 12.3 12.4 11.9 11.3 10.8 Total pension expenditure, gross 13.4 13.2 12.8 12.6 12.6 13.2 13.6 13.7 13.1 12.3 11.8 All pensions, assets : : : : : : : : : : : Lower interest rate; as % of GDP

Social security pensions, gross 13.4 13.2 12.8 12.7 12.8 13.5 14.0 14.0 13.4 12.7 12.2

Old-age and early pensions, gross 11.2 11.0 10.9 11.0 11.3 12.1 12.6 12.7 12.3 11.7 11.3 Total pension expenditure, gross 13.4 13.2 12.8 12.7 12.8 13.5 14.0 14.0 13.4 12.7 12.2 All pensions, assets : : : : : : : : : : : Higher interest rate; as % of GDP

Social security pensions, gross 13.4 13.2 12.8 12.7 12.8 13.5 14.0 14.0 13.4 12.7 12.2

Austria OTHER AGE-RELATED EXPENDITURES as % of GDP

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Health care spending as % of GDP

Pure ageing s cenario 5.3 5 .3 5.5 5.7 5.9 6.1 6.3 6.5 6.7 6.9 6 .9

Cons tant health s cenario 5.3 5 .3 5.3 5.5 5.6 5.7 5.8 6.0 6.1 6.2 6 .3

Death-related cos ts s cenario 5.3 5 .3 5.4 5.6 5.8 6.0 6.1 6.3 6.4 6.5 6 .6 Incom e elas ticity of dem and 5.3 5 .3 5.5 5.8 6.1 6.3 6.5 6.8 7.0 7.1 7 .2 Unit cos ts - GDP per worker 5.3 5 .3 5.3 5.5 5.7 6.1 6.6 7.0 7.3 7.5 7 .6 AWG reference s cenario 5.3 5 .3 5.5 5.7 5.9 6.1 6.3 6.5 6.7 6.8 6 .8 Long-term care spending as % of GDP

Pure ageing s cenario 0.6 0 .6 0.7 0.7 0.8 0.9 1.0 1.1 1.2 1.4 1 .5

Unit cos ts - GDP per capita 0.6 0 .6 0.7 0.7 0.8 0.9 0.9 1.0 1.1 1.3 1 .4

Cons tant dis ability s cenario 0.6 0 .6 0.7 0.7 0.8 0.9 1.0 1.1 1.2 1.4 1 .5 Increas e in form al care 0.6 0 .6 0.7 0.7 0.8 0.9 1.0 1.1 1.2 1.4 1 .5 AWG reference s cenario 0.6 0 .6 0.7 0.7 0.8 0.9 1.0 1.1 1.2 1.4 1 .5 Numbe r of de pe nde nt pe ople (in thous ands )

Pure ageing s cenario 197 203 223 238 259 289 32 2 357 3 88 410 419

Unit cos ts - GDP per capita 197 203 223 238 259 143 32 2 357 3 88 410 419

Cons tant dis ability s cenario 197 200 204 167 205 216 22 7 238 2 51 261 263 Increas e in form al care 197 203 223 238 259 289 32 2 357 3 88 410 419 AWG reference s cenario 197 201 214 221 232 252 27 5 298 3 19 335 341 of which re ce iving formal care

Pure ageing s cenario : : : : : : : : : : :

Unit cos ts - GDP per capita : : : : : : : : : : :

Cons tant dis ability s cenario : : : : : : : : : : : Increas e in form al care : : : : : : : : : : : AWG reference s cenario : : : : : : : : : : : of which re ce iving informal or no care

Pure ageing s cenario : : : : : : : : : : :

Unit cos ts - GDP per capita : : : : : : : : : : :

Cons tant dis ability s cenario : : : : : : : : : : : Increas e in form al care : : : : : : : : : : : AWG reference s cenario : : : : : : : : : : : Education spending as % of GDP

Total 5.1 5 .0 4.6 4.3 4.1 4.1 4.2 4.2 4.2 4.1 4 .1

of which: Transfers 0.3 0 .3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0 .3 Prim ary 1.1 1 .1 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0 .9

of which: Transfers 0.0 0 .0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0 .0 Low s econdary 1.4 1 .4 1.2 1.1 1.1 1.1 1.1 1.2 1.1 1.1 1 .1

of which: Transfers 0.0 0 .0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0 .0 Upper s econdary 1.3 1 .3 1.2 1.1 1.0 1.0 1.1 1.1 1.1 1.1 1 .0

of which: Transfers 0.0 0 .0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0 .0 Tertiary education 1.4 1 .3 1.2 1.2 1.1 1.1 1.1 1.1 1.1 1.1 1 .1

of which: Transfers 0.3 0 .3 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0 .2 Number of s tudents (in thous ands )

Total 1 428 1414 1341 1270 1226 120 5 1192 11 70 1131 1 089 1057 Prim ary 371 362 330 323 320 322 31 8 304 2 89 279 275

Low s econdary 395 395 360 335 327 325 32 6 320 3 06 292 283

Upper s econdary 426 429 431 394 371 362 35 9 359 3 52 337 323

Tertiary education 236 228 220 218 207 196 18 9 186 1 84 181 176 Memo

Population aged 15 64 (in thous ands ) 5 531 5525 5562 5594 5569 544 7 5233 50 18 4895 4 822 4698 Unemployment benefit spending as % of GDP

0.8 0 .7 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0 .6

Poland Main demographic and macroeconomic assumptions (BA SELINE SCENA RIO)

Budgetary Projection: A WG variant population scenario

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 De mogra phic a ssumptions

Fe rtility rate 1.2 1.2 1.2 1.3 1.4 1.5 1.6 1.6 1.6 1.6 1.6 Life e xpe ctancy at bir th

m ale s 70.5 70.7 72.0 73.3 74.6 75.8 76.8 77.6 78.2 78.7 79.1

fe m ale s 78.5 78.7 79.6 80.5 81.3 82.1 82.8 83.3 83.7 84.1 84.4 Life e xpe ctancy at 65

m ale s 13.7 13.8 14.5 15.2 15.9 16.6 17.3 17.8 18.1 18.5 18.8

fe m ale s 17.4 17.5 18.1 18.6 19.2 19.8 20.3 20.7 21.0 21.2 21.5

Ne t m igr ation (thous and) -27.9 -27.8 -35.4 -51.5 -10.6 29.7 35.9 36.0 35.4 34.5 33.7

Ne t m igr ation as % of population -0.07 -0.07 -0.09 -0.14 -0.03 0.08 0.10 0.10 0.10 0.10 0.10 Population (m illion) 38.2 38.1 37.8 37.4 37.1 36.8 36.5 36.1 35.4 34.5 33.7

Population age d 0-14 as % of total 17.2 16.7 14.7 14.3 14.5 14.6 14.2 13.4 12.9 12.8 13.0

Prim e age population (25-54) as % of total 43.7 43.8 44.3 43.7 43.4 42.9 41.3 38.8 36.0 34.3 33.4 Work ing age population (15-64) as % of total 69.8 70.2 71.8 70.5 67.3 64.3 63.3 63.1 62.4 60.4 57.6 Elde rly population age d 65+ as % of total 13.0 13.1 13.5 15.3 18.2 21.1 22.6 23.4 24.8 26.8 29.4

V e ry e lde rly population age d 80 and ove r as % of total 2.4 2.5 3.2 3.9 4.2 4.3 5.4 7.3 8.8 9.0 8.8

Elde rly population age d 55+ as % of w or k ing age pop.15-64 21.7 21.6 21.7 23.5 25.5 27.2 28.2 29.1 30.4 31.9 33.4 Ma croe conomic a ssumptions

Re al GDP (grow th r ate ) 3.3 3.6 5.0 3.7 3.2 2.9 2.2 1.2 0.7 0.5 0.4

Labour input (grow th r ate ) -0.9 -0.6 1.4 0.4 0.1 0.0 -0.5 -0.8 -1.2 -1.3 -1.3

Labour pr oductivity (gr ow th rate ) 4.1 4.2 3.6 3.3 3.1 2.9 2.7 2.0 1.9 1.8 1.7 TFP (gr ow th rate ) 2.5 2.4 2.4 1.9 1.9 1.8 1.8 1.3 1.2 1.2 1.1

Capital de e pe ning (c ontribution to labour productivity grow th) 1.7 1.8 1.2 1.4 1.3 1.1 0.9 0.7 0.7 0.6 0.6 GDP pe r capita (grow th r ate ) 3.4 3.8 5.2 3.9 3.4 3.1 2.4 1.5 1.2 1.0 0.9

GDP in 2004 price s (in billions of e uro) 195 202 259 318 375 436 490 530 554 570 582 GDP pe r w ork e r 9.0 9.4 12.1 15.0 17.9 20.9 23.7 25.9 27.7 29.1 30.5 Re al inte re s t r ate 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 La bour force a ssum ptions

Population grow th (w ork ing age :15-64) 0.4 0.1 -0.9 -1.1 -0.8 -0.4 -0.4 -0.8 -1.2 -1.6

Labour force (thous ands ) 17153 17343 18381 18445 17961 17438 17066 16508 15696 14720 13778 Participation rate (15-64) 64.3 64.8 67.7 69.9 72.0 73.6 73.8 72.5 71.1 70.5 71.0

young (15-24) 37.5 38.6 40.4 41.1 39.9 38.2 37.3 37.8 38.7 39.4 39.2

prim e -age (25-54) 82.1 82.6 85.6 88.0 89.3 89.7 89.8 89.4 89.2 89.3 89.6 olde r (55-64) 29.9 29.9 37.1 40.2 41.0 43.6 49.1 51.4 51.3 49.7 49.3 olde s t (65-71) 7.8 7.5 6.2 8.0 7.7 7.8 7.7 8.4 9.4 9.2 9.2 Em ploym e nt rate (15-64) 52.1 52.7 57.0 61.0 64.9 68.4 68.6 67.4 66.2 65.6 66.1 Em ploym e nt rate (15-71) 48.8 49.3 53.6 56.5 58.2 60.7 61.6 61.2 59.5 57.6 56.8 Em ploym e nt grow th (15-64) 1.5 1.4 0.4 0.1 0.0 -0.5 -0.8 -1.2 -1.3 -1.3

Une m ploym e nt rate (15-64) 19.0 18.7 15.8 12.9 9.9 7.0 7.0 7.0 7.0 7.0 7.0 De pe nde ncy ra tios:

Share of olde r w or k e rs 6.3 6.5 9.9 12.0 11.5 10.9 12.8 15.8 18.5 18.9 17.8

Old-age de pe nde ncy ratio (1) 18.6 18.7 18.8 21.7 27.1 32.8 35.7 37.1 39.7 44.3 51.0 Total de pe nde ncy ratio (2) 43.3 42.5 39.3 41.9 48.6 55.4 58.0 58.4 60.3 65.4 73.5

Total e conom ic de pe nde ncy ratio 174.9 170.5 144.4 132.8 129.1 127.1 130.2 134.8 142.3 152.4 162.7 Econom ic old-age de pe nde ncy ratio (15-64) 34.4 34.4 32.1 34.3 40.2 46.2 50.5 53.6 58.1 65.3 74.5 Econom ic old-age de pe nde ncy ratio (15-71) 34.0 34.0 31.9 33.9 39.6 45.5 49.8 52.8 57.1 63.8 72.5 LEGENDA :

S h a r e o f o ld e r wo r k e r s = P o p u la t io n a g e d 5 5 t o 6 4 a s % o f p o p u la t io n a g e d 15 - 6 4

O ld - a g e d e p e n d e n c y ra t io ( 1) = P o p u la t io n a g e d 6 5 a n d o v e r a s a p e rc e n t a g e o f t h e p o p u la t io n a g e d 15 - 6 4

T o t a l d e p e n d e n c y r a t io ( 2 ) = P o p u la t io n u n d e r 15 a n d o v e r 6 4 a s a p e rc e n t a g e o f t h e p o p u la t io n a g e d 15 - 6 4

T o t a l e c o n o m ic d e p e n d e n c y r a t io = T o t a l p o p u la t io n le s s e m p lo ye d a s % o f e m p lo ye d p o p u la t io n ( 15 - 6 4 )

E c o n o m ic o ld - a g e d e p e n d e n c y ra t io ( 15 - 6 4 ) = In a c t iv e p o p u la t io n a g e d 6 5 + a s % o f e m p lo ye d p o p u la t io n ( 15 - 6 4 )

E c o n o m ic o ld - a g e d e p e n d e n c y ra t io ( 15 - 7 1) = In a c t iv e p o p u la t io n a g e d 6 5 + a s % o f e m p lo ye d p o p u la t io n ( 15 - 7 1)

Poland EPC-AW G Pension expenditure projections

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Baseline scenario; as % of GDP

Social security pensions, gross 13.9 13.7 11.3 9.8 9.7 9.5 9.2 8.9 8.6 8.3 8.0

Old-age and early pens ions , gros s 10.7 11.1 9.4 8.2 8.4 8.3 7.9 7.4 7.1 6.8 6.6 Of which: earnings -related pens ions , gros s : : : : : : : : : : : Private s ector em ployees , gros s : : : : : : : : : : : Public s ector em ployees , gros s : : : : : : : : : : :

Other pens ions (dis ability, s urvivors ), gros s 3.2 2.6 2.0 1.6 1.3 1.3 1.3 1.4 1.5 1.5 1.4 Occupational pensions, gross : : : : : : : : : : :

Private mandatory pensions, gross 0.0 0.0 0.0 0.0 0.1 0.2 0.3 0.4 0.7 1.0 1.3

Total pension expenditure, gross 13.9 13.7 11.3 9.8 9.8 9.7 9.4 9.3 9.3 9.3 9.3 Social security pensions, net 11.8 11.7 9.6 8.3 8.3 8.1 7.8 7.5 7.3 7.1 6.8

Total pension expenditure, net 11.8 11.7 9.6 8.3 8.3 8.2 8.0 7.9 7.9 7.9 7.9

Social security pensions, contributions 7.7 7.8 8.0 8.1 8.1 8.0 7.9 7.9 7.9 7.9 7.9 Total pension contributions 9.0 9.3 9.7 9.9 10.1 10.1 10.1 10.1 10.1 10.1 10.1 Social security pensions, assets 0.1 0.2 0.4 0.4 0.3 0.3 0.4 0.4 0.4 0.5 0.5 All pensions, assets 7.1 8.4 15.9 24.0 33.5 42.5 51.1 60.3 69.9 78.4 85.0 Additional indicators

Social security pensions, net / Social sec. pensions, gross,% 85 85 85 85 85 85 85 85 85 85 85 Total pension expenditure, net / Total pension exp., gross, % 85 85 85 85 85 85 85 85 85 85 85

Social security pensions, number of pensioners , 1000 pers. 7652 7632 7254 7445 7975 8392 8635 8865 9139 9416 9574 All pensions, pensioners , 1000 pers. 9943 9761 9123 8966 9280 9564 9771 10033 10353 10638 10769

Number of pensioners aged 65+ , 1000 pers. 6409 6348 6877 7383 8026 8380 8548 8786 9157 9613 9915

Share of pensioners below age 65 as % of all pensioners 35.5 35.0 24.6 17.7 13.5 12.4 12.5 12.4 11.6 9.6 7.9 Average gross social sec. pension, 1000 in 2004 prices 3.5 3.6 4.0 4.2 4.6 4.9 5.2 5.3 5.2 5.0 4.9 Average gross total pensions, 1000 in 2004 prices 2.7 2.8 3.2 3.5 4.0 4.4 4.7 4.9 5.0 5.0 5.0 Output / W orker, 1000 in 2004 prices 14.2 14.8 16.7 19.8 23.2 26.9 30.8 34.5 38.0 41.6 45.4 Social sec. benefit ratio 25.0 24.6 24.1 21.1 19.7 18.4 16.9 15.4 13.8 12.1 10.7

Total pension benefit ratio 19.2 19.2 19.2 17.5 17.1 16.4 15.3 14.2 13.1 12.0 11.1 Social security pensions, num of contributors, in 1000 14433 14605 16156 16988 17287 17227 16815 16237 15443 14486 13565

Average social sec. pension contribution, 1000 in 2004 prices 1.0 1.1 1.3 1.5 1.8 2.0 2.3 2.6 2.9 3.1 3.4 Average total pension contribution, 1000 in 2004 prices 1.2 1.3 1.5 1.9 2.2 2.5 2.9 3.3 3.6 4.0 4.3

Support ratio (contributors /100 pensioners, social sec. pens.) 189 191 223 228 217 205 195 183 169 154 142 High life expectancy; as % of GDP

Social security pensions, gross 13.9 13.7 11.3 9.8 9.7 9.5 9.2 9.0 8.8 8.5 8.2

Old-age and early pensions, gross 10.7 11.1 9.4 8.2 8.4 8.3 7.9 7.6 7.3 7.0 6.8 Total pension expenditure, gross 13.9 13.7 11.3 9.8 9.8 9.7 9.5 9.4 9.4 9.5 9.5 All pensions, assets 7.1 8.4 15.9 24.1 33.5 42.7 51.3 60.7 70.5 79.4 86.5 Higher labour productivity; as % of GDP

Social security pensions, gross 13.9 13.7 11.3 9.7 9.5 9.2 8.9 8.5 8.2 7.9 7.6

Old-age and early pensions, gross 10.7 11.1 9.4 8.1 8.2 8.0 7.6 7.1 6.8 6.5 6.2 Total pension expenditure, gross 13.9 13.7 11.3 9.7 9.6 9.4 9.1 8.9 8.9 8.8 8.8 All pensions, assets 7.1 8.4 15.8 23.8 32.7 41.3 49.2 57.7 66.5 74.2 80.4 Lower labour productivity; as % of GDP

Social security pensions, gross 13.9 13.7 11.3 9.8 9.8 9.7 9.4 9.1 8.9 8.6 8.3

Old-age and early pensions, gross 10.7 11.1 9.4 8.2 8.5 8.4 8.0 7.7 7.3 7.1 6.8 Total pension expenditure, gross 13.9 13.7 11.3 9.8 9.9 9.8 9.6 9.5 9.6 9.6 9.7 All pensions, assets 7.1 8.4 15.8 24.1 33.7 43.0 51.9 61.5 71.5 80.5 87.6 Higher employment rate (1 p.p.); as % of GDP

Social security pensions, gross 13.9 13.7 11.3 9.7 9.6 9.4 9.1 8.8 8.5 8.2 7.9

Old-age and early pensions, gross 10.7 11.1 9.3 8.1 8.3 8.2 7.8 7.4 7.0 6.7 6.5 Total pension expenditure, gross 13.9 13.7 11.3 9.7 9.7 9.6 9.3 9.2 9.2 9.2 9.2 All pensions, assets 7.1 8.5 15.9 24.1 33.5 42.5 51.0 60.1 69.6 77.9 84.5 Higher older workers empl. rate (5 p.p.); as % of GDP

Social security pensions, gross 13.9 13.7 11.3 9.7 9.7 9.5 9.2 8.9 8.6 8.3 8.0

Old-age and early pensions, gross 10.7 11.1 9.3 8.2 8.4 8.3 7.9 7.5 7.1 6.8 6.6 Total pension expenditure, gross 13.9 13.7 11.3 9.8 9.8 9.7 9.4 9.3 9.3 9.3 9.3 All pensions, assets 7.1 8.5 16.1 24.4 33.9 43.1 51.8 61.0 70.4 78.7 85.1 Lower interest rate; as % of GDP

Social security pensions, gross 13.9 13.7 11.3 9.8 9.7 9.5 9.2 8.9 8.7 8.4 8.0

Old-age and early pensions, gross 10.7 11.1 9.4 8.2 8.4 8.3 7.9 7.5 7.1 6.9 6.6 Total pension expenditure, gross 13.9 13.7 11.3 9.8 9.8 9.7 9.5 9.3 9.3 9.4 9.3 All pensions, assets 6.9 8.3 15.1 22.5 30.7 38.4 45.4 52.8 60.4 67.1 72.3 Higher interest rate; as % of GDP

Social security pensions, gross 13.9 13.7 11.3 9.8 9.7 9.5 9.2 8.9 8.7 8.4 8.0

Old-age and early pensions, gross 10.7 11.1 9.4 8.2 8.4 8.3 7.9 7.5 7.1 6.9 6.6 Total pension expenditure, gross 13.9 13.7 11.3 9.8 9.8 9.7 9.5 9.4 9.4 9.6 9.6 All pensions, assets 7.2 8.6 16.6 25.8 36.6 47.3 57.8 69.3 81.4 92.3 101.0 : = data not provided

Poland OTHER AGE-RELATED EXPENDITURES as % of GDP

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Health care spending as % of GDP

Pure ageing s cenario 4.1 4.1 4.3 4.5 4 .7 4.8 5.0 5.1 5.2 5.3 5.4

Cons tant health s cenario 4.1 4.1 4.2 4.3 4 .4 4.5 4.5 4.6 4.7 4.7 4.8

Death-related cos ts s cenario 4.1 4.1 4.3 4.4 4 .5 4.6 4.8 4.8 4.9 5.0 5.0 Incom e elas ticity of dem and 4.1 4.2 4.4 4.7 4 .9 5.2 5.4 5.5 5.6 5.7 5.8 Unit cos ts - GDP per worker 4.1 4.2 4.0 4.0 4 .1 4.2 4.4 4.6 4.8 5.1 5.4 AWG reference s cenario 4.1 4.1 4.4 4.6 4 .8 5.0 5.1 5.2 5.3 5.4 5.5 Long-term care spending as % of GDP

Pure ageing s cenario 0.1 0.1 0.1 0.1 0 .1 0.1 0.1 0.2 0.2 0.2 0.2

Unit cos ts - GDP per capita 0.1 0.1 0.1 0.1 0 .1 0.1 0.2 0.2 0.2 0.2 0.2

Cons tant dis ability s cenario 0.1 0.1 0.1 0.1 0 .1 0.1 0.1 0.1 0.2 0.2 0.2 Increas e in form al care 0.1 0.1 0.2 0.2 0 .2 0.2 0.3 0.3 0.4 0.4 0.4 AWG reference s cenario 0.1 0.1 0.1 0.1 0 .1 0.1 0.1 0.2 0.2 0.2 0.2 Numbe r of de pe nde nt pe ople (in thous ands )

Pure ageing s cenario 885 90 6 9 90 1098 123 7 140 1 15 98 17 80 1 903 1 949 2004

Unit cos ts - GDP per capita 885 90 6 9 90 1098 123 7 650 15 98 17 80 1 903 1 949 2004

Cons tant dis ability s cenario 885 89 2 9 06 7 73 978 102 6 11 18 12 19 1 276 1 255 1226 Increas e in form al care 885 90 6 9 90 1098 123 7 140 1 15 98 17 80 1 903 1 949 2004 AWG reference s cenario 885 89 9 9 48 1016 110 8 121 4 13 58 15 00 1 590 1 602 1615 of which re ce iving formal care

Pure ageing s cenario 148 15 2 1 66 1 88 215 242 275 308 335 345 35 6

Unit cos ts - GDP per capita 148 15 2 1 66 1 88 215 242 275 308 335 345 35 6

Cons tant dis ability s cenario 148 15 0 1 53 1 61 171 179 195 214 227 225 22 1

Increas e in form al care 148 19 0 3 84 5 80 787 891 10 16 11 33 1 213 1 243 1278 AWG reference s cenario 148 15 1 1 60 1 74 193 210 235 261 281 285 28 8 of which re ce iving informal or no care

Pure ageing s cenario 737 75 4 8 23 9 10 102 2 116 0 13 23 14 72 1 568 1 603 1648

Unit cos ts - GDP per capita 737 75 4 8 23 9 10 102 2 534 13 23 14 72 1 568 1 603 1648 Cons tant dis ability s cenario 737 74 2 7 53 6 39 807 847 923 10 04 1 049 1 030 1006 Increas e in form al care 737 71 6 6 05 5 17 450 510 582 648 690 706 72 5

AWG reference s cenario 737 74 8 7 88 8 42 915 100 3 11 23 12 38 1 309 1 316 1327 Education spending as % of GDP

Total 5.0 4.9 3.9 3.3 3 .0 2.9 3.0 3.0 3.0 3.0 3.1

of which: Transfers 0.1 0.1 0.1 0.1 0 .1 0.1 0.1 0.1 0.1 0.1 0.1 Prim ary 1.8 1.7 1.3 1.2 1 .2 1.2 1.2 1.2 1.1 1.2 1.2

of which: Transfers 0.0 0.0 0.0 0.0 0 .0 0.0 0.0 0.0 0.0 0.0 0.0 Low s econdary 0.9 0.9 0.7 0.6 0 .5 0.5 0.6 0.6 0.6 0.6 0.6

of which: Transfers 0.0 0.0 0.0 0.0 0 .0 0.0 0.0 0.0 0.0 0.0 0.0 Upper s econdary 1.2 1.1 0.9 0.7 0 .6 0.6 0.6 0.6 0.7 0.6 0.6

of which: Transfers 0.0 0.0 0.0 0.0 0 .0 0.0 0.0 0.0 0.0 0.0 0.0 Tertiary education 1.2 1.2 1.0 0.8 0 .7 0.6 0.6 0.6 0.7 0.7 0.7

of which: Transfers 0.0 0.0 0.0 0.0 0 .0 0.0 0.0 0.0 0.0 0.0 0.0 Number of s tudents (in thous ands )

Total 8775 8518 7248 6283 576 7 564 8 56 43 55 26 5 256 4 955 4749

Prim ary 2860 2733 2276 2094 213 0 219 0 21 59 20 21 1 857 1 763 1755

Low s econdary 1681 1644 1336 1123 104 3 107 0 11 05 10 85 1 011 927 88 4

Upper s econdary 2232 2139 1823 1481 127 3 122 9 12 76 12 98 1 256 1 162 1076

Tertiary education 2002 2002 1813 1584 132 1 115 8 11 05 11 21 1 132 1 102 1033 Memo

Population aged 15 64 (in thous ands ) 2665 9 267 59 271 59 26 372 2 4943 2 3703 23121 22762 2206 2 2088 3 193 99 Unemployment benefit spending as % of GDP

0.5 0.5 0.4 0.3 0 .3 0.2 0.2 0.2 0.2 0.2 0.2

Portugal Main demographic and macroeconomic assumptions (BA SELINE SCENA RIO)

Budgetary Projection: A WG variant population sc enario

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 De mogra phic a ssumptions

Fe rtility r ate 1.5 1.5 1.5 1.6 1.6 1.6 1.6 1.6 1.6 1.6 1.6 Life e xpe ctancy at bir th

m ale s 74.2 74.4 75.5 76.5 77.4 78.2 79.0 79.6 80.2 80.7 81.2

fe m ale s 81.0 81.2 82.2 83.1 83.9 84.6 85.2 85.6 86.0 86.4 86.7 Life e xpe ctancy at 65

m ale s 15.6 15.7 16.4 17.0 17.6 18.1 18.6 18.9 19.3 19.6 19.9

fe m ale s 19.0 19.1 19.8 20.4 21.0 21.5 21.9 22.3 22.6 22.9 23.1

Ne t m igration (thous and) 41.8 36.4 18.3 16.6 15.6 15.1 15.0 14.9 14.9 14.9 14.9

Ne t m igration as % of population 0.40 0.35 0.17 0.15 0.14 0.14 0.14 0.14 0.14 0.15 0.15 Population (m illion) 10.5 10.5 10.7 10.8 10.8 10.7 10.7 10.6 10.5 10.3 10.1

Population age d 0-14 as % of total 15.7 15.7 15.7 15.6 15.1 14.2 13.4 13.1 13.1 13.1 13.0

Pr im e age population (25-54) as % of total 43.5 43.6 43.8 42.5 40.7 38.9 37.0 35.1 34.0 33.7 33.6 Wor k ing age population (15-64) as % of total 67.4 67.3 66.6 65.5 64.5 63.7 62.2 60.5 58.3 56.0 54.9 Elde rly population age d 65+ as % of total 16.8 17.0 17.7 18.9 20.4 22.2 24.4 26.4 28.6 30.8 32.1

V e ry e lde r ly population age d 80 and ove r as % of total 3.7 3.8 4.4 5.0 5.6 6.0 6.8 7.7 8.6 9.8 10.7

Elde rly population age d 55+ as % of w ork ing age pop.15-64 6.8 6.8 7.3 7.7 8.2 8.5 9.0 9.6 10.1 10.5 10.5 Ma croe conom ic a ssumptions

Re al GDP (gr ow th rate ) 1.4 1.4 2.4 2.4 2.2 2.1 1.0 0.9 0.6 0.8 1.0

Labour input (grow th r ate ) 0.9 0.7 0.3 -0.1 -0.3 -0.4 -0.7 -0.8 -1.1 -0.9 -0.7 Labour productivity (gr ow th rate ) 0.5 0.6 2.1 2.5 2.5 2.5 1.7 1.7 1.7 1.7 1.7 TFP (grow th r ate ) 0.1 0.2 1.3 1.6 1.6 1.6 1.1 1.1 1.1 1.1 1.1

Capital de e pe ning (contribution to labour productivity grow th) 0.4 0.4 0.8 0.9 0.9 0.9 0.6 0.6 0.6 0.6 0.6 GDP pe r capita (gr ow th r ate ) 0.7 0.9 2.2 2.3 2.2 2.1 1.2 1.1 0.9 1.2 1.5

GDP in 2004 price s (in billions of e uro) 135 137 152 171 192 213 231 242 251 260 272 GDP pe r w ork e r 13.7 13.8 15.0 16.9 18.9 21.1 23.0 24.3 25.5 26.8 28.7 Re al inte re s t rate 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 La bour force a ssum ptions

Population gr ow th (w ork ing age :15-64) 0.3 -0.1 -0.2 -0.3 -0.4 -0.7 -0.8 -1.1 -1.0 -0.7

Labour for ce (thous ands ) 5188 5249 5425 5440 5382 5278 5125 4933 4696 4458 4282 Participation r ate (15-64) 73.4 74.1 76.2 77.2 77.4 77.2 77.1 77.0 77.0 77.4 77.7

young (15-24) 45.6 46.0 45.0 44.3 43.5 43.8 44.6 45.2 45.0 44.4 44.1

pr im e -age (25-54) 86.5 86.9 88.8 90.1 90.9 91.0 90.8 90.7 90.8 91.0 91.0 olde r (55-64) 54.7 55.5 58.3 60.7 62.8 64.5 66.4 66.7 66.0 65.7 66.2

olde s t (65-71) 23.6 23.6 24.9 26.4 26.5 26.8 27.4 27.3 27.9 27.4 27.1 Em ploym e nt rate (15-64) 68.9 69.7 71.9 72.9 73.1 72.9 72.8 72.7 72.8 73.1 73.4 Em ploym e nt rate (15-71) 64.6 65.3 67.6 68.2 67.9 67.5 67.0 66.5 66.1 65.8 66.2 Em ploym e nt gr ow th (15-64) 1.4 0.3 -0.1 -0.3 -0.4 -0.7 -0.8 -1.1 -0.9 -0.7

Une m ploym e nt r ate (15-64) 6.2 6.0 5.6 5.6 5.6 5.6 5.6 5.6 5.6 5.6 5.6 De pe nde ncy ra tios:

Shar e of olde r w ork e rs 12.1 12.3 13.7 15.1 16.9 18.4 20.1 21.8 21.8 19.9 18.5

Old-age de pe nde ncy ratio (1) 24.9 25.2 26.5 28.8 31.6 34.8 39.2 43.6 49.1 55.0 58.5 Total de pe nde ncy ratio (2) 48.3 48.5 50.0 52.7 54.9 57.1 60.7 65.2 71.5 78.4 82.3

Total e conom ic de pe nde ncy ratio 115.2 113.2 108.6 109.5 112.0 115.5 120.6 127.2 135.7 144.2 148.5 Econom ic old-age de pe nde ncy r atio (15-64) 32.6 32.7 33.4 35.5 38.7 42.9 48.2 54.1 60.9 68.1 73.0 Econom ic old-age de pe nde ncy r atio (15-71) 31.5 31.6 32.2 34.1 37.1 40.9 45.7 51.0 57.1 63.6 68.4 LEGENDA :

S h a r e o f o ld e r wo rk e r s = P o p u la t io n a g e d 5 5 t o 6 4 a s % o f p o p u la t io n a g e d 15 - 6 4

O ld - a g e d e p e n d e n c y r a t io ( 1) = P o p u la t io n a g e d 6 5 a n d o v e r a s a p e rc e n t a g e o f t h e p o p u la t io n a g e d 15 - 6 4

T o t a l d e p e n d e n c y ra t io ( 2 ) = P o p u la t io n u n d e r 15 a n d o v e r 6 4 a s a p e rc e n t a g e o f t h e p o p u la t io n a g e d 15 - 6 4

T o t a l e c o n o m ic d e p e n d e n c y r a t io = T o t a l p o p u la t io n le s s e m p lo ye d a s % o f e m p lo ye d p o p u la t io n ( 15 - 6 4 )

E c o n o m ic o ld - a g e d e p e n d e n c y ra t io ( 15 - 6 4 ) = In a c t iv e p o p u la t io n a g e d 6 5 + a s % o f e m p lo ye d p o p u la t io n ( 15 - 6 4 )

E c o n o m ic o ld - a g e d e p e n d e n c y ra t io ( 15 - 7 1) = In a c t iv e p o p u la t io n a g e d 6 5 + a s % o f e m p lo ye d p o p u la t io n ( 15 - 7 1)

Portugal EPC-AW G Pension expenditure projections

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Baseline scenario; as % of GDP

Social security pensions, gross 11.1 11.5 11.9 12.6 14.1 15.0 16.0 17.4 18.8 20.0 20.8

Old-age and early pens ions , gros s 8.6 9.0 9.4 10.2 11.6 12.3 13.2 14.3 15.5 16.5 17.2 Of which: earnings -related pens ions , gros s : : : : : : : : : : :

Private s ector em ployees , gros s 4.4 4.7 5.5 6.3 7.1 7.8 8.7 9.8 10.9 12.2 12.9 Public s ector em ployees , gros s 3.6 3.7 3.5 3.6 4.3 4.4 4.3 4.4 4.4 4.2 4.1

Other pens ions (dis ability, s urvivors ), gros s 2.4 2.5 2.5 2.5 2.6 2.7 2.8 3.1 3.3 3.5 3.6 Occupational pensions, gross : : : : : : : : : : :

Private mandatory pensions, gross : : : : : : : : : : :

Total pension expenditure, gross 11.1 11.5 11.9 12.6 14.1 15.0 16.0 17.4 18.8 20.0 20.8 Social security pensions, net 10.3 10.8 11.1 11.8 13.2 14.0 14.9 16.2 17.6 18.7 19.4

Total pension expenditure, net 10.3 10.8 11.1 11.8 13.2 14.0 14.9 16.2 17.6 18.7 19.4

Social security pensions, contributions 10.5 10.6 10.5 9.9 9.6 9.5 9.4 9.2 9.1 9.2 9.2 Total pension contributions 10.5 10.6 10.5 9.9 9.6 9.5 9.4 9.2 9.1 9.2 9.2 Social security pensions, assets 4.3 4.4 4.0 : : : : : : : : All pensions, assets 4.3 4.4 4.0 : : : : : : : : Additional indicators

Social security pensions, net / Social sec. pensions, gross,% 93 93 93 93 93 93 93 93 93 93 93 Total pension expenditure, net / Total pension exp., gross, % 93 93 93 93 93 93 93 93 93 93 93

Social security pensions, number of pensioners , 1000 pers. 3048 3143 3304 3585 4005 4351 4698 4989 5244 5379 5454 All pensions, pensioners , 1000 pers. 3048 3143 3304 3585 4005 4351 4698 4989 5244 5379 5454 Number of pensioners aged 65+ , 1000 pers. : : : : : : : : : : :

Share of pensioners below age 65 as % of all pensioners : : : : : : : : : : :

Average gross social sec. pension, 1000 in 2004 prices 4.9 5.0 5.5 6.0 6.8 7.3 7.9 8.4 9.0 9.7 10.4 Average gross total pensions, 1000 in 2004 prices 4.9 5.0 5.5 6.0 6.8 7.3 7.9 8.4 9.0 9.7 10.4 Output / W orker, 1000 in 2004 prices 26.4 26.5 29.6 33.4 37.8 42.8 47.7 52.0 56.7 61.7 67.3 Social sec. benefit ratio 18.6 18.9 18.4 18.1 17.9 17.2 16.5 16.2 15.9 15.7 15.4

Total pension benefit ratio 18.6 18.9 18.4 18.1 17.9 17.2 16.5 16.2 15.9 15.7 15.4

Social security pensions, num of contributors, in 1000 4285 4332 4436 4362 4335 4268 4108 3939 3751 3576 3468 Average social sec. pension contribution, 1000 in 2004 prices 3.3 3.3 3.6 3.9 4.3 4.8 5.3 5.7 6.1 6.7 7.3 Average total pension contribution, 1000 in 2004 prices : : : : : : : : : : :

Support ratio (contributors /100 pensioners, social sec. pens.) 141 138 134 122 108 98 87 79 72 66 64 High life expectancy; as % of GDP

Social security pensions, gross 11.1 11.5 11.9 12.7 14.2 15.1 16.2 17.6 19.2 20.5 21.4 Old-age and early pensions, gross 8.6 9.0 9.4 10.2 11.6 12.4 13.3 14.5 15.8 16.9 17.7

Total pension expenditure, gross 11.1 11.5 11.9 12.7 14.2 15.1 16.2 17.6 19.2 20.5 21.4 All pensions, assets 4.3 4.4 4.0 : : : : : : : : Higher labour productivity; as % of GDP

Social security pensions, gross 11.1 11.5 11.9 12.5 13.9 14.6 15.4 16.6 17.9 18.9 19.6 Old-age and early pensions, gross 8.6 9.0 9.4 10.1 11.3 12.0 12.7 13.7 14.7 15.5 16.1

Total pension expenditure, gross 11.1 11.5 11.9 12.5 13.9 14.6 15.4 16.6 17.9 18.9 19.6 All pensions, assets 4.3 4.4 4.0 : : : : : : : : Lower labour productivity; as % of GDP

Social security pensions, gross 11.1 11.5 11.9 12.7 14.4 15.4 16.6 18.2 19.8 21.2 22.1 Old-age and early pensions, gross 8.6 9.0 9.4 10.2 11.8 12.7 13.7 15.0 16.4 17.6 18.4

Total pension expenditure, gross 11.1 11.5 11.9 12.7 14.4 15.4 16.6 18.2 19.8 21.2 22.1 All pensions, assets 4.3 4.4 4.1 : : : : : : : : Higher employment rate (1 p.p.); as % of GDP

Social security pensions, gross 11.1 11.5 11.8 12.5 14.0 14.9 15.8 17.2 18.7 19.8 20.6 Old-age and early pensions, gross 8.6 9.0 9.4 10.1 11.5 12.2 13.0 14.2 15.4 16.4 17.0

Total pension expenditure, gross 11.1 11.5 11.8 12.5 14.0 14.9 15.8 17.2 18.7 19.8 20.6 All pensions, assets 4.3 4.4 4.4 0.3 : : : : : : : Higher older workers empl. rate (5 p.p.); as % of GDP

Social security pensions, gross 11.1 11.5 11.9 12.6 14.0 14.8 15.8 17.2 18.6 19.8 20.5 Old-age and early pensions, gross 8.6 9.0 9.4 10.1 11.5 12.2 13.0 14.1 15.3 16.3 17.0

Total pension expenditure, gross 11.1 11.5 11.9 12.6 14.0 14.8 15.8 17.2 18.6 19.8 20.5 All pensions, assets 4.3 4.4 4.0 : : : : : : : : Lower interest rate; as % of GDP

Social security pensions, gross 11.1 11.5 11.9 12.6 14.1 15.0 16.0 17.4 18.8 20.0 20.8 Old-age and early pensions, gross 8.6 9.0 9.4 10.2 11.6 12.3 13.2 14.3 15.5 16.5 17.2

Total pension expenditure, gross 11.1 11.5 11.9 12.6 14.1 15.0 16.0 17.4 18.8 20.0 20.8 All pensions, assets 4.3 4.4 3.8 : : : : : : : : Higher interest rate; as % of GDP

Social security pensions, gross 11.1 11.5 11.9 12.6 14.1 15.0 16.0 17.4 18.8 20.0 20.8 Old-age and early pensions, gross 8.6 9.0 9.4 10.2 11.6 12.3 13.2 14.3 15.5 16.5 17.2

Total pension expenditure, gross 11.1 11.5 11.9 12.6 14.1 15.0 16.0 17.4 18.8 20.0 20.8 All pensions, assets 4.3 4.4 4.2 : : : : : : : : : = data not provided

Portugal OTHER AGE-RELATED EXPENDITURES as % of GDP

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Health care spending as % of GDP

Pure ageing s cenario 6.7 6 .7 6.8 6.8 6.7 6.6 6.7 6.9 7.0 7.2 7 .3

Cons tant health s cenario 6.7 6 .7 6.7 6.5 6.4 6.2 6.2 6.3 6.4 6.5 6 .6

Death-related cos ts s cenario 6.7 6 .7 6.8 6.7 6.6 6.4 6.5 6.6 6.7 6.9 6 .9 Incom e elas ticity of dem and 6.7 6 .7 6.9 6.9 6.9 6.8 6.9 7.1 7.3 7.4 7 .5 Unit cos ts - GDP per worker 6.7 6 .7 6.7 6.7 6.7 6.7 6.9 7.3 7.8 8.2 8 .5 AWG reference s cenario 6.7 6 .7 6.8 6.8 6.7 6.6 6.6 6.8 6.9 7.1 7 .2 Long-term care spending as % of GDP

Pure ageing s cenario : : : : : : : : : : :

Unit cos ts - GDP per capita : : : : : : : : : : :

Cons tant dis ability s cenario : : : : : : : : : : : Increas e in form al care : : : : : : : : : : : AWG reference s cenario : : : : : : : : : : : Numbe r of de pe nde nt pe ople (in thous ands )

Pure ageing s cenario 295 302 331 363 394 427 47 1 514 5 57 599 626

Unit cos ts - GDP per capita 295 302 331 363 394 214 47 1 514 5 57 599 626

Cons tant dis ability s cenario 295 297 303 258 315 321 33 5 350 3 66 382 390 Increas e in form al care 295 302 331 363 394 427 47 1 514 5 57 599 626 AWG reference s cenario 295 299 317 337 355 374 40 3 432 4 62 491 508 of which re ce iving formal care

Pure ageing s cenario 0 0 0 0 0 0 0 0 0 0 0

Unit cos ts - GDP per capita 0 0 0 0 0 0 0 0 0 0 0

Cons tant dis ability s cenario 0 0 0 0 0 0 0 0 0 0 0

Increas e in form al care 0 15 88 157 221 239 26 4 288 3 12 335 351 AWG reference s cenario 0 0 0 0 0 0 0 0 0 0 0 of which re ce iving informal or no care

Pure ageing s cenario 295 302 331 363 394 427 47 1 514 5 57 599 626

Unit cos ts - GDP per capita 295 302 331 363 394 214 47 1 514 5 57 599 626

Cons tant dis ability s cenario 295 297 303 258 315 321 33 5 350 3 66 382 390 Increas e in form al care 295 287 243 206 173 188 20 7 226 2 45 264 276 AWG reference s cenario 295 299 317 337 355 374 40 3 432 4 62 491 508 Education spending as % of GDP

Total 5.1 5 .0 4.7 4.6 4.7 4.6 4.5 4.4 4.5 4.6 4 .8

of which: Transfers 0.1 0 .1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0 .1 Prim ary 1.8 1 .8 1.8 1.8 1.8 1.7 1.6 1.6 1.7 1.8 1 .8

of which: Transfers 0.0 0 .0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0 .0 Low s econdary 1.2 1 .2 1.1 1.2 1.2 1.2 1.1 1.1 1.1 1.2 1 .2

of which: Transfers 0.0 0 .0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0 .0 Upper s econdary 1.1 1 .1 0.9 0.9 1.0 1.0 1.0 0.9 0.9 0.9 1 .0

of which: Transfers 0.0 0 .0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0 .0 Tertiary education 1.0 1 .0 0.8 0.8 0.7 0.8 0.8 0.8 0.8 0.8 0 .8

of which: Transfers 0.1 0 .1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0 .1 Number of s tudents (in thous ands )

Total 1 908 1882 1815 1812 1805 174 9 1657 15 69 1515 1 488 1462 Prim ary 763 760 788 809 795 739 68 3 654 6 48 647 633

Low s econdary 391 388 366 379 388 379 35 2 327 3 13 311 310

Upper s econdary 360 351 325 315 325 329 31 7 294 2 75 267 266

Tertiary education 393 383 335 308 298 302 30 4 295 2 78 262 252 Memo

Population aged 15 64 (in thous ands ) 7 064 7086 7123 7050 6958 684 0 6645 64 07 6095 5 761 5514 Unemployment benefit spending as % of GDP

1.0 0 .9 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0 .8

Slov enia Main demographic and macroeconomic assumptions (BA SELINE SCENA RIO)

Budgetary Projection: A WG variant population scenario

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 De mogra phic a ssumptions

Fe rtility rate 1.2 1.2 1.3 1.4 1.5 1.5 1.5 1.5 1.5 1.5 1.5 Life e xpe ctancy at bir th

m ale s 72.6 72.8 73.9 75.0 76.1 77.2 77.9 78.4 78.9 79.4 79.8

fe m ale s 80.2 80.3 81.2 82.0 82.8 83.4 83.8 84.2 84.6 84.9 85.1 Life e xpe ctancy at 65

m ale s 14.3 14.4 14.9 15.6 16.2 16.9 17.4 17.7 18.1 18.4 18.7

fe m ale s 18.4 18.5 19.1 19.7 20.3 20.7 21.0 21.3 21.5 21.8 22.0

Ne t m igr ation (thous and) 6.1 6.2 5.9 3.8 5.3 6.8 7.0 7.0 6.9 6.8 6.7

Ne t m igr ation as % of population 0.31 0.31 0.29 0.19 0.26 0.34 0.35 0.35 0.35 0.35 0.35 Population (m illion) 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 1.9 1.9

Population age d 0-14 as % of total 14.6 14.3 13.5 13.5 13.5 13.4 12.9 12.3 12.1 12.4 12.8

Prim e age population (25-54) as % of total 45.7 45.8 45.4 44.1 42.1 39.8 37.9 35.7 34.3 33.7 34.0 Work ing age population (15-64) as % of total 70.4 70.4 70.0 68.7 66.1 63.8 62.1 60.7 59.5 57.6 56.0 Elde rly population age d 65+ as % of total 15.0 15.3 16.5 17.8 20.4 22.8 25.1 27.0 28.4 30.0 31.1

V e ry e lde rly population age d 80 and ove r as % of total 2.9 3.0 3.8 4.6 5.1 5.6 6.3 7.8 9.1 9.9 10.6

Elde rly population age d 55+ as % of w or k ing age pop.15-64 1.1 1.2 1.2 1.3 1.5 1.6 1.7 1.8 1.8 1.9 1.9 Ma croe conomic a ssumptions

Re al GDP (grow th r ate ) 3.5 3.4 3.6 2.8 2.4 2.1 2.0 1.2 1.0 1.0 1.1

Labour input (grow th r ate ) 0.0 -0.1 0.6 -0.4 -0.5 -0.7 -0.7 -0.8 -0.9 -0.8 -0.6 Labour pr oductivity (gr ow th rate ) 3.5 3.5 3.1 3.2 3.0 2.8 2.7 2.0 1.9 1.8 1.7 TFP (gr ow th rate ) 1.1 1.1 1.2 1.6 1.6 1.7 1.8 1.3 1.2 1.2 1.1

Capital de e pe ning (c ontribution to labour productivity grow th) 2.4 2.4 1.9 1.6 1.3 1.1 0.9 0.7 0.7 0.6 0.6 GDP pe r capita (grow th r ate ) 3.4 3.2 3.5 2.8 2.5 2.1 2.1 1.4 1.3 1.3 1.5

GDP in 2004 price s (in billions of e uro) 26 27 32 38 43 48 53 57 60 63 66 GDP pe r w ork e r 14.7 15.1 18.1 21.1 23.9 26.7 29.6 32.2 34.4 36.6 39.3 Re al inte re s t r ate 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 La bour force a ssum ptions

Population grow th (w ork ing age :15-64) 0.2 0.1 -0.6 -0.8 -0.6 -0.6 -0.5 -0.8 -1.0 -0.8

Labour force (thous ands ) 955 967 1010 1007 981 950 916 882 845 810 782

Participation rate (15-64) 68.0 68.7 71.6 72.5 73.6 74.0 73.6 73.0 72.3 72.6 73.4

young (15-24) 33.3 32.7 32.9 32.1 31.2 30.9 30.2 31.1 31.9 32.0 31.4

prim e -age (25-54) 88.5 88.9 90.3 91.4 92.6 92.8 92.5 92.1 91.9 92.1 92.3 olde r (55-64) 25.6 28.8 40.9 43.2 46.2 50.4 52.9 55.5 54.3 53.6 53.0 olde s t (65-71) 6.1 6.1 7.4 13.3 13.1 12.5 12.7 12.4 12.7 12.8 12.3 Em ploym e nt rate (15-64) 63.7 64.6 67.7 68.5 69.6 69.9 69.5 68.9 68.3 68.6 69.3 Em ploym e nt rate (15-71) 58.8 59.6 62.4 63.4 62.8 62.4 61.9 61.1 60.6 60.1 60.4 Em ploym e nt grow th (15-64) 1.6 0.6 -0.4 -0.5 -0.7 -0.7 -0.8 -0.9 -0.8 -0.6

Une m ploym e nt rate (15-64) 6.3 6.0 5.5 5.5 5.5 5.5 5.5 5.5 5.5 5.5 5.5 De pe nde ncy ra tios:

Share of olde r w or k e rs 5.8 6.6 10.6 12.7 13.9 15.7 16.7 18.7 19.4 18.6 16.7

Old-age de pe nde ncy ratio (1) 21.4 21.7 23.6 25.9 30.8 35.8 40.4 44.5 47.7 52.1 55.6 Total de pe nde ncy ratio (2) 42.1 42.0 42.9 45.5 51.3 56.9 61.1 64.7 68.0 73.6 78.5

Total e conom ic de pe nde ncy ratio 123.1 120.0 111.2 112.3 117.5 124.4 131.8 138.9 146.1 153.1 157.5 Econom ic old-age de pe nde ncy ratio (15-64) 32.6 32.8 33.8 35.7 41.7 48.5 55.3 61.7 66.9 72.6 76.9 Econom ic old-age de pe nde ncy ratio (15-71) 32.4 32.5 33.5 35.1 40.7 47.3 53.8 59.9 65.0 70.3 74.4 LEGENDA :

S h a r e o f o ld e r wo r k e r s = P o p u la t io n a g e d 5 5 t o 6 4 a s % o f p o p u la t io n a g e d 15 - 6 4

O ld - a g e d e p e n d e n c y ra t io ( 1) = P o p u la t io n a g e d 6 5 a n d o v e r a s a p e rc e n t a g e o f t h e p o p u la t io n a g e d 15 - 6 4

T o t a l d e p e n d e n c y r a t io ( 2 ) = P o p u la t io n u n d e r 15 a n d o v e r 6 4 a s a p e rc e n t a g e o f t h e p o p u la t io n a g e d 15 - 6 4

T o t a l e c o n o m ic d e p e n d e n c y r a t io = T o t a l p o p u la t io n le s s e m p lo ye d a s % o f e m p lo ye d p o p u la t io n ( 15 - 6 4 )

E c o n o m ic o ld - a g e d e p e n d e n c y ra t io ( 15 - 6 4 ) = In a c t iv e p o p u la t io n a g e d 6 5 + a s % o f e m p lo ye d p o p u la t io n ( 15 - 6 4 )

E c o n o m ic o ld - a g e d e p e n d e n c y ra t io ( 15 - 7 1) = In a c t iv e p o p u la t io n a g e d 6 5 + a s % o f e m p lo ye d p o p u la t io n ( 15 - 7 1)

Slov enia EPC-AW G Pension expenditure projections

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Baseline scenario; as % of GDP

Social security pensions, gross 11.0 11.0 11.1 11.6 12.3 13.3 14.4 15.6 16.8 17.8 18.3

Old-age and early pens ions , gros s 11.0 11.0 11.1 11.6 12.3 13.3 14.4 15.6 16.8 17.8 18.3 Of which: earnings -related pens ions , gros s : : : : : : : : : : : Private s ector em ployees , gros s : : : : : : : : : : : Public s ector em ployees , gros s : : : : : : : : : : :

Other pens ions (dis ability, s urvivors ), gros s : : : : : : : : : : : Occupational pensions, gross 0.0 0.0 0.0 0.0 0.1 0.2 0.3 0.5 0.7 0.9 1.0 Private mandatory pensions, gross : : : : : : : : : : :

Total pension expenditure, gross 11.0 11.0 11.1 11.6 12.4 13.5 14.7 16.1 17.5 18.7 19.3 Social security pensions, net 11.0 11.0 11.1 11.6 12.3 13.3 14.4 15.6 16.8 17.8 18.3

Total pension expenditure, net 11.0 11.0 11.1 11.6 12.4 13.5 14.7 16.0 17.4 18.5 19.1

Social security pensions, contributions 9.3 9.6 10.1 10.4 10.6 10.7 10.7 10.7 10.6 10.6 10.6 Total pension contributions 10.0 10.3 10.9 11.4 11.7 11.9 12.0 12.0 11.9 11.9 11.9 Social security pensions, assets : : : : : : : : : : :

All pensions, assets 1.4 2.1 5.5 9.6 13.9 18.3 22.6 26.5 30.1 33.3 35.9 Additional indicators

Social security pensions, num ber of pensioners , 1000 pers. 524 530 571 609 647 686 722 752 778 789 781 All pensions, pensioners , 1000 pers. 524 530 571 609 647 686 722 752 778 789 781

Number of pensioners aged 65+ , 1000 pers. 315 324 354 386 438 490 537 572 595 619 629

Share of pensioners below age 65 as % of all pensioners 39.8 39.0 38.1 36.7 32.2 28.7 25.6 24.0 23.4 21.5 19.5 Average gross social sec. pension, 1000 in 2004 prices 5.4 5.6 6.3 7.1 8.1 9.2 10.5 11.7 12.9 14.1 15.4 Average gross total pensions, 1000 in 2004 prices 5.4 5.6 6.3 7.2 8.2 9.4 10.7 12.1 13.4 14.8 16.3 Output / W orker, 1000 in 2004 prices 28.8 29.8 33.8 39.5 46.0 53.0 60.7 68.0 74.8 81.9 89.4 Social sec. benefit ratio 18.9 18.6 18.5 18.0 17.7 17.4 17.3 17.2 17.2 17.3 17.3

Total pension benefit ratio 18.9 18.6 18.5 18.1 17.8 17.7 17.7 17.8 17.9 18.1 18.2

Social security pensions, num of contributors, in 1000 807 829 873 878 860 833 803 773 741 712 688

Average social sec. pension contribution, 1000 in 2004 prices 3.0 3.1 3.7 4.4 5.2 6.1 7.0 7.8 8.6 9.4 10.2 Average total pension contribution, 1000 in 2004 prices : : : : : : : : : : :

Support ratio (contributors /100 pensioners, social sec. pens.) 154 156 153 144 133 121 111 103 95 90 88 High life expectancy; as % of GDP

Social security pensions, gross 10.9 10.9 10.9 11.4 12.2 13.2 14.4 15.6 17.0 18.1 18.8

Old-age and early pensions, gross 10.9 10.9 10.9 11.4 12.2 13.2 14.4 15.6 17.0 18.1 18.8 Total pension expenditure, gross 10.9 10.9 10.9 11.4 12.2 13.2 14.4 15.6 17.0 18.1 18.8 All pensions, assets : : : : : : : : : : : Higher labour productivity; as % of GDP

Social security pensions, gross 11.0 11.0 11.1 11.5 12.3 13.2 14.3 15.5 16.7 17.7 18.1

Old-age and early pensions, gross 11.0 11.0 11.1 11.5 12.3 13.2 14.3 15.5 16.7 17.7 18.1 Total pension expenditure, gross 11.0 11.0 11.1 11.5 12.3 13.2 14.3 15.5 16.7 17.7 18.1 All pensions, assets : : : : : : : : : : : Lower labour productivity; as % of GDP

Social security pensions, gross 11.0 11.0 11.1 11.5 12.3 13.2 14.3 15.4 16.7 17.6 18.1

Old-age and early pensions, gross 11.0 11.0 11.1 11.5 12.3 13.2 14.3 15.4 16.7 17.6 18.1 Total pension expenditure, gross 11.0 11.0 11.1 11.5 12.3 13.2 14.3 15.4 16.7 17.6 18.1 All pensions, assets : : : : : : : : : : : Higher employment rate (1 p.p.); as % of GDP

Social security pensions, gross 11.0 11.0 11.0 11.4 12.1 13.0 14.1 15.2 16.4 17.4 17.8

Old-age and early pensions, gross 11.0 11.0 11.0 11.4 12.1 13.0 14.1 15.2 16.4 17.4 17.8 Total pension expenditure, gross 11.0 11.0 11.0 11.4 12.1 13.0 14.1 15.2 16.4 17.4 17.8 All pensions, assets : : : : : : : : : : : Higher older workers empl. rate (5 p.p.); as % of GDP

Social security pensions, gross 11.0 11.0 11.0 11.2 11.8 12.6 13.6 14.7 15.9 16.9 17.4

Old-age and early pensions, gross 11.0 11.0 11.0 11.2 11.8 12.6 13.6 14.7 15.9 16.9 17.4 Total pension expenditure, gross 11.0 11.0 11.0 11.2 11.8 12.6 13.6 14.7 15.9 16.9 17.4 All pensions, assets : : : : : : : : : : : Lower interest rate; as % of GDP

Social security pensions, gross 11.0 11.0 11.1 11.6 12.3 13.3 14.4 15.6 16.8 17.8 18.3

Old-age and early pensions, gross 11.0 11.0 11.1 11.6 12.3 13.3 14.4 15.6 16.8 17.8 18.3 Total pension expenditure, gross 11.0 11.0 11.1 11.6 12.4 13.5 14.7 16.1 17.5 18.7 19.3 All pensions, assets 1.4 2.1 5.5 9.6 13.9 18.3 22.6 26.5 30.1 33.3 35.9 Higher interest rate; as % of GDP

Social security pensions, gross 11.0 11.0 11.1 11.6 12.3 13.3 14.4 15.6 16.8 17.8 18.3

Slovenia OTHER AGE-RELATED EXPENDITURES as % of GDP

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Health care spending as % of GDP

Pure ageing s cenario 6.4 6.5 6.6 6.8 7 .0 7.2 7.4 7.6 7.7 7.8 7.8

Cons tant health s cenario 6.4 6.5 6.6 6.6 6 .8 6.9 7.0 7.2 7.2 7.3 7.3

Death-related cos ts s cenario 6.4 6.5 6.6 6.7 6 .8 7.0 7.1 7.2 7.3 7.4 7.4 Incom e elas ticity of dem and 6.4 6.5 6.8 7.0 7 .3 7.6 7.8 8.0 8.1 8.3 8.3 Unit cos ts - GDP per worker 6.4 6.5 6.5 6.7 7 .1 7.5 8.0 8.4 8.8 9.1 9.4 AWG reference s cenario 6.4 6.5 6.7 6.9 7 .2 7.4 7.6 7.8 7.9 8.0 8.0 Long-term care spending as % of GDP

Pure ageing s cenario 0.9 1.0 1.1 1.2 1 .3 1.5 1.6 1.9 2.1 2.3 2.4

Unit cos ts - GDP per capita 0.9 1.0 1.1 1.3 1 .3 1.1 1.5 1.7 1.9 2.0 2.1

Cons tant dis ability s cenario 0.9 1.0 1.1 1.2 1 .2 1.3 1.4 1.6 1.8 1.9 1.9 Increas e in form al care 0.9 1.0 1.3 1.6 1 .9 2.0 2.3 2.7 3.1 3.4 3.6 AWG reference s cenario 0.9 1.0 1.1 1.2 1 .3 1.4 1.5 1.7 1.9 2.1 2.2 Numbe r of de pe nde nt pe ople (in thous ands )

Pure ageing s cenario 58 59 68 75 84 93 104 116 125 132 13 5

Unit cos ts - GDP per capita 58 59 68 75 84 46 104 116 125 132 13 5 Cons tant dis ability s cenario 58 58 62 54 67 70 7 4 8 0 83 85 85 Increas e in form al care 58 59 68 75 84 93 104 116 125 132 13 5 AWG reference s cenario 58 59 65 70 75 81 8 9 9 8 104 108 11 0 of which re ce iving formal care

Pure ageing s cenario 22 23 26 29 32 36 4 0 4 5 49 52 53

Unit cos ts - GDP per capita 22 23 26 29 32 36 4 0 4 5 49 52 53

Cons tant dis ability s cenario 22 22 24 25 26 27 2 9 3 2 34 35 35 Increas e in form al care 22 24 37 49 61 68 7 6 8 5 92 96 99 AWG reference s cenario 22 22 25 27 29 32 3 4 3 9 41 43 44 of which re ce iving informal or no care

Pure ageing s cenario 36 37 42 46 51 57 6 4 7 1 76 80 82

Unit cos ts - GDP per capita 36 37 42 46 51 27 6 4 7 1 76 80 82

Cons tant dis ability s cenario 36 36 38 32 40 42 4 5 4 8 50 51 50 Increas e in form al care 36 35 31 26 22 25 2 8 3 1 34 35 36 AWG reference s cenario 36 37 40 42 46 50 5 4 6 0 63 65 66 Education spending as % of GDP

Total 5.3 5.2 4.6 4.3 4 .3 4.5 4.7 4.7 4.7 4.8 4.9

of which: Transfers 0.6 0.6 0.5 0.5 0 .5 0.5 0.5 0.5 0.5 0.5 0.5 Prim ary 1.3 1.2 1.1 1.1 1 .2 1.2 1.2 1.2 1.2 1.2 1.3

of which: Transfers 0.0 0.0 0.0 0.0 0 .0 0.0 0.0 0.0 0.0 0.0 0.0 Low s econdary 1.2 1.2 1.0 1.0 1 .0 1.1 1.1 1.1 1.1 1.1 1.1

of which: Transfers 0.0 0.0 0.0 0.0 0 .0 0.0 0.0 0.0 0.0 0.0 0.0 Upper s econdary 1.5 1.4 1.2 1.1 1 .1 1.1 1.2 1.2 1.2 1.2 1.2

of which: Transfers 0.2 0.2 0.2 0.2 0 .2 0.2 0.2 0.2 0.2 0.2 0.2 Tertiary education 1.4 1.4 1.3 1.2 1 .1 1.1 1.1 1.2 1.3 1.3 1.2

of which: Transfers 0.4 0.4 0.3 0.3 0 .3 0.3 0.3 0.3 0.3 0.3 0.3 Number of s tudents (in thous ands )

Total 384 37 7 3 45 3 21 312 313 314 306 293 284 28 2 Prim ary 86 84 81 78 82 82 7 8 7 2 69 70 72

Low s econdary 87 84 75 73 71 75 7 6 7 1 66 64 65

Upper s econdary 109 10 6 88 81 79 79 8 4 8 3 77 73 71

Tertiary education 102 10 3 1 00 88 80 76 7 7 8 1 81 78 73 Memo

Population aged 15 64 (in thous ands ) 1405 1408 1410 1388 133 3 128 4 12 45 12 08 1 170 1 115 1065 Unemployment benefit spending as % of GDP

0.5 0.5 0.4 0.4 0 .4 0.4 0.4 0.4 0.4 0.4 0.4

Slov ak Republic Main demographic and macroeconomic assumptions (BA SELINE SCENA RIO)

Budgetary Projection: A WG variant population scenario

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 De mogra phic a ssum ptions

Fe r tility rate 1.2 1.2 1.2 1.2 1.3 1.4 1.5 1.6 1.6 1.6 1.6 Life e xpe ctancy at birth

m ale s 69.7 69.9 70.9 72.0 73.1 74.3 75.3 76.1 76.7 77.2 77.7

fe m ale s 77.8 77.9 78.7 79.5 80.3 81.1 81.8 82.3 82.7 83.1 83.4 Life e xpe ctancy at 65

m ale s 12.9 13.0 13.5 14.0 14.7 15.4 16.0 16.5 16.9 17.3 17.6

fe m ale s 16.5 16.6 17.0 17.5 18.1 18.7 19.2 19.6 19.9 20.1 20.4

Ne t m igration (thous and) -2.3 -2.3 -2.4 -2.3 1.2 4.6 5.1 5.1 5.0 4.9 4.7

Ne t m igration as % of population -0.04 -0.04 -0.05 -0.04 0.02 0.09 0.10 0.10 0.10 0.10 0.10 Population (m illion) 5.4 5.4 5.3 5.3 5.3 5.2 5.2 5.1 5.0 4.9 4.7

Population age d 0-14 as % of total 17.6 17.0 15.0 14.3 14.2 14.0 13.5 13.0 12.6 12.6 12.8

Prim e age population (25-54) as % of total 44.8 45.2 45.8 45.8 45.6 44.6 42.4 39.3 36.7 34.7 33.3 Work ing age population (15-64) as % of total 70.9 71.3 72.7 71.9 69.4 67.1 65.7 64.8 63.2 60.4 57.9 Elde r ly population age d 65+ as % of total 11.5 11.6 12.3 13.7 16.3 18.8 20.8 22.2 24.1 26.9 29.3

V e ry e lde r ly population age d 80 and ove r as % of total 2.3 2.4 2.7 3.0 3.1 3.5 4.4 5.9 7.1 7.7 8.0

Elde rly population age d 55+ as % of w ork ing age pop.15-64 2.9 2.9 2.9 3.1 3.3 3.6 3.8 4.0 4.2 4.5 4.7 Ma croe conomic a ssumptions

Re al GDP (grow th rate ) 3.9 3.9 5.3 4.1 3.3 2.9 2.0 0.8 0.4 0.2 0.3

Labour input (gr ow th rate ) 0.4 0.1 1.1 0.6 0.0 -0.1 -0.7 -1.1 -1.5 -1.6 -1.4

Labour pr oductivity (grow th rate ) 3.5 3.8 4.2 3.5 3.3 3.0 2.7 2.0 1.9 1.8 1.7 TFP (grow th rate ) 2.0 2.1 2.5 2.0 1.9 1.8 1.8 1.3 1.2 1.2 1.1

Capital de e pe ning (contribution to labour productiv ity grow th) 1.5 1.8 1.7 1.6 1.4 1.2 0.9 0.7 0.7 0.6 0.6 GDP pe r capita (gr ow th rate ) 3.9 4.0 5.4 4.3 3.4 3.1 2.2 1.2 0.8 0.8 0.9 GDP in 2004 price s (in billions of e uro) 33 34 44 55 66 77 85 91 93 95 96 GDP pe r w or k e r 9.8 10.2 13.0 16.5 19.9 23.2 26.1 28.3 29.6 30.8 32.1 Re al inte r e s t r ate 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 La bour force a ssumptions

Population grow th (w or k ing age :15-64) 0.5 0.0 -0.6 -0.9 -0.6 -0.7 -0.6 -1.2 -1.5 -1.5

Labour force (thous ands ) 2696 2726 2849 2908 2845 2748 2657 2535 2363 2186 2026

Par ticipation rate (15-64) 70.7 71.1 73.3 76.2 77.8 78.2 78.0 76.6 74.7 74.2 73.9

young (15-24) 42.3 42.7 43.3 44.5 42.9 41.5 41.4 41.6 42.2 42.5 42.2

prim e -age (25-54) 89.7 89.9 91.5 92.3 92.9 93.4 93.5 93.4 93.1 92.8 92.8 olde r (55-64) 30.4 31.9 41.3 50.7 53.4 52.9 55.8 56.5 53.5 52.8 52.0 olde s t (65-71) 1.8 1.8 2.2 2.1 2.6 2.5 2.6 2.6 2.8 2.7 2.6 Em ploym e nt rate (15-64) 58.7 59.2 62.1 66.7 70.2 72.7 72.6 71.2 69.5 69.0 68.7 Em ploym e nt rate (15-71) 55.0 55.5 58.0 61.4 63.1 64.7 64.7 63.6 61.2 58.8 58.0 Em ploym e nt grow th (15-64) 1.3 1.1 0.6 0.0 -0.1 -0.7 -1.1 -1.5 -1.6 -1.4

Une m ploym e nt rate (15-64) 16.9 16.7 15.2 12.5 9.7 7.0 7.0 7.0 7.0 7.0 7.0 De pe nde ncy ra tios:

Shar e of olde r w ork e r s 5.8 6.3 9.5 12.7 13.3 12.8 14.6 17.7 18.8 19.1 18.6

Old-age de pe nde ncy ratio (1) 16.3 16.3 16.9 19.1 23.5 28.1 31.7 34.2 38.1 44.5 50.6 Total de pe nde ncy r atio (2) 41.0 40.2 37.5 39.0 44.1 49.0 52.3 54.2 58.1 65.4 72.9

Total e conom ic de pe nde ncy ratio 140.2 136.8 121.4 108.6 105.3 104.9 109.9 116.6 127.6 139.9 151.5 Econom ic old-age de pe nde ncy r atio (15-64) 27.5 27.3 27.0 28.4 33.1 38.2 43.2 47.6 54.3 63.8 73.0 Econom ic old-age de pe nde ncy r atio (15-71) 27.4 27.3 26.9 28.3 33.0 38.0 43.0 47.3 54.0 63.4 72.4 LEGENDA :

S h a re o f o ld e r wo rk e rs = P o p u la t io n a g e d 5 5 t o 6 4 a s % o f p o p u la t io n a g e d 15 - 6 4

O ld - a g e d e p e n d e n c y ra t io ( 1) = P o p u la t io n a g e d 6 5 a n d o v e r a s a p e r c e n t a g e o f t h e p o p u la t io n a g e d 15 - 6 4

T o t a l d e p e n d e n c y r a t io ( 2 ) = P o p u la t io n u n d e r 15 a n d o v e r 6 4 a s a p e r c e n t a g e o f t h e p o p u la t io n a g e d 15 - 6 4

T o t a l e c o n o m ic d e p e n d e n c y r a t io = T o t a l p o p u la t io n le s s e m p lo ye d a s % o f e m p lo ye d p o p u la t io n ( 15 - 6 4 )

E c o n o m ic o ld - a g e d e p e n d e n c y ra t io ( 15 - 6 4 ) = In a c t iv e p o p u la t io n a g e d 6 5 + a s % o f e m p lo ye d p o p u la t io n ( 15 - 6 4 )

E c o n o m ic o ld - a g e d e p e n d e n c y ra t io ( 15 - 7 1) = In a c t iv e p o p u la t io n a g e d 6 5 + a s % o f e m p lo ye d p o p u la t io n ( 15 - 7 1)

Slov ak Republic EPC-AW G Pension expenditure projections

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Baseline scenario; as % of GDP

Social security pensions, gross 7.2 7.4 6.7 6.6 7.0 7.3 7.7 7.9 8.2 8.5 9.0

Old-age and early pens ions , gros s 5.4 5.6 4.8 4.4 4.6 4.8 5.0 5.1 5.5 5.9 6.3 Of which: earnings -related pens ions , gros s : : : : : : : : : : : Private s ector em ployees , gros s : : : : : : : : : : : Public s ector em ployees , gros s : : : : : : : : : : :

Other pens ions (dis ability, s urvivors ), gros s 1.8 1.8 1.9 2.1 2.3 2.5 2.7 2.8 2.7 2.7 2.7 Occupational pensions, gross : : : : : : : : : : :

Private mandatory pensions, gross 0.0 0.0 0.0 0.1 0.2 0.4 0.7 1.0 1.4 1.9 2.3

Total pension expenditure, gross 7.2 7.4 6.7 6.7 7.2 7.8 8.3 8.9 9.7 10.4 11.2 Social security pensions, net 7.2 7.4 6.7 6.6 7.0 7.3 7.7 7.9 8.2 8.5 9.0

Total pension expenditure, net 7.2 7.4 6.7 6.7 7.2 7.8 8.3 8.9 9.7 10.4 11.2

Social security pensions, contributions 6.5 5.1 5.0 4.9 4.8 4.7 4.7 4.7 4.7 4.6 4.4 Total pension contributions 6.5 6.4 6.3 6.3 6.3 6.3 6.4 6.4 6.4 6.3 6.3 Social security pensions, assets : : : : : : : : : : :

All pensions, assets 0.0 1.2 7.0 12.8 18.9 25.1 31.5 38.4 45.7 52.3 58.0 Additional indicators

Social security pensions, number of pensioners , 1000 pers. 1212 1225 1282 1347 1458 1570 1664 1748 1833 1892 1919 All pensions, pensioners , 1000 pers. 1212 1225 1282 1347 1458 1570 1664 1748 1833 1892 1919 Number of pensioners aged 65+ , 1000 pers. 621 631 684 771 910 1040 1136 1189 1254 1350 1420

Share of pensioners below age 65 as % of all pensioners 48.7 48.5 46.6 42.7 37.6 33.7 31.7 31.9 31.6 28.7 26.0 Average gross social sec. pension, 1000 in 2004 prices 2.0 2.1 2.3 2.7 3.2 3.6 3.9 4.1 4.2 4.3 4.5 Average gross total pensions, 1000 in 2004 prices 2.0 2.1 2.3 2.7 3.3 3.8 4.3 4.6 4.9 5.2 5.6 Output / W orker, 1000 in 2004 prices 15.1 15.7 18.1 21.7 25.7 30.0 34.5 38.6 42.5 46.6 50.9 Social sec. benefit ratio 13.0 13.4 12.6 12.4 12.3 12.0 11.4 10.7 9.9 9.1 8.8

Total pension benefit ratio 13.0 13.4 12.7 12.6 12.7 12.7 12.4 12.0 11.6 11.2 11.0

Social security pensions, num of contributors, in 1000 2244 2273 2419 2550 2579 2568 2483 2370 2213 2050 1901 Average social sec. pension contribution, 1000 in 2004 prices 1.0 0.8 0.9 1.1 1.2 1.4 1.6 1.8 2.0 2.1 2.2 Average total pension contribution, 1000 in 2004 prices 1.0 1.0 1.1 1.4 1.6 1.9 2.2 2.5 2.7 2.9 3.2

Support ratio (contributors /100 pensioners, social sec. pens.) 185 186 189 189 177 164 149 136 121 108 99 High life expectancy; as % of GDP

Social security pensions, gross 7.2 7.4 6.7 6.6 7.0 7.4 7.8 8.1 8.5 8.9 9.4

Old-age and early pensions, gross 5.4 5.6 4.8 4.5 4.7 4.9 5.1 5.3 5.7 6.1 6.6

Total pension expenditure, gross 7.2 7.4 6.7 6.7 7.3 7.9 8.5 9.1 9.9 10.8 11.7 All pensions, assets 0.0 1.2 7.0 12.8 19.0 25.2 31.7 38.7 46.2 53.0 59.1 Higher labour productivity; as % of GDP

Social security pensions, gross 7.2 7.4 6.7 6.5 6.9 7.3 7.6 7.8 8.1 8.4 8.8

Old-age and early pensions, gross 5.4 5.6 4.8 4.4 4.6 4.8 4.9 5.1 5.4 5.8 6.1

Total pension expenditure, gross 7.2 7.4 6.7 6.7 7.2 7.7 8.3 8.8 9.5 10.2 10.9 All pensions, assets 0.0 1.2 7.0 12.7 18.7 24.6 30.8 37.3 44.2 50.3 55.8 Lower labour productivity; as % of GDP

Social security pensions, gross 7.2 7.4 6.7 6.6 7.0 7.4 7.7 8.0 8.4 8.7 9.2

Old-age and early pensions, gross 7.2 5.6 4.8 4.5 4.7 4.9 5.0 5.2 5.6 6.0 6.4

Total pension expenditure, gross 7.2 7.4 6.7 6.7 7.3 7.9 8.5 9.1 9.9 10.7 11.6 All pensions, assets 0.0 1.2 7.0 12.8 19.2 25.6 32.4 39.6 47.4 54.4 60.6 Higher employment rate (1 p.p.); as % of GDP

Social security pensions, gross 7.2 7.4 6.7 6.5 6.9 7.3 7.6 7.9 8.2 8.5 8.9

Old-age and early pensions, gross 5.4 5.6 4.8 4.4 4.6 4.8 4.9 5.1 5.5 5.8 6.3

Total pension expenditure, gross 7.2 7.4 6.7 6.6 7.2 7.7 8.3 8.9 9.6 10.4 11.2 All pensions, assets 0.0 1.2 7.0 12.8 19.0 25.2 31.6 38.5 45.9 52.5 58.3 Higher older workers empl. rate (5 p.p.); as % of GDP

Social security pensions, gross 7.2 7.4 6.7 6.5 6.9 7.3 7.6 7.9 8.2 8.5 9.0

Old-age and early pensions, gross 5.4 5.6 4.7 4.4 4.6 4.8 4.9 5.1 5.5 5.9 6.3

Total pension expenditure, gross 7.2 7.4 6.7 6.6 7.1 7.7 8.3 8.9 9.6 10.5 11.3 All pensions, assets 0.0 1.2 7.0 12.7 18.9 25.1 31.5 38.4 45.7 52.3 58.1 Lower interest rate; as % of GDP

Social security pensions, gross 7.2 7.4 6.7 6.6 7.0 7.3 7.7 7.9 8.2 8.5 9.0

Old-age and early pensions, gross 5.4 5.6 4.8 4.4 4.6 4.8 5.0 5.1 5.5 5.9 6.3

Total pension expenditure, gross 7.2 7.4 6.7 6.7 7.2 7.7 8.3 8.8 9.4 10.1 10.8 All pensions, assets 0.0 1.2 6.8 12.2 17.8 23.2 28.7 34.4 40.4 45.7 50.4 Higher interest rate; as % of GDP

Social security pensions, gross 7.2 7.4 6.7 6.6 7.0 7.3 7.7 7.9 8.2 8.5 9.0

Old-age and early pensions, gross 5.4 5.6 4.8 4.4 4.6 4.8 5.0 5.1 5.5 5.9 6.3

Total pension expenditure, gross 7.2 7.4 6.7 6.7 7.3 7.8 8.5 9.1 10.0 10.9 11.9 All pensions, assets 0.0 1.2 7.2 13.3 20.2 27.2 34.8 43.1 52.0 60.1 67.3 : = data not provided

Slovak Republic OTHER AGE-RELATED EXPENDITURES as % of GDP

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Health care spending as % of GDP

Pure ageing s cenario 4.4 4.4 4.6 4.8 5 .1 5.3 5.5 5.7 5.9 6.0 6.1

Cons tant health s cenario 4.4 4.4 4.5 4.7 4 .8 4.9 5.0 5.2 5.3 5.4 5.5

Death-related cos ts s cenario 4.4 4.4 4.6 4.7 4 .9 5.1 5.3 5.4 5.5 5.6 5.7 Incom e elas ticity of dem and 4.4 4.4 4.7 5.1 5 .4 5.7 6.0 6.2 6.4 6.5 6.7 Unit cos ts - GDP per worker 4.4 4.4 4.4 4.3 4 .5 4.7 5.0 5.3 5.7 6.2 6.6 AWG reference s cenario 4.4 4.4 4.7 5.0 5 .2 5.5 5.7 5.9 6.0 6.2 6.3 Long-term care spending as % of GDP

Pure ageing s cenario 0.7 0.8 0.8 0.8 0 .8 0.8 0.9 1.0 1.2 1.3 1.4

Unit cos ts - GDP per capita 0.7 0.8 0.8 0.8 0 .9 0.7 1.0 1.1 1.2 1.3 1.3

Cons tant dis ability s cenario 0.7 0.8 0.8 0.7 0 .7 0.7 0.8 0.9 1.0 1.1 1.2 Increas e in form al care 0.7 0.8 0.8 0.9 0 .9 1.0 1.1 1.3 1.5 1.7 1.8 AWG reference s cenario 0.7 0.8 0.8 0.7 0 .7 0.8 0.9 1.0 1.1 1.2 1.3 Numbe r of de pe nde nt pe ople (in thous ands )

Pure ageing s cenario 127 12 9 1 38 1 50 170 197 227 253 275 293 30 9

Unit cos ts - GDP per capita 127 12 9 1 38 1 50 170 89 227 253 275 293 30 9

Cons tant dis ability s cenario 127 12 7 1 26 1 03 133 143 156 170 179 184 18 5 Increas e in form al care 127 12 9 1 38 1 50 170 197 227 253 275 293 30 9 AWG reference s cenario 127 12 8 1 32 1 38 152 170 191 212 227 238 24 7 of which re ce iving formal care

Pure ageing s cenario 68 69 74 81 93 108 124 138 151 163 17 1

Unit cos ts - GDP per capita 68 69 74 81 93 108 124 138 151 163 17 1 Cons tant dis ability s cenario 68 68 68 69 73 79 8 6 9 4 99 103 10 4 Increas e in form al care 68 72 91 1 11 137 158 181 203 221 236 24 8 AWG reference s cenario 68 68 71 75 83 94 105 116 125 133 13 8 of which re ce iving informal or no care

Pure ageing s cenario 59 60 64 69 77 89 103 115 123 130 13 7

Unit cos ts - GDP per capita 59 60 64 69 77 39 103 115 123 130 13 7 Cons tant dis ability s cenario 59 59 58 47 60 64 7 0 7 6 80 81 82 Increas e in form al care 59 57 47 39 34 39 4 5 5 1 54 57 60

AWG reference s cenario 59 59 61 63 68 77 8 7 9 6 101 106 10 9 Education spending as % of GDP

Total 3.7 3.6 3.0 2.4 2 .2 2.1 2.2 2.2 2.3 2.3 2.4

of which: Transfers 0.4 0.3 0.3 0.2 0 .2 0.2 0.2 0.2 0.2 0.2 0.2 Prim ary 0.5 0.5 0.4 0.4 0 .4 0.4 0.4 0.4 0.4 0.4 0.4

of which: Transfers 0.0 0.0 0.0 0.0 0 .0 0.0 0.0 0.0 0.0 0.0 0.0 Low s econdary 0.9 0.9 0.7 0.6 0 .5 0.5 0.6 0.6 0.6 0.6 0.6

of which: Transfers 0.0 0.0 0.0 0.0 0 .0 0.0 0.0 0.0 0.0 0.0 0.0 Upper s econdary 1.3 1.3 1.1 0.8 0 .7 0.7 0.7 0.7 0.8 0.8 0.8

of which: Transfers 0.2 0.2 0.2 0.1 0 .1 0.1 0.1 0.1 0.1 0.1 0.1 Tertiary education 0.9 0.9 0.8 0.7 0 .6 0.5 0.5 0.5 0.6 0.6 0.6

of which: Transfers 0.2 0.2 0.1 0.1 0 .1 0.1 0.1 0.1 0.1 0.1 0.1 Number of s tudents (in thous ands )

Total 1066 1033 8 84 7 78 728 712 698 671 636 606 59 0

Prim ary 256 24 4 2 12 2 06 204 202 194 180 170 166 16 6

Low s econdary 372 36 0 2 85 2 50 244 243 241 230 214 203 19 9

Upper s econdary 281 27 1 2 39 1 91 170 168 167 165 157 147 14 0 Tertiary education 158 15 7 1 49 1 31 110 99 9 6 9 5 94 90 85 Memo

Population aged 15 64 (in thous ands ) 3815 3834 3887 3818 365 8 351 6 34 05 33 12 3 163 2 947 2741 Unemployment benefit spending as % of GDP

0.3 0.3 0.2 0.2 0 .1 0.1 0.1 0.1 0.1 0.1 0.1

Finland Main demographic and macroeconomic assumptions (BA SELINE SCENA RIO)

Budgetary Projection: A WG variant population scenario

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 De mogra phic a ssumptions

Fe rtility rate 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 Life e xpe ctancy at bir th

m ale s 75.3 75.5 76.7 77.8 78.7 79.5 80.2 80.7 81.2 81.6 81.9

fe m ale s 81.9 82.0 82.8 83.5 84.2 84.8 85.3 85.7 86.0 86.3 86.6 Life e xpe ctancy at 65

m ale s 15.7 15.8 16.6 17.2 17.9 18.4 18.8 19.2 19.4 19.7 20.0

fe m ale s 19.5 19.6 20.3 20.9 21.4 21.9 22.3 22.6 22.9 23.1 23.3

Ne t m igr ation (thous and) 6.3 6.2 6.2 6.3 6.1 6.0 6.0 6.0 6.0 6.0 6.0

Ne t m igr ation as % of population 0.12 0.12 0.12 0.12 0.11 0.11 0.11 0.11 0.11 0.11 0.12 Population (m illion) 5.2 5.2 5.3 5.4 5.4 5.4 5.4 5.4 5.4 5.3 5.2

Population age d 0-14 as % of total 17.6 17.5 16.5 16.1 16.1 16.0 15.8 15.4 15.2 15.1 15.3

Prim e age population (25-54) as % of total 41.7 41.2 39.4 37.9 36.8 35.8 35.6 35.2 34.9 35.0 34.7 Work ing age population (15-64) as % of total 66.8 66.7 66.6 63.7 61.3 59.4 58.1 57.6 58.1 58.1 57.8 Elde rly population age d 65+ as % of total 15.6 15.8 16.9 20.1 22.6 24.6 26.1 27.0 26.7 26.8 27.0

V e ry e lde rly population age d 80 and ove r as % of total 3.7 3.8 4.5 4.8 5.4 6.0 8.0 9.3 9.9 10.2 10.3

Elde rly population age d 55+ as % of w or k ing age pop.15-64 3.6 3.6 3.8 4.2 4.6 4.9 5.0 5.1 5.0 4.9 4.9 Ma croe conomic a ssumptions

Re al GDP (grow th r ate ) 3.1 3.1 2.2 1.9 1.7 1.5 1.4 1.6 1.5 1.4 1.4

Labour input (grow th r ate ) 0.9 0.8 0.3 -0.3 -0.4 -0.4 -0.3 -0.1 -0.2 -0.3 -0.3 Labour pr oductivity (gr ow th rate ) 2.1 2.2 1.9 2.2 2.1 1.9 1.7 1.7 1.7 1.7 1.7 TFP (gr ow th rate ) 2.1 2.1 1.8 1.7 1.5 1.3 1.1 1.1 1.1 1.1 1.1

Capital de e pe ning (c ontribution to labour productivity grow th) 0.0 0.1 0.1 0.5 0.6 0.7 0.6 0.6 0.6 0.6 0.6 GDP pe r capita (grow th r ate ) 2.8 2.8 2.0 1.7 1.6 1.4 1.4 1.8 1.8 1.7 1.6

GDP in 2004 price s (in billions of e uro) 150 154 175 193 212 229 246 266 288 309 331 GDP pe r w ork e r 21.9 22.5 25.2 27.5 29.9 32.2 34.5 37.5 41.0 44.7 48.4 Re al inte re s t r ate 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 La bour force a ssum ptions

Population grow th (w ork ing age :15-64) 0.1 0.1 -0.7 -0.6 -0.4 -0.4 -0.1 -0.1 -0.3 -0.4

Labour force (thous ands ) 2609 2620 2656 2636 2600 2549 2504 2482 2469 2438 2399 Participation rate (15-64) 74.8 75.1 75.3 77.2 78.5 78.9 79.2 79.7 79.4 79.4 79.6

young (15-24) 51.7 51.9 51.7 53.2 52.6 52.0 51.9 52.1 52.3 52.5 52.5

prim e -age (25-54) 87.8 88.1 89.8 90.9 91.5 92.0 92.2 92.3 92.3 92.2 92.2 olde r (55-64) 55.0 56.0 56.5 60.6 64.3 64.9 64.8 67.4 67.1 66.8 67.5 olde s t (65-71) 6.7 7.0 8.6 11.3 11.9 12.4 12.7 12.4 12.5 13.0 13.0 Em ploym e nt rate (15-64) 68.5 69.1 70.2 72.2 73.4 73.8 74.1 74.5 74.3 74.3 74.4 Em ploym e nt rate (15-71) 63.3 63.7 64.5 64.6 65.2 65.7 66.0 66.4 67.1 66.9 66.6 Em ploym e nt grow th (15-64) 1.0 0.3 -0.3 -0.4 -0.4 -0.3 -0.1 -0.2 -0.3 -0.3

Une m ploym e nt rate (15-64) 8.5 8.0 6.8 6.5 6.5 6.5 6.5 6.5 6.5 6.5 6.5 De pe nde ncy ra tios:

Share of olde r w or k e rs 13.9 14.6 16.8 17.2 17.9 17.9 16.5 16.8 17.7 17.6 18.2

Old-age de pe nde ncy ratio (1) 23.3 23.7 25.4 31.6 37.0 41.3 45.0 46.9 46.0 46.1 46.7 Total de pe nde ncy ratio (2) 49.7 49.9 50.2 56.9 63.3 68.3 72.2 73.7 72.1 72.1 73.1

Total e conom ic de pe nde ncy ratio 118.7 117.0 113.8 117.3 122.3 128.2 132.5 133.2 131.8 131.7 132.6 Econom ic old-age de pe nde ncy ratio (15-64) 33.2 33.4 35.0 41.5 47.8 53.5 58.1 60.5 59.7 59.6 60.2 Econom ic old-age de pe nde ncy ratio (15-71) 32.9 33.1 34.5 40.6 46.6 52.2 56.7 59.0 58.4 58.2 58.7 LEGENDA :

S h a r e o f o ld e r wo r k e r s = P o p u la t io n a g e d 5 5 t o 6 4 a s % o f p o p u la t io n a g e d 15 - 6 4

O ld - a g e d e p e n d e n c y ra t io ( 1) = P o p u la t io n a g e d 6 5 a n d o v e r a s a p e rc e n t a g e o f t h e p o p u la t io n a g e d 15 - 6 4

T o t a l d e p e n d e n c y r a t io ( 2 ) = P o p u la t io n u n d e r 15 a n d o v e r 6 4 a s a p e rc e n t a g e o f t h e p o p u la t io n a g e d 15 - 6 4

T o t a l e c o n o m ic d e p e n d e n c y r a t io = T o t a l p o p u la t io n le s s e m p lo ye d a s % o f e m p lo ye d p o p u la t io n ( 15 - 6 4 )

E c o n o m ic o ld - a g e d e p e n d e n c y ra t io ( 15 - 6 4 ) = In a c t iv e p o p u la t io n a g e d 6 5 + a s % o f e m p lo ye d p o p u la t io n ( 15 - 6 4 )

E c o n o m ic o ld - a g e d e p e n d e n c y ra t io ( 15 - 7 1) = In a c t iv e p o p u la t io n a g e d 6 5 + a s % o f e m p lo ye d p o p u la t io n ( 15 - 7 1)

Finland EPC-AW G Pension expenditure projections

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Baseline scenario; as % of GDP

Social security pensions, gross 10.7 10.4 11.2 12.0 12.9 13.5 14.0 14.1 13.8 13.7 13.7

Old-age and early pens ions , gros s 7.9 8.0 8.8 9.7 10.7 11.5 12.0 12.2 12.0 12.0 12.1

Of which: earnings -related pens ions , gros s 6.8 7.0 8.0 9.1 10.1 10.9 11.6 11.8 11.7 11.7 11.9 Private s ector em ployees , gros s 4.0 4.1 4.9 5.7 6.4 7.0 7.5 7.8 7.9 8.0 8.2 Public s ector em ployees , gros s 2.8 2.9 3.1 3.4 3.7 3.9 4.0 4.0 3.8 3.7 3.6

Other pens ions (dis ability, s urvivors ), gros s 2.8 2.4 2.4 2.3 2.2 2.1 2.0 1.9 1.8 1.7 1.7 Occupational pensions, gross : : : : : : : : : : :

Private mandatory pensions, gross : : : : : : : : : : :

Total pension expenditure, gross 10.7 10.4 11.2 12.0 12.9 13.5 14.0 14.1 13.8 13.7 13.7 Social security pensions, net 8.7 8.5 9.1 9.8 10.5 11.0 11.4 11.5 11.3 11.2 11.2

Total pension expenditure, net 8.7 8.5 9.1 9.8 10.5 11.0 11.4 11.5 11.3 11.2 11.2

Social security pensions, contributions 9.1 9.1 9.0 9.7 10.3 10.8 11.2 11.3 11.2 11.2 11.2 Total pension contributions 9.1 9.1 9.0 9.7 10.3 10.8 11.2 11.3 11.2 11.2 11.2

Social security pensions, assets 52.4 53.9 59.3 63.1 66.0 68.2 69.9 70.8 71.3 72.2 72.9 All pensions, assets 52.4 53.9 59.3 63.1 66.0 68.2 69.9 70.8 71.3 72.2 72.9 Additional indicators

Social security pensions, net / Social sec. pensions, gross,% 81 81 82 82 82 82 82 82 82 82 82 Total pension expenditure, net / Total pension exp., gross, % 81 81 82 82 82 82 82 82 82 82 82

Social security pensions, num ber of pensioners , 1000 pers. 1282 1309 1413 1530 1640 1721 1771 1773 1748 1727 1714 All pensions, pensioners , 1000 pers. 1282 1309 1413 1530 1640 1721 1771 1773 1748 1727 1714

Number of pensioners aged 65+ , 1000 pers. 824 834 919 1096 1231 1335 1415 1440 1407 1390 1386

Share of pensioners below age 65 as % of all pensioners 35.7 36.3 35.0 28.3 24.9 22.4 20.1 18.8 19.5 19.5 19.1 Average gross social sec. pension, 1000 in 2004 prices 12.5 12.3 13.9 15.2 16.6 18.0 19.5 21.1 22.8 24.6 26.5 Average gross total pensions, 1000 in 2004 prices 12.5 12.3 13.9 15.2 16.6 18.0 19.5 21.1 22.8 24.6 26.5 Output / W orker, 1000 in 2004 prices 62.7 64.1 70.5 78.3 87.0 96.2 105.2 114.5 124.6 135.7 147.7 Social sec. benefit ratio 19.8 19.1 19.6 19.4 19.1 18.8 18.5 18.4 18.3 18.1 18.0

Total pension benefit ratio 19.8 19.1 19.6 19.4 19.1 18.8 18.5 18.4 18.3 18.1 18.0

Social security pensions, num of contributors, in 1000 2311 2313 2365 2360 2341 2305 2272 2257 2246 2221 2187 Average social sec. pension contribution, 1000 in 2004 prices 5.9 6.1 6.7 8.0 9.3 10.7 12.1 13.3 14.4 15.7 17.0 Average total pension contribution, 1000 in 2004 prices 5.9 6.1 6.7 8.0 9.3 10.7 12.1 13.3 14.4 15.7 17.0

Support ratio (contributors /100 pensioners, social sec. pens.) 180 177 167 154 143 134 128 127 128 129 128 High life expectancy; as % of GDP

Social security pensions, gross 10.7 10.4 11.2 12.1 12.9 13.6 14.1 14.2 14.0 13.9 13.9 Old-age and early pensions, gross 7.9 8.0 8.8 9.8 10.7 11.5 12.1 12.3 12.2 12.2 12.3

Total pension expenditure, gross 10.7 10.4 11.2 12.1 12.9 13.6 14.1 14.2 14.0 13.9 13.9 All pensions, assets 52.4 53.9 59.3 63.1 66.1 68.3 70.1 70.9 71.3 72.1 72.6 Higher labour productivity; as % of GDP

Social security pensions, gross 10.7 10.4 11.2 12.0 12.7 13.3 13.6 13.6 13.4 13.3 13.3 Old-age and early pensions, gross 7.9 8.0 8.8 9.7 10.5 11.2 11.7 11.8 11.6 11.6 11.7

Total pension expenditure, gross 10.7 10.4 11.2 12.0 12.7 13.3 13.6 13.6 13.4 13.3 13.3 All pensions, assets 52.4 53.9 59.3 62.5 64.6 66.1 67.2 67.5 67.6 68.1 68.4 Lower labour productivity; as % of GDP

Social security pensions, gross 10.7 10.4 11.2 12.1 13.1 13.8 14.4 14.5 14.3 14.2 14.2 Old-age and early pensions, gross 7.9 8.0 8.8 9.8 10.8 11.7 12.4 12.5 12.4 12.4 12.5

Total pension expenditure, gross 10.7 10.4 11.2 12.1 13.1 13.8 14.4 14.5 14.3 14.2 14.2 All pensions, assets 52.4 53.9 59.4 63.6 67.3 70.3 72.6 74.0 74.9 76.2 77.2 Higher employment rate (1 p.p.); as % of GDP

Social security pensions, gross 10.7 10.4 11.2 11.9 12.8 13.5 13.9 14.0 13.8 13.7 13.8 Old-age and early pensions, gross 7.9 8.0 8.8 9.7 10.6 11.4 12.0 12.2 12.0 12.0 12.1

Total pension expenditure, gross 10.7 10.4 11.2 11.9 12.8 13.5 13.9 14.0 13.8 13.7 13.8 All pensions, assets 52.4 53.9 59.3 62.9 66.0 68.4 70.3 71.3 71.8 72.8 73.5 Higher older workers empl. rate (5 p.p.); as % of GDP

Social security pensions, gross 10.7 10.4 11.1 11.8 12.6 13.2 13.7 13.8 13.6 13.5 13.5 Old-age and early pensions, gross 7.9 8.0 8.8 9.7 10.6 11.3 11.9 12.1 12.0 11.9 12.0

Total pension expenditure, gross 10.7 10.4 11.1 11.8 12.6 13.2 13.7 13.8 13.6 13.5 13.5 All pensions, assets 52.4 53.9 59.0 62.5 65.1 67.1 68.9 69.8 70.2 71.0 71.6 Lower interest rate; as % of GDP

Social security pensions, gross 10.7 10.4 11.2 12.0 12.9 13.5 13.9 14.0 13.8 13.7 13.6 Old-age and early pensions, gross 7.9 8.0 8.8 9.7 10.7 11.4 12.0 12.1 12.0 11.9 12.0

Total pension expenditure, gross 10.7 10.4 11.2 12.0 12.9 13.5 13.9 14.0 13.8 13.7 13.6 All pensions, assets 52.4 53.9 56.6 58.2 59.3 60.1 60.4 60.3 59.9 60.0 60.0 Higher interest rate; as % of GDP

Social security pensions, gross 10.7 10.4 11.2 12.0 12.9 13.6 14.0 14.1 13.9 13.8 13.8 Old-age and early pensions, gross 7.9 8.0 8.8 9.7 10.7 11.5 12.1 12.2 12.1 12.1 12.2

Total pension expenditure, gross 10.7 10.4 11.2 12.0 12.9 13.6 14.0 14.1 13.9 13.8 13.8 All pensions, assets 52.4 54.3 62.1 67.8 72.8 77.0 80.5 83.0 84.9 87.2 88.8 : = data not provided

Finland OTHER AGE-RELATED EXPENDITURES as % of GDP

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Health care spending as % of GDP

Pure ageing s cenario 5.6 5.6 5.8 6 .0 6.2 6.4 6.7 6.9 7.0 7 .0 7.0

Cons tant health s cenario 5.6 5.6 5.6 5 .7 5.9 6.0 6.2 6.3 6.4 6 .4 6.4

Death-related cos ts s cenario 5.6 5.6 5.7 5 .9 6.0 6.2 6.4 6.6 6.7 6 .7 6.7 Incom e elas ticity of dem and 5.6 5.6 5.8 6 .1 6.4 6.6 6.9 7.1 7.3 7 .3 7.3 Unit cos ts - GDP per worker 5.6 5.6 5.7 6 .0 6.3 6.7 7.1 7.4 7.5 7 .5 7.5 AWG reference s cenario 5.6 5.6 5.8 6 .0 6.2 6.4 6.6 6.9 7.0 7 .0 7.0 Long-term care spending as % of GDP

Pure ageing s cenario 1.7 1.7 1.9 2 .0 2.3 2.5 3.2 3.6 3.8 3 .9 3.9

Unit cos ts - GDP per capita 1.7 1.8 1.9 2 .0 2.2 1.9 3.0 3.4 3.6 3 .7 3.7

Cons tant dis ability s cenario 1.7 1.7 1.8 1 .9 2.0 2.2 2.7 3.0 3.0 3 .0 3.0 Increas e in form al care 1.7 1.8 2.0 2 .3 2.6 2.9 3.7 4.2 4.4 4 .5 4.6 AWG reference s cenario 1.7 1.7 1.9 2 .0 2.1 2.4 3.0 3.3 3.4 3 .5 3.5 Numbe r of de pe nde nt pe ople (in thous ands )

Pure ageing s cenario 183 187 206 234 2 66 30 3 349 375 381 379 3 74

Unit cos ts - GDP per capita 183 187 206 234 2 66 15 3 349 375 381 379 3 74

Cons tant dis ability s cenario 183 184 190 167 2 13 22 8 254 264 261 252 2 42 Increas e in form al care 183 187 206 234 2 66 30 3 349 375 381 379 3 74 AWG reference s cenario 183 185 198 217 2 40 26 5 301 320 321 316 3 08 of which re ce iving formal care

Pure ageing s cenario 109 111 125 139 1 57 18 0 217 238 246 246 2 42

Unit cos ts - GDP per capita 109 111 125 139 1 57 18 0 217 238 246 246 2 42

Cons tant dis ability s cenario 109 110 116 122 1 29 14 1 165 176 176 172 1 65 Increas e in form al care 109 115 146 180 2 18 24 9 291 315 321 321 3 16 AWG reference s cenario 109 111 120 130 1 43 16 0 191 207 211 209 2 04 of which re ce iving informal or no care

Pure ageing s cenario 74 7 5 81 96 1 09 12 2 132 136 135 133 1 31

Unit cos ts - GDP per capita 74 7 5 81 96 1 09 51 132 136 135 133 1 31 Cons tant dis ability s cenario 74 7 4 74 63 84 87 89 8 9 85 81 77 Increas e in form al care 74 7 2 60 54 48 54 58 6 0 59 59 58

AWG reference s cenario 74 7 5 78 87 96 10 5 110 113 110 107 1 04 Education spending as % of GDP

Total 6.0 6.0 5.6 5 .4 5.3 5.3 5.4 5.4 5.3 5 .3 5.3

of which: Transfers 0.5 0.5 0.5 0 .5 0.5 0.4 0.4 0.4 0.4 0 .4 0.4 Prim ary 1.4 1.3 1.2 1 .2 1.2 1.2 1.3 1.2 1.2 1 .2 1.2

of which: Transfers 0.0 0.0 0.0 0 .0 0.0 0.0 0.0 0.0 0.0 0 .0 0.0 Low s econdary 1.1 1.1 1.1 1 .0 1.0 1.0 1.0 1.1 1.0 1 .0 1.0

of which: Transfers 0.0 0.0 0.0 0 .0 0.0 0.0 0.0 0.0 0.0 0 .0 0.0 Upper s econdary 1.4 1.5 1.4 1 .4 1.3 1.3 1.4 1.4 1.3 1 .3 1.3

of which: Transfers 0.1 0.1 0.1 0 .1 0.1 0.1 0.1 0.1 0.1 0 .1 0.1 Tertiary education 2.1 2.1 1.9 1 .9 1.8 1.8 1.8 1.8 1.8 1 .8 1.8

of which: Transfers 0.4 0.4 0.4 0 .3 0.3 0.3 0.3 0.3 0.3 0 .3 0.3 Number of s tudents (in thous ands )

Total 1 169 11 85 112 1 1079 1056 1044 1 040 10 29 100 6 983 9 67 Prim ary 388 382 347 344 3 48 35 2 350 342 329 321 3 19

Low s econdary 198 201 195 178 1 77 17 9 181 180 175 168 1 65

Upper s econdary 300 309 309 291 2 78 27 3 274 273 269 262 2 56

Tertiary education 283 293 269 266 2 53 24 0 236 234 233 232 2 28 Memo

Population aged 15 64 (in thous ands ) 3 486 34 91 352 6 3412 3311 3231 3 162 31 15 310 9 3069 3015 Unemployment benefit spending as % of GDP

1.5 1.4 1.2 1 .1 1.1 1.1 1.1 1.1 1.1 1 .1 1.1

Sweden Main demographic and macroeconomic assumptions (BA SELINE SCENA RIO)

Budgetary Projection: A WG variant population scenario

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 De mogra phic a ssumptions

Fe rtility rate 1.7 1.8 1.8 1.9 1.9 1.9 1.9 1.9 1.9 1.9 1.9 Life e xpe ctancy at bir th

m ale s 78.1 78.2 79.0 79.7 80.4 80.9 81.4 81.8 82.1 82.4 82.6

fe m ale s 82.4 82.5 83.2 83.8 84.4 84.9 85.4 85.7 86.1 86.4 86.6 Life e xpe ctancy at 65

m ale s 16.7 16.8 17.3 17.8 18.3 18.7 19.0 19.3 19.5 19.8 20.0

fe m ale s 19.8 19.9 20.4 20.8 21.3 21.7 22.0 22.3 22.5 22.8 23.0

Ne t m igr ation (thous and) 28.2 27.2 24.1 23.9 22.7 22.1 21.8 21.7 21.5 21.4 21.3

Ne t m igr ation as % of population 0.31 0.30 0.26 0.26 0.24 0.23 0.22 0.22 0.21 0.21 0.21 Population (m illion) 9.0 9.0 9.2 9.4 9.6 9.8 9.9 10.0 10.0 10.1 10.2

Population age d 0-14 as % of total 17.8 17.6 16.5 16.8 17.1 17.1 17.0 16.6 16.2 16.1 16.3

Prim e age population (25-54) as % of total 40.2 39.9 38.9 38.7 38.7 37.1 36.1 36.2 36.4 36.2 35.5 Work ing age population (15-64) as % of total 65.0 65.2 65.3 63.1 61.7 60.8 60.0 59.4 59.3 59.4 59.4 Elde rly population age d 65+ as % of total 17.2 17.2 18.3 20.1 21.2 22.1 23.0 24.0 24.5 24.4 24.3

V e ry e lde rly population age d 80 and ove r as % of total 5.3 5.3 5.3 5.1 5.3 6.3 7.6 8.0 8.2 8.6 9.1

Elde rly population age d 55+ as % of w or k ing age pop.15-64 6.6 6.6 6.7 7.3 7.8 8.3 8.7 8.8 8.8 8.9 9.1 Ma croe conomic a ssumptions

Re al GDP (grow th r ate ) 2.1 2.7 2.9 2.7 2.5 2.2 1.6 1.8 1.9 1.9 1.8

Labour input (grow th r ate ) 0.0 0.8 0.3 0.2 0.1 0.1 -0.1 0.1 0.2 0.2 0.0

Labour pr oductivity (gr ow th rate ) 2.1 1.9 2.6 2.6 2.4 2.1 1.7 1.7 1.7 1.7 1.7 TFP (gr ow th rate ) 1.7 1.6 2.1 1.9 1.6 1.4 1.1 1.1 1.1 1.1 1.1

Capital de e pe ning (c ontribution to labour productivity grow th) 0.4 0.3 0.5 0.7 0.8 0.7 0.6 0.6 0.6 0.6 0.6 GDP pe r capita (grow th r ate ) 1.7 2.3 2.5 2.3 2.1 1.8 1.3 1.7 1.7 1.8 1.6

GDP in 2004 price s (in billions of e uro) 278 286 329 378 429 481 526 572 626 690 756 GDP pe r w ork e r 22.6 23.1 26.1 29.3 32.6 35.8 38.7 41.7 45.4 49.7 54.0 Re al inte re s t r ate 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 La bour force a ssum ptions

Population grow th (w ork ing age :15-64) 0.7 0.0 -0.3 0.1 0.1 -0.2 0.1 0.1 0.2 0.1

Labour force (thous ands ) 4522 4563 4698 4745 4769 4794 4790 4783 4812 4873 4905 Participation rate (15-64) 77.5 77.7 78.3 80.3 80.8 80.8 80.7 80.7 80.9 81.1 81.1

young (15-24) 48.4 48.7 50.7 54.2 50.9 50.6 51.2 51.0 51.2 51.8 51.7

prim e -age (25-54) 88.0 88.2 89.4 90.1 90.6 91.0 91.2 91.3 91.3 91.2 91.2 olde r (55-64) 71.8 72.5 73.4 75.3 76.3 77.5 77.3 77.6 78.0 79.0 79.0

olde s t (65-71) 10.9 11.1 14.3 13.5 13.4 13.7 14.3 13.6 13.9 13.6 14.0 Em ploym e nt rate (15-64) 73.4 73.8 74.9 76.8 77.3 77.4 77.2 77.2 77.4 77.6 77.6 Em ploym e nt rate (15-71) 68.1 68.5 68.8 69.1 70.0 70.3 69.9 69.3 69.8 70.4 70.7 Em ploym e nt grow th (15-64) 1.3 0.3 0.2 0.1 0.1 -0.1 0.1 0.2 0.2 0.0

Une m ploym e nt rate (15-64) 5.3 5.0 4.3 4.3 4.3 4.3 4.3 4.3 4.3 4.3 4.3 De pe nde ncy ra tios:

Share of olde r w or k e rs 18.3 18.8 18.7 18.0 18.6 19.9 20.0 18.8 18.0 19.1 20.9

Old-age de pe nde ncy ratio (1) 26.4 26.4 28.0 31.9 34.4 36.4 38.4 40.5 41.4 41.1 40.9 Total de pe nde ncy ratio (2) 53.8 53.4 53.2 58.6 62.1 64.6 66.7 68.4 68.7 68.3 68.4

Total e conom ic de pe nde ncy ratio 109.6 107.7 104.4 106.4 109.7 112.7 115.9 118.1 118.1 116.8 116.9 Econom ic old-age de pe nde ncy ratio (15-64) 34.6 34.4 35.2 39.2 42.3 44.8 47.4 50.0 51.1 50.8 50.5 Econom ic old-age de pe nde ncy ratio (15-71) 34.2 33.9 34.4 38.2 41.3 43.9 46.2 48.8 49.9 49.7 49.4 LEGENDA :

S h a r e o f o ld e r wo r k e r s = P o p u la t io n a g e d 5 5 t o 6 4 a s % o f p o p u la t io n a g e d 15 - 6 4

O ld - a g e d e p e n d e n c y ra t io ( 1) = P o p u la t io n a g e d 6 5 a n d o v e r a s a p e rc e n t a g e o f t h e p o p u la t io n a g e d 15 - 6 4

T o t a l d e p e n d e n c y r a t io ( 2 ) = P o p u la t io n u n d e r 15 a n d o v e r 6 4 a s a p e rc e n t a g e o f t h e p o p u la t io n a g e d 15 - 6 4

T o t a l e c o n o m ic d e p e n d e n c y r a t io = T o t a l p o p u la t io n le s s e m p lo ye d a s % o f e m p lo ye d p o p u la t io n ( 15 - 6 4 )

E c o n o m ic o ld - a g e d e p e n d e n c y ra t io ( 15 - 6 4 ) = In a c t iv e p o p u la t io n a g e d 6 5 + a s % o f e m p lo ye d p o p u la t io n ( 15 - 6 4 )

E c o n o m ic o ld - a g e d e p e n d e n c y ra t io ( 15 - 7 1) = In a c t iv e p o p u la t io n a g e d 6 5 + a s % o f e m p lo ye d p o p u la t io n ( 15 - 7 1)

Sweden EPC-AW G Pension expenditure projections

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Baseline scenario; as % of GDP

Social security pensions, gross 10.6 10.4 10.1 10.3 10.4 10.7 11.1 11.4 11.6 11.4 11.2 Old-age and early pens ions , gros s 7.8 7.6 7.7 8.2 8.5 8.9 9.4 9.8 10.1 10.0 9.9

Of which: earnings -related pens ions , gros s 6.4 6.5 6.8 7.2 7.4 7.6 7.9 8.2 8.4 8.1 8.0 Private s ector em ployees , gros s 3.8 3.9 4.0 4.2 4.1 4.2 4.3 4.4 4.5 4.4 4.3 Public s ector em ployees , gros s 2.6 2.6 2.8 3.1 3.2 3.4 3.6 3.8 3.9 3.8 3.7

Other pens ions (dis ability, s urvivors ), gros s 2.8 2.8 2.4 2.1 1.9 1.8 1.7 1.6 1.4 1.4 1.3 Occupational pensions, gross 2.3 2.3 2.3 2.5 2.5 2.6 2.8 2.9 2.9 2.7 2.6

Private mandatory pensions, gross 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Total pension expenditure, gross 12.9 12.6 12.4 12.8 12.9 13.3 13.9 14.3 14.5 14.1 13.9 Social security pensions, net 7.8 7.6 7.4 7.5 7.6 7.8 8.1 8.3 8.5 8.3 8.2

Total pension expenditure, net 9.4 9.2 9.1 9.3 9.4 9.7 10.1 10.5 10.6 10.3 10.1

Social security pensions, contributions 7.7 7.7 7.5 7.4 7.4 7.4 7.4 7.4 7.3 7.3 7.3 Total pension contributions 9.1 9.0 8.8 8.8 8.8 8.7 8.7 8.7 8.6 8.6 8.6

Social security pensions, assets 32.1 33.7 40.0 43.1 45.6 47.7 49.6 49.6 47.7 45.5 44.4 All pensions, assets 38.6 41.5 53.5 60.7 66.0 69.7 72.3 71.6 68.1 63.9 60.9 Additional indicators

Social security pensions, net / Social sec. pensions, gross,% 73 73 73 73 73 73 73 73 73 73 73 Total pension expenditure, net / Total pension exp., gross, % 73 73 73 73 73 73 73 73 73 73 73

Social security pensions, num ber of pensioners , 1000 pers. 2126 2132 2275 2507 2715 2902 3079 3201 3297 3303 3327 All pensions, pensioners , 1000 pers. 2126 2132 2275 2507 2715 2902 3079 3201 3297 3303 3327

Num ber of pensioners aged 65+ , 1000 pers. 1629 1630 1802 2053 2263 2451 2633 2756 2848 2845 2868

Share of pensioners below age 65 as % of all pensioners 23.4 23.5 20.8 18.1 16.6 15.6 14.5 13.9 13.6 13.9 13.8 Average gross social sec. pension, 1000 in 2004 prices 13.9 13.9 14.6 15.6 16.4 17.7 18.9 20.4 22.0 23.8 25.6 Average gross total pensions, 1000 in 2004 prices 16.9 17.0 18.0 19.3 20.4 22.0 23.7 25.6 27.5 29.4 31.5 Output / W orker, 1000 in 2004 prices 65.4 66.7 73.2 83.2 94.0 104.8 114.9 125.0 136.1 148.0 161.1 Social sec. benefit ratio 21.3 20.9 20.0 18.7 17.5 16.9 16.5 16.3 16.2 16.0 15.9

Total pension benefit ratio 25.9 25.4 24.6 23.1 21.7 21.0 20.6 20.5 20.2 19.9 19.5 Social security pensions, num of contributors, in 1000 : : : : : : : : : : :

Average social sec. pension contribution, 1000 in 2004 prices : : : : : : : : : : :

Average total pension contribution, 1000 in 2004 prices 4.7 4.8 5.3 6.0 6.8 7.6 8.2 8.8 9.5 10.3 11.2 Support ratio (contributors /100 pensioners, social sec. pens.) : : : : : : : : : : : High life expectancy; as % of GDP

Social security pensions, gross 10.6 10.4 10.1 10.3 10.5 10.8 11.2 11.6 11.8 11.7 11.6 Old-age and early pensions, gross 7.8 7.6 7.7 8.3 8.6 9.0 9.5 10.0 10.4 10.3 10.2

Total pension expenditure, gross 12.9 12.6 12.5 12.8 13.0 13.4 14.1 14.6 14.8 14.4 14.2 All pensions, assets 38.6 41.5 53.2 60.2 65.3 68.7 71.1 70.0 66.1 61.3 57.9 Higher labour productivity; as % of GDP

Social security pensions, gross 10.6 10.4 10.1 10.3 10.3 10.6 10.9 11.3 11.4 11.2 11.0 Old-age and early pensions, gross 7.8 7.6 7.7 8.2 8.4 8.8 9.3 9.8 10.0 9.9 9.8

Total pension expenditure, gross 12.9 12.6 12.4 12.7 12.8 13.1 13.7 14.0 14.1 13.7 13.5 All pensions, assets 38.6 41.5 53.4 60.2 65.0 68.1 70.3 69.3 65.9 61.8 59.3 Lower labour productivity; as % of GDP

Social security pensions, gross 10.6 10.4 10.1 10.4 10.5 10.8 11.3 11.6 11.8 11.6 11.5 Old-age and early pensions, gross 7.8 7.6 7.7 8.3 8.6 9.0 9.5 10.0 10.3 10.2 10.1

Total pension expenditure, gross 12.9 12.6 12.4 12.9 13.1 13.5 14.2 14.7 14.9 14.5 14.3 All pensions, assets 38.6 41.5 53.5 61.1 67.2 71.6 74.9 74.6 71.3 66.9 63.7 Higher employment rate (1 p.p.); as % of GDP

Social security pensions, gross 10.6 10.4 10.1 10.2 10.3 10.6 11.0 11.4 11.5 11.3 11.2 Old-age and early pensions, gross 7.8 7.6 7.7 8.1 8.4 8.8 9.3 9.8 10.1 9.9 9.9

Total pension expenditure, gross 12.9 12.6 12.4 12.7 12.9 13.3 13.8 14.3 14.4 14.0 13.8 All pensions, assets 38.6 41.5 53.1 60.3 65.8 69.4 72.1 71.5 68.1 64.1 61.4 Higher older workers empl. rate (5 p.p.); as % of GDP

Social security pensions, gross : : : : : : : : : : :

Old-age and early pensions, gross : : : : : : : : : : : Total pension expenditure, gross : : : : : : : : : : : All pensions, assets : : : : : : : : : : : Lower interest rate; as % of GDP

Social security pensions, gross 10.6 10.4 10.1 10.3 10.4 10.6 11.0 11.3 11.4 11.1 11.0 Old-age and early pensions, gross 7.8 7.6 7.7 8.2 8.5 8.8 9.3 9.7 9.9 9.8 9.6

Total pension expenditure, gross 12.9 12.6 12.4 12.7 12.9 13.1 13.6 13.9 14.0 13.5 13.2 All pensions, assets 38.6 41.2 51.5 56.6 59.8 61.4 62.3 60.3 56.2 52.0 49.4 Higher interest rate; as % of GDP

Social security pensions, gross 10.6 10.4 10.1 10.3 10.5 10.7 11.2 11.6 11.8 11.7 11.6 Old-age and early pensions, gross 7.8 7.6 7.7 8.2 8.5 8.9 9.5 10.0 10.4 10.3 10.3

Total pension expenditure, gross 12.9 12.6 12.5 12.9 13.1 13.5 14.2 14.8 15.1 14.8 14.6 All pensions, assets 38.7 41.8 55.5 65.1 73.0 79.2 84.5 86.0 84.1 80.6 78.2 : = data not provided

Sweden OTHER AGE-RELATED EXPENDITURES as % of GDP

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Health care spending as % of GDP

Pure ageing s cenario 6.7 6.7 6.8 7.0 7 .2 7.3 7.5 7.6 7.7 7.7 7.8

Cons tant health s cenario 6.7 6.7 6.7 6.7 6 .8 6.9 6.9 7.0 7.0 7.0 7.0

Death-related cos ts s cenario 6.7 6.7 6.8 6.9 7 .0 7.1 7.2 7.3 7.4 7.5 7.5 Incom e elas ticity of dem and 6.7 6.7 6.9 7.1 7 .4 7.6 7.8 7.9 8.0 8.1 8.1 Unit cos ts - GDP per worker 6.7 6.7 6.7 6.9 7 .2 7.5 7.8 8.0 8.1 8.1 8.1 AWG reference s cenario 6.7 6.7 6.8 7.0 7 .2 7.4 7.5 7.6 7.7 7.7 7.7 Long-term care spending as % of GDP

Pure ageing s cenario 3.8 3.8 3.7 3.7 3 .9 4.5 5.3 5.7 5.8 6.0 6.3

Unit cos ts - GDP per capita 3.8 3.8 3.8 3.7 3 .8 3.3 5.1 5.4 5.5 5.7 6.0

Cons tant dis ability s cenario 3.8 3.8 3.6 3.4 3 .5 3.9 4.5 4.6 4.6 4.6 4.7 Increas e in form al care 3.8 3.9 3.9 3.9 4 .2 4.9 5.8 6.1 6.2 6.4 6.8 AWG reference s cenario 3.8 3.8 3.7 3.5 3 .7 4.2 4.9 5.1 5.2 5.3 5.5 Numbe r of de pe nde nt pe ople (in thous ands )

Pure ageing s cenario 322 32 4 3 31 3 48 379 432 487 514 531 549 56 9

Unit cos ts - GDP per capita 322 32 4 3 31 3 48 379 241 487 514 531 549 56 9

Cons tant dis ability s cenario 322 32 0 3 08 2 59 310 337 366 372 370 372 37 8 Increas e in form al care 322 32 4 3 31 3 48 379 432 487 514 531 549 56 9 AWG reference s cenario 322 32 2 3 20 3 26 345 384 427 443 450 460 47 4 of which re ce iving formal care

Pure ageing s cenario 243 24 4 2 48 2 54 275 321 370 392 404 421 44 2

Unit cos ts - GDP per capita 243 24 4 2 48 2 54 275 321 370 392 404 421 44 2

Cons tant dis ability s cenario 243 24 2 2 32 2 26 231 258 288 294 293 297 30 6 Increas e in form al care 243 24 8 2 70 2 95 334 383 435 460 475 492 51 3 AWG reference s cenario 243 24 3 2 40 2 40 253 289 329 343 349 359 37 4 of which re ce iving informal or no care

Pure ageing s cenario 79 79 84 94 104 111 116 122 126 128 12 7

Unit cos ts - GDP per capita 79 79 84 94 104 47 116 122 126 128 12 7 Cons tant dis ability s cenario 79 78 76 62 79 79 7 9 7 8 77 75 73 Increas e in form al care 79 75 61 53 46 49 5 1 5 4 56 56 56

AWG reference s cenario 79 78 80 86 92 95 9 8 100 102 102 10 0 Education spending as % of GDP

Total 7.3 7.3 6.7 6.5 6 .4 6.4 6.6 6.6 6.6 6.5 6.4

of which: Transfers 1.1 1.1 1.0 1.0 0 .9 0.9 0.9 1.0 1.0 0.9 0.9 Prim ary 2.0 1.9 1.7 1.8 1 .8 1.9 1.9 1.9 1.8 1.8 1.8

of which: Transfers 0.0 0.0 0.0 0.0 0 .0 0.0 0.0 0.0 0.0 0.0 0.0 Low s econdary 1.2 1.2 1.0 0.9 1 .0 1.0 1.0 1.0 1.0 1.0 1.0

of which: Transfers 0.0 0.0 0.0 0.0 0 .0 0.0 0.0 0.0 0.0 0.0 0.0 Upper s econdary 1.7 1.7 1.8 1.5 1 .5 1.5 1.6 1.6 1.6 1.6 1.5

of which: Transfers 0.3 0.3 0.4 0.3 0 .3 0.3 0.3 0.3 0.3 0.3 0.3 Tertiary education 2.4 2.4 2.2 2.3 2 .1 2.0 2.1 2.1 2.1 2.1 2.1

of which: Transfers 0.7 0.7 0.6 0.7 0 .6 0.6 0.6 0.6 0.6 0.6 0.6 Number of s tudents (in thous ands )

Total 2100 2111 1991 1943 196 1 198 4 20 25 20 48 2 033 2 009 2005 Prim ary 745 71 3 6 29 6 87 704 717 737 730 706 701 71 5

Low s econdary 405 42 0 3 63 3 28 361 366 375 385 380 367 36 5

Upper s econdary 540 56 4 5 97 5 15 514 532 538 552 559 549 53 6

Tertiary education 411 41 5 4 02 4 13 381 367 375 381 388 392 38 7 Memo

Population aged 15 64 (in thous ands ) 5835 5874 5998 5909 590 2 592 9 59 36 59 26 5 951 6 006 6046 Unemployment benefit spending as % of GDP

1.1 1.1 0.9 0.9 0 .9 0.9 0.9 0.9 0.9 0.9 0.9

United Kingdom Main demographic and macroeconomic assumptions (BA SELINE SCENA RIO)

Budgetary Projection: A WG variant population scenario

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 De mogra phic a ssumptions

Fe rtility rate 1.7 1.7 1.7 1.7 1.8 1.8 1.8 1.8 1.8 1.8 1.8 Life e xpe ctancy at bir th

m ale s 76.4 76.6 77.6 78.5 79.4 80.1 80.7 81.3 81.7 82.1 82.4

fe m ale s 80.9 81.1 82.1 83.0 83.8 84.5 85.1 85.6 86.0 86.3 86.7 Life e xpe ctancy at 65

m ale s 16.1 16.2 16.9 17.6 18.2 18.7 19.2 19.6 19.9 20.2 20.4

fe m ale s 19.0 19.1 19.8 20.5 21.1 21.7 22.1 22.5 22.8 23.1 23.3

Ne t m igr ation (thous and) 139.5 134.5 116.1 107.7 102.8 100.3 99.2 98.8 98.7 98.5 98.5

Ne t m igr ation as % of population 0.23 0.22 0.19 0.17 0.16 0.16 0.15 0.15 0.15 0.15 0.15 Population (m illion) 59.7 59.9 60.9 61.9 62.9 63.8 64.4 64.6 64.7 64.5 64.2

Population age d 0-14 as % of total 18.3 18.0 17.0 16.5 16.3 16.1 15.8 15.3 14.9 14.7 14.7

Prim e age population (25-54) as % of total 41.5 41.4 41.2 40.9 39.8 38.2 37.2 37.1 36.6 36.0 35.5 Work ing age population (15-64) as % of total 65.7 65.9 66.3 65.2 64.2 63.0 61.3 59.9 59.2 59.2 58.8 Elde rly population age d 65+ as % of total 16.0 16.1 16.6 18.3 19.5 20.9 22.9 24.8 25.8 26.0 26.5

V e ry e lde rly population age d 80 and ove r as % of total 4.3 4.4 4.6 4.8 5.2 5.7 6.8 7.3 8.1 9.2 10.1

Elde rly population age d 55+ as % of w or k ing age pop.15-64 41.5 41.6 42.1 44.3 47.8 51.4 54.4 56.1 57.3 58.1 59.0 Ma croe conomic a ssumptions

Re al GDP (grow th r ate ) 2.6 2.6 3.0 2.6 2.1 1.7 1.3 1.5 1.7 1.5 1.3

Labour input (grow th r ate ) 0.7 0.6 0.7 0.2 0.0 -0.2 -0.4 -0.2 0.0 -0.2 -0.4

Labour pr oductivity (gr ow th rate ) 1.9 2.0 2.4 2.3 2.2 1.9 1.7 1.7 1.7 1.7 1.7 TFP (gr ow th rate ) 1.2 1.2 1.6 1.5 1.3 1.2 1.1 1.1 1.1 1.1 1.1

Capital de e pe ning (c ontribution to labour productivity grow th) 0.7 0.8 0.7 0.9 0.8 0.7 0.6 0.6 0.6 0.6 0.6 GDP pe r capita (grow th r ate ) 2.2 2.2 2.7 2.2 1.8 1.5 1.2 1.4 1.7 1.6 1.5

GDP in 2004 price s (in billions of e uro) 1706 1751 2019 2309 2587 2843 3054 3277 3547 3843 4123 GDP pe r w ork e r 21.0 21.5 24.4 27.4 30.2 32.8 34.9 37.3 40.3 43.8 47.2 Re al inte re s t r ate 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 La bour force a ssum ptions

Population grow th (w ork ing age :15-64) 0.6 0.3 0.0 0.0 -0.2 -0.4 -0.3 -0.1 -0.2 -0.3

Labour force (thous ands ) 29599 29827 30859 31402 31476 31280 30759 30320 30155 30011 29577 Participation rate (15-64) 75.5 75.6 76.4 77.7 77.9 77.8 77.9 78.3 78.7 78.5 78.3

young (15-24) 63.8 63.9 65.2 65.7 65.2 64.9 64.8 64.8 65.0 65.2 65.2

prim e -age (25-54) 84.0 84.3 85.2 85.7 86.2 86.6 86.8 87.0 87.0 87.0 86.9 olde r (55-64) 57.5 57.6 58.5 62.8 63.6 63.9 63.5 63.8 65.6 65.6 65.2

olde s t (65-71) 15.7 16.0 16.1 16.4 16.3 16.4 16.6 16.3 16.1 16.3 16.6 Em ploym e nt rate (15-64) 71.8 72.0 72.9 74.2 74.3 74.2 74.3 74.7 75.1 74.9 74.7 Em ploym e nt rate (15-71) 67.0 67.2 67.8 68.0 68.2 67.9 67.1 66.9 67.6 68.2 67.7 Em ploym e nt grow th (15-64) 0.9 0.7 0.2 0.0 -0.2 -0.4 -0.2 0.0 -0.2 -0.4

Une m ploym e nt rate (15-64) 4.9 4.8 4.6 4.6 4.6 4.6 4.6 4.6 4.6 4.6 4.6 De pe nde ncy ra tios:

Share of olde r w or k e rs 13.3 13.5 14.0 14.8 16.5 18.0 17.6 16.2 16.4 17.7 18.2

Old-age de pe nde ncy ratio (1) 24.3 24.4 25.1 28.1 30.3 33.1 37.3 41.3 43.6 44.0 45.0 Total de pe nde ncy ratio (2) 52.1 51.7 50.8 53.3 55.7 58.7 63.0 66.9 68.8 68.9 70.0

Total e conom ic de pe nde ncy ratio 111.9 110.9 106.9 106.7 109.6 113.7 119.3 123.4 124.8 125.4 127.5 Econom ic old-age de pe nde ncy ratio (15-64) 31.9 31.9 32.3 35.3 38.3 42.0 47.1 52.0 55.0 56.0 57.2 Econom ic old-age de pe nde ncy ratio (15-71) 31.3 31.2 31.7 34.4 37.4 40.9 45.7 50.4 53.4 54.4 55.6 LEGENDA :

S h a r e o f o ld e r wo r k e r s = P o p u la t io n a g e d 5 5 t o 6 4 a s % o f p o p u la t io n a g e d 15 - 6 4

O ld - a g e d e p e n d e n c y ra t io ( 1) = P o p u la t io n a g e d 6 5 a n d o v e r a s a p e rc e n t a g e o f t h e p o p u la t io n a g e d 15 - 6 4

T o t a l d e p e n d e n c y r a t io ( 2 ) = P o p u la t io n u n d e r 15 a n d o v e r 6 4 a s a p e rc e n t a g e o f t h e p o p u la t io n a g e d 15 - 6 4

T o t a l e c o n o m ic d e p e n d e n c y r a t io = T o t a l p o p u la t io n le s s e m p lo ye d a s % o f e m p lo ye d p o p u la t io n ( 15 - 6 4 )

E c o n o m ic o ld - a g e d e p e n d e n c y ra t io ( 15 - 6 4 ) = In a c t iv e p o p u la t io n a g e d 6 5 + a s % o f e m p lo ye d p o p u la t io n ( 15 - 6 4 )

E c o n o m ic o ld - a g e d e p e n d e n c y ra t io ( 15 - 7 1) = In a c t iv e p o p u la t io n a g e d 6 5 + a s % o f e m p lo ye d p o p u la t io n ( 15 - 7 1)

United Kingdom EPC-AW G Pension expenditure projections

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Baseline scenario; as % of GDP

Social security pensions, gross 6.6 6.7 6.6 6.7 6.9 7.3 7.9 8.3 8.4 8.4 8.6

Old-age and early pens ions , gros s 6.6 6.7 6.6 6.7 6.9 7.3 7.9 8.3 8.4 8.4 8.6

Of which: earnings -related pens ions , gros s 2.2 2.2 2.5 2.7 3.1 3.3 3.7 3.9 4.1 4.2 4.5 Private s ector em ployees , gros s 0.7 0.7 0.8 0.9 1.0 1.1 1.3 1.4 1.5 1.7 2.0 Public s ector em ployees , gros s 1.5 1.5 1.6 1.8 2.1 2.2 2.5 2.5 2.5 2.5 2.5 Other pens ions (dis ability, s urvivors ), gros s : : : : : : : : : : : Occupational pensions, gross : : : : : : : : : : :

Private mandatory pensions, gross : : : : : : : : : : : Total pension expenditure, gross : : : : : : : : : : : Social security pensions, net : : : : : : : : : : :

Total pension expenditure, net : : : : : : : : : : :

Social security pensions, contributions 5.7 5.8 5.9 6.1 6.2 6.2 6.3 6.3 6.3 6.3 6.3 Total pension contributions : : : : : : : : : : :

Social security pensions, assets : : : : : : : : : : : All pensions, assets : : : : : : : : : : : Additional indicators

Social security pensions, net / Social sec. pensions, gross,% : : : : : : : : : : : Total pension expenditure, net / Total pension exp., gross, % : : : : : : : : : : : Social security pensions, number of pensioners , 1000 pers. : : : : : : : : : : : All pensions, pensioners , 1000 pers. : : : : : : : : : : :

Number of pensioners aged 65+ , 1000 pers. : : : : : : : : : : :

Share of pensioners below age 65 as % of all pensioners : : : : : : : : : : : Average gross social sec. pension, 1000 in 2004 prices : : : : : : : : : : : Average gross total pensions, 1000 in 2004 prices : : : : : : : : : : :

Output / W orker, 1000 in 2004 prices 59.3 60.5 68.6 77.1 86.2 95.3 104.1 113.3 123.3 134.2 146.1 Social sec. benefit ratio : : : : : : : : : : :

Total pension benefit ratio : : : : : : : : : : :

Social security pensions, num of contributors, in 1000 : : : : : : : : : : :

Average social sec. pension contribution, 1000 in 2004 prices : : : : : : : : : : : Average total pension contribution, 1000 in 2004 prices : : : : : : : : : : :

Support ratio (contributors /100 pensioners, social sec. pens.) : : : : : : : : : : : High life expectancy; as % of GDP

Social security pensions, gross 6.6 6.7 6.7 6.8 6.9 7.4 8.0 8.4 8.5 8.6 8.8

Old-age and early pensions, gross 6.6 6.7 6.7 6.8 6.9 7.4 8.0 8.4 8.5 8.6 8.8 Total pension expenditure, gross : : : : : : : : : : : All pensions, assets : : : : : : : : : : : Higher labour productivity; as % of GDP

Social security pensions, gross 6.6 6.7 6.6 6.7 6.7 7.1 7.7 8.0 8.0 8.1 8.2

Old-age and early pensions, gross 6.6 6.7 6.6 6.7 6.7 7.1 7.7 8.0 8.0 8.1 8.2 Total pension expenditure, gross : : : : : : : : : : : All pensions, assets : : : : : : : : : : : Lower labour productivity; as % of GDP

Social security pensions, gross 6.6 6.7 6.6 6.7 7.0 7.5 8.1 8.5 8.7 8.7 8.9

Old-age and early pensions, gross 6.6 6.7 6.6 6.7 7.0 7.5 8.1 8.5 8.7 8.7 8.9 Total pension expenditure, gross : : : : : : : : : : : All pensions, assets : : : : : : : : : : : Higher employment rate (1 p.p.); as % of GDP

Social security pensions, gross 6.6 6.7 6.6 6.7 6.8 7.2 7.8 8.2 8.3 8.4 8.5

Old-age and early pensions, gross 6.6 6.7 6.6 6.7 6.8 7.2 7.8 8.2 8.3 8.4 8.5 Total pension expenditure, gross : : : : : : : : : : : All pensions, assets : : : : : : : : : : : Higher older workers empl. rate (5 p.p.); as % of GDP

Social security pensions, gross 6.6 6.7 6.6 6.7 6.8 7.2 7.8 8.2 8.3 8.4 8.5

Old-age and early pensions, gross 6.6 6.7 6.6 6.7 6.8 7.2 7.8 8.2 8.3 8.4 8.5 Total pension expenditure, gross : : : : : : : : : : : All pensions, assets : : : : : : : : : : : Lower interest rate; as % of GDP

Social security pensions, gross 6.6 6.7 6.6 6.7 6.9 7.3 7.9 8.3 8.4 8.4 8.6

Old-age and early pensions, gross 6.6 6.7 6.6 6.7 6.9 7.3 7.9 8.3 8.4 8.4 8.6 Total pension expenditure, gross : : : : : : : : : : : All pensions, assets : : : : : : : : : : : Higher interest rate; as % of GDP

Social security pensions, gross 6.6 6.7 6.6 6.7 6.9 7.3 7.9 8.3 8.4 8.4 8.6

Old-age and early pensions, gross 6.6 6.7 6.6 6.7 6.9 7.3 7.9 8.3 8.4 8.4 8.6 Total pension expenditure, gross : : : : : : : : : : : All pensions, assets : : : : : : : : : : : : = data not provided

United Kingdom OTHER AGE-RELATED EXPENDITURES as % of GDP

2004 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Health care spending as % of GDP

Pure ageing s cenario 7 .0 7.0 7 .2 7.4 7.7 8.0 8.3 8.6 8.9 9 .1 9.3

Cons tant health s cenario 7 .0 7.0 7 .0 7.1 7.1 7.2 7.4 7.6 7.7 7 .9 7.9

Death-related cos ts s cenario 7 .0 7.0 7 .1 7.3 7.5 7.7 8.0 8.3 8.5 8 .7 8.8 Incom e elas ticity of dem and 7 .0 7.0 7 .3 7.6 7.9 8.3 8.6 9.0 9.3 9 .6 9.7

Unit cos ts - GDP per worker 7 .0 7.0 7 .0 7.3 7.6 8.1 8.6 9.2 9.5 9 .8 10 .0 AWG reference s cenario 7 .0 7.0 7 .2 7.4 7.6 7.9 8.1 8.4 8.7 8 .8 8.9 Long-term care spending as % of GDP

Pure ageing s cenario 1 .0 1.0 1 .0 1.0 1.1 1.2 1.4 1.5 1.7 1 .9 2.0

Unit cos ts - GDP per capita 1 .0 1.0 1 .0 1.1 1.1 0.9 1.4 1.5 1.6 1 .7 1.9

Cons tant dis ability s cenario 1 .0 1.0 1 .0 1.0 1.0 1.1 1.2 1.3 1.3 1 .4 1.5 Increas e in form al care 1 .0 1.1 1 .4 1.6 2.0 2.2 2.5 2.8 3.0 3 .4 3.6 AWG reference s cenario 1 .0 1.0 1 .0 1.0 1.1 1.1 1.3 1.4 1.5 1 .6 1.8 Numbe r of de pe nde nt pe ople (in thous ands )

Pure ageing s cenario 289 9 2 923 307 5 3 380 3686 40 47 4517 49 17 5 236 543 6 5 564

Unit cos ts - GDP per capita 289 9 2 923 307 5 3 380 3686 19 01 4517 49 17 5 236 543 6 5 564

Cons tant dis ability s cenario 289 9 2 880 280 9 2 329 2895 29 74 3156 32 62 3 343 339 9 3 408 Increas e in form al care 289 9 2 923 307 5 3 380 3686 40 47 4517 49 17 5 236 543 6 5 564 AWG reference s cenario 289 9 2 902 294 2 3 117 3291 35 10 3837 40 90 4 289 441 7 4 486 of which re ce iving formal care

Pure ageing s cenario 718 72 6 7 63 820 8 97 997 1147 12 47 1 354 147 2 1 553

Unit cos ts - GDP per capita 718 72 6 7 63 820 8 97 997 1147 12 47 1 354 147 2 1 553 Cons tant dis ability s cenario 718 71 7 7 11 720 7 44 785 86 8 906 95 2 101 5 1 053

Increas e in form al care 718 83 5 137 6 1 924 2459 27 05 3034 33 02 3 528 369 1 3 799 AWG reference s cenario 718 72 1 7 37 770 8 20 891 1008 10 76 1 153 124 4 1 303 of which re ce iving informal or no care

Pure ageing s cenario 218 1 2 198 231 2 2 559 2790 30 50 3371 36 71 3 882 396 3 4 011

Unit cos ts - GDP per capita 218 1 2 198 231 2 2 559 2790 13 29 3371 36 71 3 882 396 3 4 011

Cons tant dis ability s cenario 218 1 2 163 209 7 1 709 2151 21 89 2287 23 56 2 391 238 4 2 355 Increas e in form al care 218 1 2 088 170 0 1 456 1228 13 42 1484 16 16 1 709 174 4 1 765 AWG reference s cenario 218 1 2 180 220 5 2 347 2471 26 20 2829 30 14 3 136 317 3 3 183 Education spending as % of GDP

Total 4 .6 4.5 4 .2 4.0 4.0 4.0 4.1 4.1 4.0 3 .9 4.0

of which: Transfers 0 .3 0.3 0 .3 0.2 0.2 0.2 0.2 0.2 0.2 0 .2 0.2 Prim ary 1 .1 1.1 1 .0 1.0 1.0 1.0 1.0 1.0 1.0 1 .0 1.0

of which: Transfers 0 .0 0.0 0 .0 0.0 0.0 0.0 0.0 0.0 0.0 0 .0 0.0 Low s econdary 0 .8 0.8 0 .7 0.7 0.7 0.7 0.7 0.7 0.7 0 .7 0.7

of which: Transfers 0 .0 0.0 0 .0 0.0 0.0 0.0 0.0 0.0 0.0 0 .0 0.0 Upper s econdary 1 .5 1.5 1 .4 1.3 1.3 1.3 1.3 1.4 1.3 1 .3 1.3

of which: Transfers 0 .0 0.0 0 .0 0.0 0.0 0.0 0.0 0.0 0.0 0 .0 0.0 Tertiary education 1 .1 1.1 1 .1 1.0 1.0 1.0 1.0 1.0 1.0 1 .0 1.0

of which: Transfers 0 .3 0.3 0 .3 0.2 0.2 0.2 0.2 0.2 0.2 0 .2 0.2 Number of s tudents (in thous ands )

Total 1 6352 162 50 15 647 1529 2 15 151 15153 151 71 1 4970 145 77 1 4244 1415 5 Prim ary 442 8 4 367 411 8 4 128 4131 41 70 4136 40 13 3 891 383 2 3 818

Low s econdary 234 0 2 307 216 2 2 024 2037 20 45 2065 20 43 1 977 191 8 1 893

Upper s econdary 716 6 7 159 696 4 6 784 6702 66 87 6734 66 94 6 516 633 9 6 311

Tertiary education 241 8 2 417 240 4 2 357 2281 22 51 2235 22 20 2 192 215 5 2 132 Memo

Population aged 15 64 (in thous ands ) 3 9218 394 61 40 413 4038 9 40 418 40201 394 88 3 8716 383 07 3 8226 3776 3 Unemployment benefit spending as % of GDP

0 .4 0.4 0 .3 0.3 0.3 0.3 0.3 0.3 0.3 0 .3 0.3

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The impact of ageing on public expenditure:projections for the EU25 Member States on pensions, health care, long-term care, education and unemployment transfers (2004-2050) - Annex to the full report - Hoofdinhoud

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publicatiedatum	13-02-2006
kenmerk	6119/06 ADD 2