Ageing Populations, Pension Systems and Government Budgets

The paper examines the effects of demographic changes on government budgets and national savings. Most OECD countries will experience a rapid ageing of the population in the future and this development will put public pensions, health care systems and government budgets in general under increasing pressure. It could also have adverse effects on national saving. In order to provide some idea of the scale and magnitude of potential future problems the paper presents a quantitative analysis of the effects of ageing populations on government budgets, on inter-generational equity and on national saving and it also discusses policy options to cope with these problems. The paper finds that getting general government fiscal positions into better shape over the next few years would enable governments to better cope with the demographic change that will occur in the first decades of the next century. Furthermore, it stresses that further increases in retirement ages could make a major ...