The cost of Belgium's ageing population is predicted to be "particularly high" between now and 2050, as the president of the Federal Committee on Ageing has warned that this will grow the country's deficit and public debt unless policies are changed.
The latest report by the Ageing Committee estimates that by 2070, the cost of ageing will increase total social expenditure in Belgium to 30% of gross domestic product (GDP), compared to 25.8% of GDP in 2023. The annual report is designed to inform the Federal Government, as well as social partners and the general public, about both the budgetary and social implications of people growing older.
Although Belgium's total population is expected to grow from 11.7 million in 2023 to 12.9 million by 2070, age demographics across the country are expected to change.
The report highlights that between now and 2070, the share of people in Belgium aged 17 and under will decrease by 2.5%, and the share of people aged between 18 and 66 will fall by 1.4%. Meanwhile, the proportion of the population aged 67 and over is expected to increase by more than 53%.
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"This ageing population increases social expenditure expressed in percentage of GDP, especially pension expenditure, health care and long-term care expenditure," explained Greet T'Jonck, President of the Federal Ageing Committee. However, she noted that over the same period social expenditure on unemployment and family allowances are expected to fall.
The budgetary cost of ageing is estimated to be particularly high between 2023 and 2050 as the 'baby-boomer' generation (born between 1945 and 1965) reaches retirement age, before slowing to growth of 0.3 percentage points between 2050 and 2070.
By 2070, pensions (13.7% of GDP) and health care (10.7% of GDP) will account for more than 80% of all social spending by the State. The remaining 20% of social spending comes from incapacity for work and unemployment (3.1% of GDP), family allowances and other social spending (2.4% of GDP).
Cost of ageing on the rise
The budgetary cost of ageing between 2023 and 2070 is now predicted to be 4.1 percentage points of GDP, 0.6 percentage points higher than what was estimated in last year's report.
The increase is partly due to lower fertility rates (which results in a lower youth population and later a smaller working population), lower growth in economic productivity, and the presumption that fewer people will postpone their retirement when the statutory retirement age is raised in 2025 and 2030.
The report notes that pension reforms voted through in April, including required working conditions to access the minimum pension, pension bonuses and the limitation of equalisation for civil servants' pensions, have slightly decreased the cost of ageing (by 0.3 percentage points of GDP).
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The cost of ageing "has to be placed in the budgetary context of Belgium," according to T'Jonck. "Starting in 2023 with a public deficit of more than 4% of GDP and a public debt of more than 105% of GDP, the cost of ageing will raise the deficit and the public debt at unchanged policy."
"Ensuring the financial sustainability of the Belgian public finances cannot rely on one miracle solution. It will likely require a package of measures, including measures to boost productivity growth and the employment rate, while taking care not to increase the population's risk of poverty," she added.
Older people at higher risk of poverty
Looking at the social impacts of ageing in Belgium, the report also noted that the elderly and pensioners are at a higher risk of financial poverty than the rest of the population.
The poverty threshold is defined as 60% of the median equivalised disposable income. According to 2022 data from the European Survey on Income and Living Conditions, this would be below €1,450 per month. Some 12.3% of the Belgian population are below this threshold, but among people aged 65 and over this rises to 15.8%.
The report did note that the risk of poverty among people aged over 65 decreases "significantly" when home ownership is taken into account, as a significant proportion of older people (69%) have their own home, free of mortgage charges.
