The increase of the ratio between the number of retirees and the number of workers will amplify expenditure on public pensions and health and long-term care and thus puts a burden on maintaining a sound balance between future public expenditure and tax revenues.
The Working Group on Ageing Populations and Sustainability (AWG) is a working group of the Economic Policy Committee (EPC). Its purpose is to bring together expertise on the economic and budgetary impact of demographic changes, and in addition, where appropriate, on other factors directly related to demographic change that may affect future government expenditure. The working group is constituted to carry out common budgetary projections together with the Commission, based on population projections by Eurostat. The working group contributes to improve the analysis of the sustainability of public finances and economic consequences of the demographic development of the EU Member States, to assist policy formation. Within the EU fiscal surveillance framework, the projections contribute particularly to the reference trajectory and technical information provided by the Commission to the Member States and should be reflected in their medium-term fiscal-structural plans. The technical work by the AWG should also feed into the coordination of economic policies and other relevant co-ordination processes in the context of the European Semester.
The core and priority business of the AWG is to carry out the common ageing-related budgetary expenditure projections together with the Commission, based on Eurostat’s latest population projections, and prepare every three years the Ageing Report, following a mandate given by the Council.
The group works to continuously improve the coverage of the projection exercise, the projection methodology, and the data availability and comparability. Work by the AWG draws upon analysis presented by the Commission (DG ECFIN). AWG members also actively contribute to the work by presenting analysis carried out in their countries, e.g., on experiences with past/current reforms or methodological aspects.
The members of the working group comprise representatives with relevant background from all member states, the Commission and European Central Bank. Each Member State is represented by up to two experts.