EU Pension Systems under Demographic Assault

Investment Analysis Clubs Macro Economic Trends and Risks
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https://www.politico.eu/article/retirement-dreams-busted/
European pension systems are slowly rolling toward a breaking point — and no one seems to have the answer to how to fix it.

The root cause is an aging population, characterized by fewer births and longer life expectancy. This increases the so-called old age dependency ratio, whereby a growing share of an ever-grayer population’s pension payments rests on a shrinking labor force.

In some countries, like Germany, that ratio is already high, at 40 percent. But by 2050, that ratio will be even more extreme, topping 75 percent in the cases of Italy, Spain and Greece. It’s projected to grow to above 50 percent in most EU countries, including in relatively rich places like the Nordics and the Netherlands.

None of the solutions palatable to the voting EU citizen.

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Ok, but

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But when push come to shove and they run out of funds what happens? No more pensions? Reduced payments? Increased retirement age?

Borrowing money to pay or running a deficit is especially sensitive in Germany after their experience with hyperinflation in the 1920s.

Have they forgotten?

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Borrowing money to pay or running a deficit is especially sensitive in Germany after their experience with hyperinflation in the 1920s.

Have they forgotten?

No, those ones are all dead.

Tim

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The strength of the old Deutschmark and the requirement for balanced budgets in Euro countries comes from German conservatism.

I suspect their conservative approach will win out, but we shall see if that changes when it comes to benefits for voters.

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None of the solutions palatable to the voting EU citizen.

They could grow the way the US grew, prior to the 1920s, through immigration. Instead, the UK is taking the people who want to come to the UK, work, and build a life, and flying them to Rwanda instead.

Steve

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