The fiscal cost of aging: the case of Belgium

Purpose Belgium faces a fiscal consolidation challenge at a time when the fiscal cost of aging is mounting. This article documents the magnitude of the fiscal cost of aging focusing on pensions and healthcare. It also discusses policy that can mitigate the cost of aging. Design/methodology/approach The article assesses the cost of aging based on a critical synthesis of literature and simulations. It discusses policies that could contain the increase in the cost of aging, while preserving the adequacy of pension and the outcome of health spending. Findings Pension spending will increase fast unless a combination of measures related to pension generosity and retirement eligibility are implemented. Potential efficiency gains are large in the healthcare sector and could absorb part of the fiscal and reorganization costs related to aging. Originality/value This article considers the need for pension and healthcare reforms from the fiscal point of view.