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The macroeconomic impact of ageing, EU immigration policy and pension expenditures

Release Date: 2025-10-07
Media: bruegel
Summary: The report outlines how the European Union is facing significant economic and fiscal challenges due to rapid population ageing. As fertility rates remain low and unlikely to rebound, maintaining high levels of net migration becomes the only viable way to offset the economic effects of a shrinking labor force and declining potential growth.

To ensure that migration contributes positively to public finances, the report emphasizes the need to increase the share of employment-based migration while reducing asylum and family-based migration. Differences in public pension costs among EU countries stem from varying pension replacement rates, retirement durations, and life expectancies. Although baby boomers are expected to enjoy longer retirements than previous or future generations, raising retirement ages is complicated by inequality in life expectancy.

The report also highlights disparities in reliance on private, pre-funded pension schemes across the EU, which affects the sustainability and financial impact of pension systems. Pension reforms must also address gender and coverage gaps. Additionally, ageing populations will strain the supply of long-term care workers, with limited potential for automation to fill the gap.

Authors
David Pinkus is an applied economist focusing on social welfare and ageing-related challenges in social security systems.
Jacob Funk Kirkegaard is a senior fellow specializing in European economies, labor markets, demographic change, and migration policy.
Tags: Europe

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