State-funded pension obligations in 19 of the 27-member European Union nations were about five times higher than their combined gross debt, according to a study commissioned by the European Central Bank.
The countries in the report, compiled by the Research Center for Generational Contracts at Freiburg University, had almost €30 trillion ($39.3 trillion) of projected obligations to their existing populations in 2009.
Germany accounted for €7.6 trillion and France €6.7 trillion of the liabilities, according to the report.
“This is a totally unsustainable situation that quite clearly has to be reversed,” Jacob Funk Kirkegaard, a research fellow at the Peterson Institute for International Economics in Washington, said in a telephone interview.
A recession threatening the world's second-biggest economic bloc, along with efforts to reduce debt across Europe, is exacerbating the financial risks. Stable or falling birthrates, plus rising life expectancies, are adding to pressures, with the proportion of economic output devoted to spending on retirement benefits projected to rise by a quarter to 14% by 2060, according to the ECB report.
Europe has the highest proportion of people over age 60 of any region in the world, and that is forecast to rise to almost 35% by 2050 from 22% in 2009, according to a report from the United Nations. That compares with a global estimate of 22% by 2050, up from 11% in 2009.