Issue Rising welfare costs and pension sustainability under population ageing

Summary

The second economic consequence of the demographic crisis is a heavier fiscal burden as social welfare spending surges with the growing elderly population. More older people mean higher medical costs associated with ageing. The pension systems that support life after retirement also come under threat. The report identifies two broad lines of response: reforms that improve the sustainability of pension systems, and extending the retirement age while delaying the age at which pensions start. Because old-age dependency is projected to approach 80 in both countries by 2050, pressure on these systems is set to intensify in the coming decades.