Abstract
This article analyses the consequences of the so-called ‘ageing’ of the population on the level of public pension expenditure. It provides detailed figures for all countries of the European Union, with a distinction between former member States and new member States. The article first shows that there is a great heterogeneity across European countries concerning the size of this demographic change. It also provides a detailed analysis of various dependency ratios. The main conclusion of this analysis is that the economic impact of structural changes that European Countries will face in the future is not as bad as the use of rather simplistic dependency ratios would have us believe. Assuming a reasonable economic growth, the financing of pensions is affordable and will not create an impossible burden for the economy. However, the distribution of the annual increase in economic resources between the economically active population and the overall dependent population will change to a significant extent. This is mainly a political issue that would require a full debate.
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