The issue of pension systems in Eurozone countries is significant because pension outlays represent a substantial portion of GDP. And an ageing population increases financing needs. At the same time, country deficits – and consequently debt – have deepened during the Covid period, including through higher interest rates.
- Post-war pension systems in the Eurozone were developed on the basis of two distinct logics: contributions and defined benefits. Today, all systems have become hybrid.
- Faced with the demographic challenge, all Eurozone countries have undertaken various reforms of their pension system.
- Northern countries are now doing better on financial sustainability than southern European countries because of reforms.
- In all countries, a core reform has effectively raised the retirement age or increased the contribution period. The sustainability of these systems remains to be monitored over the next 20 years.
- Tightening budget constraints in countries with high debt levels and ageing populations are exacerbating the need for savers to build supplementary and funded pension plans.
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