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Pension spending in
To stop the slippage in
In the news: Based on previous reports by the
Graphic: When you plot expected pension spending against expected gross domestic product (GDP), the picture becomes quite clear:
Belgium's pension spending is on an upward trend until around 2050, when it stabilizes around 15 percent of GDP. That is three points higher than the eurozone average (EA on the chart).Germany andthe Netherlands , two countries with much lower debt ratios thanBelgium , are stabilizing at significantly lower levels.-
And if you compare with
France ,Italy andSpain - countries that, likeBelgium , have high debt ratios - it is noticeable that in those three countries, pension expenditures become less important after several decades, which translates into a declining curve, unlikeBelgium's .
Graph: pension spending as % of GDP (for four countries and the euro area)
The gist: "Consequently,
Pension reform
On a positive note: According to the technical simulations, the government can improve the financial sustainability of pension spending through a combination of policy options, although this may require "bold" pension reforms by future governments. Purely mathematically, there are four options, the study lists:
- reduce the number of pensioners
- lower the average pension
- increase the overall productivity of the economy
- raise the employment rate by increasing the number of people in work
A start: What labor economists have been stressing for years: if older workers stay in the workforce longer, you strike a double blow: the pension system is funded longer and there are fewer retirement years to pay after their careers.
- Literally, "The most welfare-enhancing policy option is to increase the employment of older workers, since this simultaneously reduces pension spending, increases GDP, and reduces the poverty risk for retirees," NBB experts also write.
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