Fidelity Benefits Consulting has highlighted the issue based on data from the World Bank, which shows that the number of individuals over the age of 65 across EU states will increase from 98 million in 2015 to 150 million in 2050 – an overall rise of 53%. The consequence of such an increase will lead to greater demand on the already fragile State Retirement and Healthcare systems across the region.
The level of increases in the retiree population in certain countries is even more worrying. For example, Ireland is projected to see an increase of 145% and Luxembourg is expecting a 135% increase. The UK is expected to see a 61% increase in the number of individuals over age 65 by 2050. Fidelity Benefits Consulting has said the increase in the number of people eligible for State retirement benefits will place significant pressure on government finances, and unless appropriately managed, will result in governments having to increase taxes or reduce state benefits. It will also have implications for the demands placed on state healthcare systems.
Mark Sullivan, Head of International Benefits Consulting, Fidelity Benefits Consulting commented: “With state finances across Europe already fragile, large increases in the number of people in retirement will lead to a financial tipping point. Governments will need to manage greater state pension payouts and higher demand for healthcare provision against resistance to increasing tax receipts. The most acceptable way to avoid escalating budget deficits may be to accelerate state benefits reform, with further increases in state retirement ages a likely part of the approach.”
Sullivan added: “This isn’t just an issue for governments. Very likely reform will include states seeking to shift part of the responsibility to the private sector, by introducing mandatory retirement savings plans and/or, adding incentives for supplemental pension saving. Companies may need to bear the additional costs and support the education of their employees in planning for a sustainable retirement.”
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