Economic Effect of Population Ageing and Pension Reforms

The paper considers impact of population ageing on the economic growth and sustainability of pension systems.The analysis demonstrates that ageing has negative effect on the labor force and labor productivity, and thus results in a slowdown of economic growth and an increase of public spending.The most effective policy option is to raise the retirement age, while an increase in contribution rates or other taxes is the worst reaction.This recommendation is relevant for any countries at different stages of aging process, for all types of pension systems, for different demographic scenarios.Simultaneously with the raising of the retirement age, it is necessary to implement the policy aimed at improvement of the human capital quality.