Assessing the Budgetary Impact of Systemic Pension Reforms
by
Werner Roeger
European Commission
DG ECFIN/Research Directorate
Abstract:
This paper projects the macroeconomic and budgetary effects until 2050 of retaining the
current PAYG system in the EU and analyses two alternative strategies of avoiding an
increase in non wage labour costs. Special emphasis is laid on the question whether a
partial move to a funded system could be a feasible option. At least for the transition, the
budgetary costs appear to be rather large. In an alternative scenario, the paper highlights
the debt explosion associated with a move to debt financing of additional pension
expenditures.
Correspondence: Werner Roeger, European Commission, BU-1, 1200 Brussels,
E-Mail: wemer.roeger@cec.eu.mt.
The views expressed in this paper are those of the author and not necessarily those of the European
Commission.
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