Demographic trends squeeze pension system

  • 2012-05-16
  • From wire reports

TALLINN - At a sitting of the cabinet on May 10, the Estonian government reviewed a report from the Praxis Center for Policy Studies on the sustainability of the country’s social security system, reports LETA. The main emphasis in the report lays in the sustainability of the social security system in connection with the ageing of the population.
Praxis analyst and University of Tartu lecturer Andres Vork says the pension insurance system will lose money for many years to come, considering that the long-term equilibrium is vulnerable with an ageing population. Thus, it will be important to find suitable measures for preserving the balance of the pension insurance system. According to the analysis, the share of the elderly will increase and the percentage of working-age people will decline.

The projection is that the percentage of those 65 and over will almost double in the next 50 years (from 17 percent to 32 percent). The ratio of those over 65 to the number of working-age people will increase from 28 percent to 67 percent by 2060.

After reviewing the Praxis report, the government decided to instruct the Ministry of Finance, in cooperation with the Ministry of Social Affairs of Estonia, to present to the government an analysis within one year as to how to make the pension insurance system more compatible with changes stemming from the demographic trends and to ensure that pensioners both today and tomorrow have a sense of security.

Praxis’ comprehensive report on the sustainability of the Estonian social insurance system was prepared in cooperation with the Ministry of Social Affairs, Estonian Health Insurance Fund, Estonian Unemployment Fund, the Estonian Insurance Association, Eesti Pank, the Confederation of Estonian Trade Unions and the Estonian Employers Confederation. The study was made possible with co-financing of the European Social Fund.