Public pension expenditure in the EPC and the European Commission projections: an analysis of the projection results

This paper reviews the projections of the Economic Policy Committee and the European Commission on age-related expenditure carried out in 2005. It takes a closer look at the results of public pension expenditure projections with a view of analysing the timing of projected changes and the driving factors behind pension expenditure increases, as well as the sensitivity of the projections to certain economic and demographic assumptions. It intends to provide a more in-depth understanding on the evolution of projected public pension expenditure and thereby contributing to the debate on the assessment of the long-term sustainability of public finances.

The paper serves as a quality assessment of public pension expenditure projections, which were carried out by the experts in each Member State. It takes a careful look at the differences in results across Member States. It concludes that differences in the results can qualitatively be explained by different pension policies and systems as well as different population and labour force projections and economic assumptions. However, the contribution of different factors to the results or whether the differences in the results are fully explicable by these factors cannot be disentangled.