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MINISTRY OF ECONOMY AND FINANCE

Department of General Accounts General Inspectorate for Social Expenditure

Mid-long term trends for the pension, health and long term care systems

Summary and conclusions The projections of the Department of General Accounts updated to 2009

Report no. 11 - 2009

This report has been produced with the collaboration of

Consip ­ Forecasting models for social expenditure

MID LONG TERM TRENDS FOR THE PENSION, HEALTH AND LONG TERM CARE SYSTEMS ­ 2009 UPDATED

Preface

This report contains analyses of the projection results on public expenditure for pensions, health care and long term care (LTC) in terms of GDP. These projections have been carried out using the models of the Department of General Accounts (Ragioneria Generale dello Stato RGS) updated to 2009, on the basis of the forecasting scenarios defined both at national and European levels. The latter have been worked out by the Working Group on Ageing set up at the Economic Policy Committee of the Ecofin Council (EPC-WGA). Beyond illustrating the results by expenditure item, the report offers a thorough analysis of the explicative factors underlying the dynamics foreseen, and a description of the differences which come about due to the updating procedures. These procedures particularly concern the revision of the initial data of the projections, changes to the legal-institutional framework, and the definition of the demographic and macroeconomic assumptions underlying the forecasting scenarios. The first phase of updating the projection models was concluded in mid-June 2009, with the drafting of the Economic and Financial Planning Document for 2010-2013 (Documento di Programmazione Economica e Finanziaria - DPEF) where the pension system projection, under the national baseline scenario assumptions, was reported in a specific box. Such a forecast is coherent with the economic growth hypotheses foreseen in the same document over the period covered by the DPEF, and does not consider the modifications to the legal framework introduced later on. The same forecast was published in the 2009-Report of the Pension Expenditure Evaluation Committee (Nucleo di Valutazione della Spesa Previdenziale). The pension, health and LTC projections worked out on the basis of the hypotheses framework, as defined in the ambit of the EPC-WGA, and with the starting data corrected to take into account the revised growth estimates subsequent to the financial crisis, are carried in Italy's Stability Programme ­ 2009 Update, in the section dedicated to the evaluation of the sustainability of public finances in the mid/long-term. Such projections have been carried out following the legislation in force in December 2009, including the measures introduced in the budget law for 2010. As it deals with projections worked out during 2009, the value of the variables relating to the years 2008 and earlier, on which the projections are based, are coherent with the results of national accounting as communicated by Istat (National Institute of Statistics) on March 2009, and do not take into account any modifications made by Istat in the communication of March 2010, in which the results of national accounting for 2009 were also supplied. This report is composed of 6 chapters and a comprehensive appendix. Chapter 1 provides a description of the demographic and macroeconomic assumptions underlying the forecasting scenarios. Chapters 2-4 show, by topic, the projection results for the three age-related

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components of public expenditure which are analysed in the report. Chapter 5 analyses the sensitivity of projection results to the demographic and macroeconomic parameters. Chapter 6 provides a detailed description of the replacement rates in the public and privately funded systems, which have been calculated gross and net of contributions and tax revenues on them. In addition, the chapters have been enriched with appropriate boxes providing a more in-depth analysis of specific topics related to the subject concerned. The appendix is composed of 5 sections. The first one contains an updated description of the normative framework concerning those typologies of provisions which have been forecast and the related fiscal treatment. The second section (appendix 2) gathers some statistics which provide additional information about the subjects under consideration. This includes: i) an analysis of the diverse pension expenditure definitions available both at national and European levels; ii) a comparison of the social protection expenditure in the European Union countries, broken down by function; iii) a description of the monitoring and forecasting activity on lump sum social benefits carried out by the RGS in view of the preparation of public finance documents, which also provides an updated report on the correspondence between forecasts and national account results; iv) the updating of the results of the survey on social assistance services provided by municipalities, singly and in association. The remaining sections of the appendix contain the tables of results which include: the mid-long term projections for pension, health and LTC expenditure (appendix 3), the sensitivity analysis to the demographic and macroeconomic assumptions (appendix 4), and the replacement rates of the public and privately funded systems calculated for the whole forecasting period (appendix 5).

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Summary and Conclusions

The mid-long term projections for the pension, health and LTC expenditure, carried out using the models of the Department of General Accounts (Ragioneria Generale dello Stato - RGS) updated to 2009, show no relevant changes as far as the definition of the scenario hypotheses are concerned. Both at national and European levels, the demographic parameters have been kept unchanged compared to those of last year, while macroeconomic assumptions have been slightly modified, owing to the adjustments of starting values. In the short term, however, the strengthening of the economic effects brought about by the financial crisis with respect to the estimates reported in the Stability Programme for 2008 have determined a revision of the initial economic growth rates foreseen in the macroeconomic framework of the previous RGS Report. All this is in line with the subsequent revisions of the public finance documents up to the updating of the Stability Programme for 2009 which takes account of the data updated to the third quarter of the same year for the economic growth estimates. In particular, the DPEF for 2010-2013 estimated real GDP dynamics as much as 5.2%, in 2009, against the -2% of the Stability Programme updated to 2008. Subsequently, the RPP for 2010 has made a slightly upward revision of the economic growth reported in the DPEF, bringing the real GDP percentage change up to -4.8%. Such an indication has been substantially confirmed in the definition of the macroeconomic framework laid down for the updating of the Stability Programme for 2009 which, nevertheless, has increased the economic growth rate, from 0.7% to 1.1%. The projection results shown in this Report were worked out in 2009. Therefore the value of the variables relating to the years 2008 and earlier, on which the projections are based, are coherent with the results of national accounting as communicated by Istat (National Institute of Statistics) on March 2009. The legal framework is updated to December 2009. Beyond the effects coming about from the implementation of the agreement on welfare of the 23 rd July 2007 (Protocollo sul welfare del 23 luglio 2007) and the measures taken in the decree 112/2008 (converted into law 133/2008), already incorporated in last year's updating, the projections also take into account the effects on the projections deriving from the measures contained in the law 102/2009 (which converted the decree 78/2009), and in the budget law for 2010 (law 191/2009).

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In particular, within the pension field, law 102/2009 foresees a five-year increase in the statutory retirement age for women in the public sector, thus equalising the statutory retirement of both genders at the age of 65, starting from 2018. As for health expenditure, interventions have been adopted bringing about additional costs of 67 million in 2009 and 200 million in 2010, to finance the regularization of non-EU citizens as laid down in article 1-ter of the above mentioned law. Health care expenditure projections also take into account the effects brought about by the signing of the Health Pact 2010-2012, which imply an increase in the resources to finance the National Health Care System of as much as 584 million in 2010 and 419 million in 2011. Pension system projections also take into account the effects brought about by the revision of the transformation coefficients, following law 247/2007. The law assumes, from 2010, the application of transformation coefficients revised on the basis of the procedure foreseen in article 1, paragraph 6, of law 335/95. Subsequent revisions will be made every three years, through a simplified procedure which falls entirely within the administrative sphere of competence. The revision has been made on the basis of the evolution of life expectancy underlying the demographic scenario. Since the update of such coefficients is of great relevance for assessing the sustainability of the pension system, an analysis of the quantitative effects of the revision is given. As usual, the report includes certain specific, in-depth studies concerning the themes treated in each single chapter. In particular: i) the effects of the financial crisis on the forecasting scenarios; ii) changes in the eligibility requirements foreseen by the law 102/2009; iii) the dynamic of the health care consumption in relation to the lengthening of life expectancy and the improvement of health status; iv) the forecasting methodology of the disabled, applied to the LTC expenditure; v) a new methodology for the dynamic equilibrium theory, applied to the disability rates; vi) the projection of the social assistance expenditure for the disabled provided as cash benefits; vii) the definition of an indicator measuring the cumulative effects of the sensitivity hypotheses concerning demographic and macroeconomic parameters. The projections of pension, health and LTC have been made on the basis of two different scenarios: the "national baseline scenario", defined at national level, and the "EPC ­ WGA baseline scenario" defined at European level. In the previous reports, the projections were also made on the basis of another national scenario, called the "national programmatic scenario" which differed from the national baseline one in so far as, in the short term, it fully embodied the economic growth indications underlying the public finance documents. However, in recent years, the economic growth estimates reported in the programmatic scenario did not differ significantly from those assumed in the national baseline scenario, and this made the two scenarios substantially the same in terms of expenditure forecast implications. For the sake of

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illustrative simplification, it has been considered appropriate to bind the analysis to the national baseline scenario. With regard to the mid-long term period, the demographic and macroeconomic hypotheses underlying the national baseline scenario have been substantially confirmed with respect to those of last year. The demographic component embodies the hypotheses underlying the latest population projection produced by Istat, with 2007 as the base year. Such hypotheses envisage, for the period 2007-2050: i) an increase of the fertility rate from 1.37 to 1.58; ii) an increase of life expectancy by 5.9 years for males and 5.4 years for females, bringing the values at the end of the period, respectively, to 84.5 and 89.5; iii) an annual net flow of immigrants a little below 200 thousand units (table A). In order to obtain homogeneity with the demographic forecasts worked out in the EPC-WGA ambit, which extend the temporal horizon of the forecasting period until 2060, it has been deemed appropriate to carry out an extrapolation of ten years. Such an extrapolation has been carried out applying both the fertility rate and the net flow of immigrants foreseen in 2050 to the final decade, while the life expectancy has been further increased by about 1 year for males and 0.8 years for females. The macroeconomic component of the forecasting scenario confirms the midlong term trend illustrated in the RGS report of last year, regarding both productivity growth rates and employment dynamics. The growth rate of productivity show a rising time profile that gradually settles on an average level of 1.72%, in the period 2030-2050, and then drops slightly in the final decade of the forecasting period. The changes seen in the central and final part of the forecasting period come about endogenously from the application of the production function which, through the capital deepening component, links the rates of variation of productivity with the occupational dynamics. Differently, the rate of productivity growth is stable at 1.1%. For the entire forecasting period, the average annual growth rate of productivity is a little lower than 1.6%, in line with the average rate adopted in the previous updating (table A). Concerning the hypotheses relating to the labour market, the modifications carried out are negligible and linked prevalently to an updating of the base data used for estimating the parameters. In particular, the unemployment rate settles at 4.5% in 2040 and remains at that level until 2060. At the same date, the activity rate in the 15 to 64 age group will be at 70.1%, with an increase of around 7.1 percentage points compared to the level of 2008. Correspondingly, the employment rate in the same age group passes from 58.7% in 2007 to 66.9% in 2060. On the basis of the demographic and macroeconomic hypotheses illustrated above, the real growth rate of GDP settles, on average, at an annual figure of around 1.5% between 2010 and 2060, with a fluctuating profile showing an initial increase up

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to 2014, a subsequent decrease in the following 20 years, and a slight recovery in the last part of the forecasting period. The dynamics of the ratio between pension expenditure and GDP in the national baseline scenario are shown in figure A1. The graph shows an initial increase of the ratio that, at the end of the three-year period 2008-2010, will be at 15.2% compared to 13.9% in 2007. As shown in last year's updating, the increase is due solely to the negative effects of the financial crisis on the real economy and so on the denominator of the ratio. In the period under examination, the annual change rate of real GDP averages on -1.6%, about 3.4 percentage points lower than the rate to stabilise the ratio between pension expenditure and GDP. Differently, the dynamics of the pension expenditure are substantially in line with the forecasting values included in the public finance documents worked out before the financial crisis. Given the scarce correlation, in the short term, between the dynamics of the pension expenditure and the hypotheses of economic growth, the ratio of pension expenditure to GDP proportionally reflects changes, in real terms, occurring with the denominator. Beginning in 2011, the ratio between pension expenditure and GDP shows a slight decrease until 2014, followed by a period of substantial stability at around 15% which continues until 2022. Successively, the ratio begins to grow until reaching a peak of 15.8% in 2040. The growth is more consistent in the first five years of the period and significantly more moderate in the years thereafter. After 2040, a phase of rapid decrease begins which takes the ratio of pension expenditure to GDP to 13.4% in 2060. The growth of the ratio of pension expenditure to GDP seen in the middle of the forecasting period is mainly due to the increase in the ratio of pensions to employees brought about by demographic change. This is only partly compensated for by the tightening of eligibility requirements (law 243/2004, as modified by law 247/2007 and the law 102/2009). Such an increase exceeds the containing effects on the evolution of pension amounts which comes about from the gradual introduction of the contribution-based method (the mixed regime). The rapid decrease in the ratio of pension expenditure to GDP in the final phase of the forecasting period is determined by the shrinkage in pension amounts as an effect of the transition from a mixed regime to a contribution-based one, whilst the ratio between pensions and employees tends to stabilise. This last phenomenon arises from the gradual disappearance of the baby boom generations. Consequent to the revision of the growth rate of the GDP in 2008 and the revision of the estimates in the two-year period 2009-2010, the projection updated to 2009 is located at a slightly higher level than that published in the 2008 RGS report, save for the period 2013-2018. To allow a more precise comprehension of the effects caused by the updating of the model, it is initially useful to analyse the differences between the projection

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updated to 2008 and that published in the DPEF 2010-2013 and, subsequently, the changes between the latter and the projection updated to 2009 (figure A1). The first of the two differences is totally due to the sharpening of the recession and the following downward revision of the macroeconomic framework underlying the DPEF 2010-2013, with respect to the Stability Programme updated to 2008. In fact, given that the forecasts concerning the dynamics and the level of pension expenditure remain substantially unchanged, the greater reduction of GDP causes an increase of the ratio between pension expenditure and GDP of 0.4 percentage points in 2010. Such a difference is reduced to 0.2 percentage points at the end of the forecasting period. In this case, the notable mid-long term difference is due to the salary dynamics in 2009 overcoming the productivity per worker that, in that year, is negative not only in real terms, but also in nominal terms. Therefore, a part of initial increase in the ratio between pension expenditure and GDP doesn't match a corresponding reduction of the pension levels in the mid-long term period. Comparing the projection updated to 2009 with that contained in the DPEF 20102013, a significant improvement in the pension expenditure to GDP ratio at the beginning and in the central part of the forecasting period emerges. Such a result comes about partly from the improvement in the economic growth estimates for the two-year period 2009-2010, moving from the macroeconomic framework of the DPEF to that in the Stability Programme updated to 2009, and partly from the effects of the increase in the statutory retirement age of women in the public sector. Considering the reduction in the ratio between average pension and productivity forecast for the mid-long term period, the illustration of the financial effects is flanked by an analysis of the distributive effects by scheme, gender and cohort. Concerning the first topic, the results show that the introduction of the contribution-based method determines, in the mid-long term, a containing effect of the expenditure dynamic more accentuated for the self employed than for the employees, because of the notably lower contribution rate. Contextually, a relevant change in the composition of resources by gender can be seen, with an increase of the total quota attributed to women. This result arises from an increase in direct female pensions originating from the higher employment rates foreseen in the first part of forecasting period. The analysis by cohort shows a reduction of the average amount of newly awarded pensions owing to the gradual introduction of the contribution-based system and the capacity of the mechanism of indexation to prices to compensate for the redistributive effect in favour of the older pensions brought about by the calculation rules. The illustration of the redistributive effects of the pension system is completed with the microeconomic analysis of the replacement rates, which express the ratio between the first annual amount of pension and the last annual salary. The calculations are carried out for the entire forecasting period in line with the

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demographic and macroeconomic assumptions underlying the adopted forecasting scenarios. Coherently with the expenditure projections, the calculation of the replacement rates takes into account the three-year revision of the transformation coefficients. The methodology agreed at European level (Social Protection Committee­

Indicator Subgroup), already utilized in the preparation of the National Strategy Report on Pensions within the procedure of the Open Method of Coordination on Pensions, has been followed. In this context, it was decided that replacement rates were to be calculated

gross and net of contributions and tax revenues, as well as considering additional income that may come from the privately funded system. The analysis of the gross replacement rates highlights some distributive features of the contribution-based system. In particular, the reduction in pension amounts which comes about from the new calculation method is predominantly due to the quick and continuous careers which are strongly favoured, in terms of internal rate of return, by the contributionbased system. The analysis of the net replacement rates and the additional contribution by the privately funded system permits an assessment of the changes in disposable income before and after retirement. In this regard, the results show a strong lessening of the effects on the adequacy of pension caused by the introduction of the contribution-based calculation. The projection of the ratio between public health care expenditure and GDP has been carried out on the basis of the methodological indications agreed within the EPCWGA. In this regard, the base assumption concerning health care consumption - which has been adopted since 2001 - envisages that the consumption profile by age, sex and typology of provision is to be kept constant throughout the whole forecasting period, whilst standardised per capita consumption (Consumo Pro capite standardizzato ­ CPS) ­ which expresses the variations in health care consumption that occur while maintaining unchanged the demographic structure by age and sex ­ is to evolve in line with GDP per capita. Such a methodological approach is labelled as the `pure ageing scenario', insofar as it makes changes in the ratio of health care expenditure to GDP depend exclusively on alterations in demographic structure. However, considering the existence of drivers other than purely demographic ones, alternative assumptions on health care consumption have also been analysed which take into account: i) an improvement of health status related to the projected increase in life expectancy, ii) price index differences between health and non-health care products, also arising from diverse technological content, and, iii) the driving force of labour compensation underlying health care costs. These different assumptions are first analysed individually, and then suitably combined with each other according to the indications agreed within the EPC-WGA. The combination of alternative assumptions, which is labelled as the `reference scenario', envisages: i) the dynamic of health consumption profiles by age through the application of the `death-related costs' methodology to the hospital component of

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health care expenditure and the `dynamic equilibrium' methodology (50% of changes in life expectancy) to the other health care provisions, ii) the elasticity of CPS to GDP per capita greater than one as far as the `acute' component of health care expenditure is concerned, and, iii) the linkage of CPS to productivity per worker, as far as the LTC component of health care expenditure is concerned. It is worthwhile pointing out that the definition of the reference scenario actually implemented within the EPC-WGA, and used for the updating of the Stability Program, differs from that illustrated above insofar as it extends the application of the dynamic equilibrium methodology to cover the hospital component of health care expenditure. This choice was made necessary since most member states had not provided the data required for death-related costs methodology to be applied. In a partial departure from the methodological indications given above, the projection for health care expenditure for the period 2010-2013 has been carried out separately for each single expenditure item, on the basis of the available information coming from monitoring activity concerning the public health care sector. The projection of the ratio between public health care expenditure and GDP based on the pure ageing scenario methodology shows more or less regular growth from 2010 and 2040 (figure A2). Only in the final part of the forecasting period does the growth rate drop off slightly, as a result of the exit of the baby boom generation. In this case too, however, the effects of the recession brought about by the financial crisis produce a significant increase in the ratio of health care expenditure to GDP in the two-year period 2008-2009. In the whole forecasting period, the ratio increases by about 2.1 percentage points, passing from 6.9% in 2008 to 9% in 2060. The health care projection updated to 2009 is not significantly different from that of the previous year (figure A2). This depends on two factors: on the one hand, the short term forecast of the ratio of expenditure to GDP has not undergone significant change, confirming the values of the previous updating, and on the other hand the structural demographic and macroeconomic assumptions in the mid-long term have been kept substantially unchanged. The projection arising from the reference scenario almost overlies that based on the pure ageing scenario throughout the whole forecasting period. This is due to the nearly complete compensation of the containing effects brought about by the assumptions on dynamic profiles of health care consumption, and the expansive effects stemming from the hypotheses on CPS evolution (figure B1). Public expenditure for care of people whose dependency is due to old age and disability, better known as public expenditure on LTC, includes three components: i) the health component of LTC expenditure, ii) the costs of attendance allowances, and, iii) expenditure on `other LTC provisions'. The overall expenditure, which accounts for

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1.7 percentage points of GDP in 2008, refers to all provisions, regardless of the age of recipients. However, considering that the incidence of dependency is strongly linked to age, and that the part of the expenditure most exposed to ageing is the one directed to the elderly population, the calculation of LTC expenditure is sometimes limited to recipients of 65 and over. In this case, such expenditure would be reduced by about one-third. The health component of LTC expenditure is a part of total health care expenditure and has, as such, been the object of forecasting and analysis in previous reports since 2002. The item under consideration is defined on the basis of the classification criteria provided by the SHA (System of Health Accounts) of the OECD. On the basis of these indications, reaffirmed on the occasion of the 2006 update of the EPC-WGA projections, the health care services of LTC constitute a set of provisions complementary to the acute component of health care provisions, this excluding any possibility of an intermediate category existing in which to locate those items which cannot be univocally assigned. The criteria followed to attribute health care services to the aggregate of LTC expenditure is the same as that adopted in the last report. In more detail, long-term hospital confinement has been assigned to the LTC whilst supplementary care provisions and prostheses care have been returned to the acute component. Beyond this, a part of health activity aimed at psychiatric assistance, rehabilitation assistance to the disabled, and assistance to drug addicts, estimated as around 10%, is not classifiable in the LTC component of health expenditure as it in fact refers to acute services. Finally, the distribution of administrative costs for each expenditure item, carried out in the ambit of the LA survey, allowed the health care expenditure component of LTC to be estimated gross of related administrative costs, as foreseen in the guidelines worked out by the OECD. The other two components of LTC constitute social expenditure items to be added to the health care component, the forecast of which has been regularly made since 2005. In particular, attendance allowances are cash benefits provided to dependent people without means testing. Differently, `other LTC services' include a heterogeneous group of benefits, largely in kind, mainly provided at a local level by municipalities, singly or in association. These are generally means-tested. According to the pure ageing scenario, the features of which have already been illustrated when referring to health care expenditure, the projection of public expenditure on LTC as a share of GDP remains substantially stable in the period 20102014. This is essentially due to the current indexation mechanism for attendance allowances. Successively, the hypothesis that such benefits will conform to the nominal dynamics of GDP per capita, and the accentuated process of ageing, causes an

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almost regular growth of the ratio. In the whole forecasting period, the LTC expenditure to GPD ratio passes from 1.7% in 2007 to 3.3% in 2060, in line with last year's projection (figure A3). As is the case for health care expenditure projections, an alternative scenario has also been constructed for LTC expenditure with regard to the pure ageing scenario. In this case, the reference scenario assumes: i) the partial application of dynamic equilibrium methodology (50% of change in life expectancy), and, ii) the linkage of CPS to either productivity per worker or GDP per capita, depending on whether benefits in kind or cash benefits are concerned. Differently from health care expenditure, the adoption of the reference scenario produces slightly lower dynamics of LTC expenditure to GDP, with a deviation of 0.2 percentage points at the end of the forecasting period (figure B2). The projection of total public expenditure on pensions, health care and LTC as a percentage of GDP is reported in figure D1 where, for the last two components, the assumptions of the reference scenario have been adopted. As shown in the graph, overall public expenditure counts the health component for LTC a single time, insofar as it is included in equal measure both in total health care expenditure and in the total expenditure for LTC. After the initial increase in the three years 2008-2010, due to the effects of the financial crisis, the ratio between total expenditure and GDP grows slightly until 2020, and then accelerates to reach a maximum value of 25.7% in 2043. In the final twentyyear period, the ratio takes on a decreasing trend that leads it to settle at 25% in 2050, and at 23.9% in 2060, over two percentage points more than the initial level in 2008 (22%). As in the case of the national baseline scenario, the demographic and macroeconomic assumptions underlying the EPC-WGA baseline scenario have not undergone any significant revision, save for the effects of the financial crisis on the economic growth estimates in the starting years. The principal elements that differentiate the national baseline scenario and the EPC-WGA baseline scenario may be seen from a comparison between the values shown in tables A and B. As for demographic parameters, differences do not seem so relevant. The population forecast made by Eurostat, with 2007 as the base year, assumes slightly lower increases in both life expectancy and fertility rate than those assumed in the Istat main variant scenario, while the net flow of immigrants is significantly higher for the greater part of the forecasting period. However, differences in the demographic parameters tend partly to compensate for each other in the calculation of dependency indicators.

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The differences are not especially relevant even regarding the variables in the macroeconomic scenario, particularly when referring to average values for the period 2010-2060. The growth rate of GDP is a little lower than that of the national baseline scenario, with an average annual difference of about 0.05 percentage points due, basically, to the different employment dynamics. From the point of view of the temporal profile of economic growth, however, a greater misalignment may be noted. The difference in the average rate is the result of an algebraic balance between slightly higher economic growth in the first fifteen years of the forecasting period, mainly due to greater productivity dynamics, and lesser growth, of cumulatively greater magnitude, in the remaining part of the forecasting period. The latter mainly depends on lower employment dynamics due to the less favourable assumptions regarding the growth rate of employment. The results of the projections carried out within the ambit of the EPC-WGA are shown in figure C, together with those based on the adoption of the national baseline scenario. Compared with the latter, the EPC-WGA baseline scenario gives a lower ratio of pension expenditure to GDP during the first part of the forecasting period, which becomes higher in the latter part, the two curves intersecting around 2035 (figure C1). The differences depend prevalently on the diverse temporal profile of the dynamics of GDP, which produces immediate effects on the denominator of the ratio and delayed effects on the number and average amount of pensions in the second half of the forecasting period. Differently, the ratio between health expenditure and GDP foreseen on the basis of the EPC-WGA baseline scenario is located at the same level of the national baseline scenario for the entire forecasting period, showing growth dynamics that practically coincide (figure C2). Regarding the expenditure curve for LTC, figure C3 shows a substantial superimposition of the two curves under comparison. Only at the end of the forecasting period does the projection worked out under the national baseline scenario settle slightly under the EPC-WGA projection. The results of any forecast depend in a significant way on the demographic and macroeconomic framework. For this reason it was thought useful to carry out broadbased sensitivity analyses aimed at measuring the effect on the ratio of expenditure to GDP of alternative hypotheses regarding the single parameters describing the demographic and macroeconomic scenarios. With this aim, the same hypotheses undertaken in last year's report have been kept, as far as possible. Sensitivity simulations have been made taking the national baseline scenario as that of reference. With regard to public expenditure for health and LTC, the reference scenario assumptions have been adopted.

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Concerning the hypotheses for the demographic parameters, four simulation exercises have been carried out. The first of these regards the adoption of the `high' and `low' Istat variants in place of the main variant. Such scenarios foresee a modification of all the demographic parameters on the basis of the different degree of attention paid to welfare, which is higher in the former and lower in the latter. Since the alternative scenarios have been defined up to 2050, the values of the demographic parameters over the subsequent decade have been obtained by applying the same procedure as that utilised for the main variant scenario. The high variant scenario considers a fertility rate augmented by 0.17 in 2060, a further increase of life expectancy, in the same year, of 2.5 years for male and of 2.3 years for female, and a net flow of immigrants 40 thousand units higher from 2020 on, which is achieved gradually, starting from 2007. The low variant scenario presupposes figures moving in the opposite direction, with substantially symmetrical deviations from the main variant scenario. At the end of the forecasting period, the effect produced on pension, health care and LTC expenditures, taken together, appears more or less symmetrical, with a difference in either direction of about 0.3 percentage points (table C). In 2040, this variation is much less, given the strong inertia which characterises the demographic forecasts at that date, and the differing temporal outlines with which the effects of the demographic parameters may be seen. Beyond this, it is interesting to note that health and LTC expenditures are scarcely sensitive to the set of assumptions underlying the two alternative demographic scenarios. In fact, the changes seen at the end of the forecasting period are almost entirely attributable to pension expenditure. The other sensitivity exercises relating to demographic parameters concern, in turn, the fertility rate, life expectancy at birth, and the net flow of immigrants. In carrying out these exercises it was thought best to consider as alternative hypotheses for each of the above mentioned parameters the corresponding values assumed in the high and low variant scenarios. Such a choice meant that the alternatives taken into consideration were not always perfectly symmetrical. However, it allowed each single exercise to be interpreted as the contribution made by the single demographic parameter to the overall result, which originates from the application of the high and low variants, net ­ obviously ­ of the interaction effect. The effects brought about by changing single demographic parameters appear to be reasonably symmetrical, particularly if corrected to take into account the slight asymmetry in the variation of the hypotheses. At the end of the forecasting period, the alternative hypotheses relating to the fertility rate produce an oscillation of some 0.5 0.6 percentage points in the ratio of total expenditure to GDP, nearly split in two between the pension component, on the one hand, and the health and LTC component on the other. Regarding the hypotheses on life expectancy, the changes brought about are diametrically opposed to those in the case of fertility. Such an

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assumption causes the total expenditure to GDP ratio to deviate from the baseline by 0.5 percentage points in 2040 and 0.7 - 0.8 percentage points in 2060. The decomposition of the overall effect sees the prevalence of the pension component for the first two-thirds of the forecasting period, and a substantial equivalence in the final years. Finally, changing only the net flow of immigration produces, in 2060, an oscillation of about 0.5 percentage points in the ratio of total expenditure to GDP, twothirds of which is attributable to the pension component. Such an effect is almost entirely achieved by 2040. The sensitivity analysis relating to the macroeconomic hypotheses concerns, in turn, a change in the rate of productivity growth, in participation rates, and in unemployment rates (table D). An alteration of 0.25% in the rate of productivity growth, both positive and negative, produces a reduction or an increase in the ratio between pension expenditure and GDP of, respectively, 0.44 and 0.47 percentage points at the end of the forecasting period. Such an effect is slightly higher in 2040. The effect of a change in participation rates, gradually applied by cohort, is much smaller, however. In this case, the reduction of 2 percentage points on the participation in the labour market brings about an increase in the ratio between total expenditure and GDP equal to 0.21 percentage points at the end of the forecasting period, whilst the opposite hypothesis sees a symmetrical effect. To come, finally, to the unemployment rate, the only hypothesis regards an increase in the rate, there not being sufficient leeway for a change in the opposite sense. The simulated alternative assumed no variation in the specific unemployment rates for age and sex with respect to the values achieved in 2020, which nearly correspond to the average unemployment rate in 2007. This results in an increase in the average unemployment rate, at the close of the forecasting period, of 1.6 percentage points. At the same date, the ratio between total expenditure and GDP shows an increase of a little more than 0.2 percentage points, substantially in line with that forecast for 2040. The sensitivity analysis shows, however, that the health and LTC component of public expenditure as a share of GDP is scarcely dependent on macroeconomic assumptions. The effects reported above are therefore almost entirely to be attributed to pension expenditure. This is due to the fact that the evolution of health and LTC consumption independent from demographic changes (CPS), being correlated to GDP per capita and, to a lesser extent, to GDP per worker, automatically produces changes in expenditure which counterbalance those brought about on GDP.

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MID LONG TERM TRENDS FOR THE PENSION, HEALTH AND LONG TERM CARE SYSTEMS ­ 2009 UPDATED

Tab. A: hypotheses and projection results - National baseline scenario

2005

Demographic assumptions Istat main variant base yea 2007(1)

2010 1.4

2020 1.5

2030 1.6

2040 1.6

2050 1.6

2060 1.6

Fertility rates Life expectancy - male - female Annual net immigration (thousands) Elderly dependency ratio(2)

1.3

78.1 83.7 261 29.3

79.1 84.6 265 30.9

80.7 86.1 195 35.9

82.2 87.5 196 43.6

83.5 88.6 196 55.8

84.5 89.5 197 60.9

85.5 90.3 198 59.3

Participation rates [15-64] - male - female - total Unemployment rates - male - female - total Employment rates [15-64] - male - female - total Employment(3) - male - female - total Productivity(3) Real GDP(3)

Projection results Expenditure in % of GDP

74.4 50.4 62.4

73.7 51.4 62.5

77.0 56.4 66.7

77.2 58.5 67.9

78.0 60.1 69.2

78.2 61.8 70.2

77.6 62.2 70.1

Macroeconomic assumptions values in %

6.2 10.1 7.7

6.9 10.6 8.4

5.1 7.6 6.2

4.0 6.1 4.9

3.7 5.6 4.5

3.7 5.5 4.5

3.7 5.5 4.5

69.7 45.3 57.5

68.5 45.9 57.2

73.0 52.0 62.5

74.0 54.9 64.5

75.0 56.7 66.0

75.2 58.3 66.9

74.7 58.7 66.9

0.2 0.8 0.4 -0.7 -0.3 [a] [b] [c] [d] [a]+[b]-[c]+[d] 13.9 6.7 0.8 1.6 21.5 15.2 7.4 1.0 1.9 23.6

0.7 1.2 0.9 1.1 2.0 15.0 7.6 1.0 2.0 23.6

0.0 0.1 0.0 1.6 1.6 15.5 8.1 1.1 2.2 24.7

-0.5 -0.5 -0.5 1.8 1.3 15.8 8.6 1.2 2.5 25.7

-0.4 -0.2 -0.3 1.7 1.3 14.6 8.9 1.4 2.9 25.0

-0.2 -0.1 -0.2 1.6 1.5 13.4 8.9 1.5 3.1 23.9

Pensions Health care(4)

(LTC component)

LTC(4) Total

(1) Source: Istat (2008). The 2005 values are final data. (2) Population of 65 and over as a percentage of population 15-64. (3) Average annual percentage change in the preceding decade. The first value refers to the period 2005-2010. (4) The projections consider the hypotheses of reference scenario .

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MID LONG TERM TRENDS FOR THE PENSION, HEALTH AND LONG TERM CARE SYSTEMS ­ 2009 UPDATED

Tab. B: hypotheses and projection results - EPC-WGA baseline scenario

2005

Demographic assumptions Eurostat Base year 2007(1)

2010

2020

2030

2040

2050

2060

Fertility rates Life expectancy - male - female Annual net immigration (thousands) Elderly dependency ratio(2) Participation rates [15-64] - male - female - total Unemployment rates - male - female - total Employment rates [15-64] - male - female - total Employment(3) - male - female - total Productivity(3) Real GDP(3)

1.3

1.4

1.4

1.5

1.5

1.5

1.6

78.1 83.7 261 29.3

78.9 84.5 256 31.0

80.3 85.7 241 35.5

81.7 86.9 249 42.4

83.1 88.0 229 54.1

84.3 89.0 193 59.2

85.5 90.0 174 59.3

74.4 50.4 62.4

73.6 51.9 62.8

76.6 56.5 66.6

77.2 57.3 67.4

78.4 57.6 68.2

78.5 57.9 68.5

77.8 57.3 67.8

Macroeconomic assumptions values in %

6.2 10.1 7.7

7.0 10.4 8.4

5.0 7.2 5.9

4.7 6.8 5.6

4.7 6.8 5.6

4.7 6.8 5.6

4.7 6.8 5.6

69.7 45.3 57.5

68.3 46.5 57.4

72.7 52.4 62.6

73.5 53.4 63.5

74.6 53.6 64.3

74.7 53.9 64.6

74.0 53.3 63.9

0.1 0.9 0.4 -0.7 -0.3 [a] [b] [c] [d] [a]+[b]-[c]+[d] 13.9 6.7 0.8 1.6 21.5 15.2 7.4 1.0 1.9 23.6

0.7 1.2 0.9 1.3 2.2 14.7 7.6 1.0 2.0 23.3

0.0 -0.1 0.0 1.7 1.6 15.3 8.0 1.1 2.2 24.5

-0.5 -0.7 -0.6 1.7 1.1 16.0 8.5 1.2 2.5 25.8

-0.4 -0.5 -0.5 1.7 1.2 14.9 8.9 1.4 2.9 25.3

-0.4 -0.4 -0.4 1.7 1.3 13.8 8.9 1.5 3.2 24.4

Projection results Expenditure in % of GDP

Pensions Health care(4)

(LTC component)

LTC(4) Total

(1) Source: Economic Policy Committee and European Commission (2008). The 2005 values are final data. (2) Population of 65 and over as a percentage of population 15-64. (3) Average annual percentage change in the preceding decade. The first value refers to the period 2005-2010. (4) The projections consider the hypotheses of reference scenario. The dynamics of age cost profiles are based on the application of the death-related costs methodology to the hospital component of health care expenditure and the `partial' application of the dynamic equilibrium methodology to the other health care provisions.

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MID LONG TERM TRENDS FOR THE PENSION, HEALTH AND LONG TERM CARE SYSTEMS ­ 2009 UPDATED

Tab. C: sensitivity analysis of the demographic hypotheses - changes in the expenditure/GDP ratio compared with the national baseline scenario (in %)

Pensions Hypotheses 2040 Scenario high variant low variant Fertility rate high variant low variant Life expectancy high variant low variant Net flow of immigration high variant low variant

changes in 2060 +0.17 -0.19 changes in 2060 (m = +2.5) ; (f = +2.3) (m = -2.8) ; (f = -2.6) from 2020 (2) +40 thousand units -40 thousand units

Health and LTC(1) 2040 2060

Total 2040 2060

2060

-0.09 0.08 -0.07 0.08 0.32 -0.35 -0.34 0.36

-0.27 0.30 -0.30 0.36 0.35 -0.40 -0.31 0.35

-0.02 0.03 -0.08 0.10 0.18 -0.19 -0.12 0.12

-0.04 0.05 -0.23 0.28 0.38 -0.41 -0.17 0.19

-0.11 0.10 -0.15 0.17 0.49 -0.54 -0.45 0.48

-0.31 0.35 -0.53 0.65 0.73 -0.81 -0.48 0.54

(1) The projections consider the hypotheses of reference scenario . (2) Level gradually reached starting from 2007.

Tab. D: sensitivity analysis of the macroeconomic hypotheses - changes in the expenditure/GDP ratio compared with the national baseline scenario (in %)

Pensions Hypothesis 2040 Productivity high variant low variant Activity rates high variant low variant

annual change +0.25% -0.25% annual change +2 p.p. -2 p.p. changes in 2060 +1.6 p.p.

Health and LTC(1) 2040 2060

Total 2040 2060

2060

-0.53 0.56

-0.49 0.52

0.03 -0.03

0.05 -0.05

-0.49 0.52

-0.44 0.47

-0.14 0.15

-0.16 0.17

-0.02 0.02

-0.04 0.04

-0.16 0.17

-0.20 0.21

Unemployment rates

0.17

0.11

0.05

0.07

0.22

0.18

(1) The projections consider the hypotheses of reference scenario .

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MID LONG TERM TRENDS FOR THE PENSION, HEALTH AND LONG TERM CARE SYSTEMS ­ 2009 UPDATED

Figure A: a comparison between 2008 and 2009 updates - National baseline scenario

Expenditure to GDP ratio

Fig. A1: public pension expenditure

17% 16% 15% 14% 13% 12%

20 00 20 05 20 10 20 15 20 20 20 25 20 30 20 35 20 40 20 45 20 50 20 55 20 60

13.4% 13.2%

Fig. A2: public health care expenditure(1)

10% 9% 8% 7% 6% 5%

20 00 20 05 20 10 20 15 20 20 20 25 20 30 20 35 20 40 20 45 20 50 20 55 20 60

3.3%

9.0%

Fig. A3: public LTC expenditure(1)

5.0% 4.0% 3.0% 2.0% 1.0% 0.0%

20 00 20 05 20 10 20 15 20 20 20 25 20 30 20 35 20 40 20 45 20 50 20 55 20 60

National baseline sceario - 2009 updating National baseline sceario - 2008 updating National baseline scenario - DPEF 2010-2013 Note: (1) The projections consider the hypotheses of pure ageing scenario .

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MID LONG TERM TRENDS FOR THE PENSION, HEALTH AND LONG TERM CARE SYSTEMS ­ 2009 UPDATED

Figure B: public health and LTC expenditure - National baseline scenario

Expenditure to GDP ratio

Fig. B1: public health care expenditure(1)

10.0% 9.0% 8.0% 7.0% 6.0% 5.0%

20 00 20 05 20 10 20 15 20 20 20 25 20 30 20 35 20 40 20 45 20 50 20 55 20 60

9.0%

Fig. B2: public LTC expenditure(1)

3.5% 3.0% 2.8% 3.0% 2.6% 2.4% 2.5% 2.2% 2.0% 2.0% 1.8% 1.6% 1.5% 1.4% 1.2% 1.0% 1.0% 2000

20 00

3.3% 3.1%

20 05

20 10

20 15

20 20

20 25

20 30

20 35

20 40

20 45

20 50

20 55

2005

2010

2015

2020

2025

2030

2035

2040

2045

2050

Fig. B3: public health and LTC expenditure

11.5% 10.8% 10.5% 9.5% 8.5% 7.5% 6.5% 5.5%

20 00 20 05 20 10 20 15 20 20 20 25 20 30 20 35 20 40 20 45 20 50 20 55 20 60

20 60

10.5%

Pure ageing scenario

Note: (1) Includes the LTC component of health care.

Reference scenario

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MID LONG TERM TRENDS FOR THE PENSION, HEALTH AND LONG TERM CARE SYSTEMS ­ 2009 UPDATED

Figure C: national and EPC-WGA baseline scenarios

Expenditure to GDP ratio

Fig. C1: public pension expenditure

17% 16% 15% 14% 13% 12%

20 00 20 05 20 10 20 15 20 20 20 25 20 30 20 35 20 40 20 45 20 50 20 55 20 60

13.8% 13.4%

Fig. C2: public health care expenditure(1)

10% 9% 8% 7% 6% 5%

20 00 20 05 20 10 20 15 20 20 20 25 20 30 20 35 20 40 20 45 20 50 20 55 20 60

3.1%

20 60

8.9%

Fig. C3: public LTC expenditure(1)

5.0% 4.0% 3.0% 2.0% 1.0% 0.0%

20 00 20 05 20 10 20 15 20 20 20 25 20 30 20 35 20 40 20 45 20 50 20 55

National baseline scenario

EPC-WGA baseline scenario

Note: (1) The projections consider the hypotheses of reference scenario.

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MID LONG TERM TRENDS FOR THE PENSION, HEALTH AND LONG TERM CARE SYSTEMS ­ 2009 UPDATED

Figure D: public expenditure for pension, health care and LTC

Expenditure to GDP ratio

Fig. D1: national baseline scenario

30%

(1)

25%

LTC

20%

15%

health care

10%

pensions

5%

0% 2000

2005

2010

2015

2020

2025

2030

2035

2040

2045

2050

2055

2060

Fig. D2: scenario EPC-WGA baseline

30%

25%

LTC

20%

health care

15%

10%

pensions

5%

0% 2000

2005

2010

2015

2020

2025

2030

2035

2040

2045

2050

2055

2060

Note: (1) The projections consider the hypotheses of reference scenario.

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MID LONG TERM TRENDS FOR THE PENSION, HEALTH AND LONG TERM CARE SYSTEMS ­ 2009 UPDATED

Annex 3: assumptions and results of the forecasts ­ Tables

A1 - National baseline scenario: demographic assumptions. A2 - National baseline scenario: macroeconomic assumptions. A3 - National baseline scenario: pension expenditure. A4 - National baseline scenario: health care expenditure. A5 - National baseline scenario: LTC expenditure. B1 - EPC-WGA baseline scenario: demographic assumptions. B2 - EPC-WGA baseline scenario: macroeconomic assumptions. B3 - EPC-WGA baseline scenario: pension expenditure. B4 - EPC-WGA baseline scenario: health care expenditure. B5 - EPC-WGA baseline scenario: LTC expenditure.

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A1 - National baseline scenario: demographic assumptions - Istat main variant, base 2007

A1.1 - Demographic parameters

2000 Migratory flow (thousands) Fertility rate (children per woman) Life expectancy Male Female 170 (b) 1.26 (d) 76.5 (d) 82.5 (d) 2005 0.3 1.32 78.1 83.7 2010 264.8 1.42 79.1 84.6 2015 197.6 1.47 79.9 85.4 2020 194.5 1.52 80.7 86.1 2025 195.3 1.55 81.5 86.8 2030 195.7 1.57 82.2 87.5 2035 195.9 1.58 82.9 88.0 2040 196.1 1.59 83.5 88.6 2045 196.6 1.59 84.1 89.1 2050 197.1 1.58 84.5 89.5 2055 197.7 1.58 85.0 89.9

(a)

2060 198.2 1.58 85.5 90.3

A1.2 - Population by sex and age bracket (1st of January)

2000 Male [0-14] [15-19] [20-54] [55-64] [65-79] [65+] [80+] total Female [0-14] [15-19] [20-54] [55-64] [65-79] [65+] [80+] total Male and female [0-14] [15-19] [20-54] [55-64] [65-79] [65+] [80+] total 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060

4,181 1,569 14,323 3,256 3,503 4,234 731 27,563 3,964 1,499 14,316 3,505 4,576 6,076 1,500 29,361 8,145 3,069 28,639 6,761 8,079 10,310 2,231 56,924

4,242 1,485 14,526 3,407 3,759 4,717 959 28,377 4,014 1,404 14,380 3,625 4,723 6,662 1,940 30,086 8,256 2,889 28,906 7,032 8,481 11,379 2,898 58,462

4,336 1,513 14,667 3,586 3,931 5,139 1,208 29,242 4,100 1,434 14,575 3,795 4,773 7,077 2,304 30,982 8,437 2,947 29,242 7,382 8,704 12,216 3,512 60,224

4,391 1,466 14,490 3,706 4,206 5,661 1,455 29,714 4,151 1,381 14,386 3,911 4,975 7,595 2,621 31,424 8,542 2,847 28,875 7,617 9,181 13,256 4,076 61,138

4,344 1,506 13,949 4,158 4,373 6,061 1,687 30,018 4,090 1,424 13,761 4,344 5,100 7,998 2,898 31,617 8,433 2,931 27,710 8,502 9,473 14,058 4,585 61,634

4,232 1,536 13,294 4,625 4,704 6,539 1,835 30,225 3,977 1,442 13,035 4,780 5,414 8,479 3,065 31,713 8,209 2,977 26,328 9,405 10,118 15,018 4,900 61,938

4,130 1,516 12,714 4,768 5,153 7,242 2,089 30,369 3,879 1,417 12,372 4,892 5,836 9,199 3,364 31,760 8,009 2,933 25,086 9,660 10,989 16,441 5,452 62,129

4,089 1,460 12,351 4,525 5,757 8,039 2,282 30,463 3,841 1,363 11,925 4,629 6,412 10,015 3,603 31,772 7,930 2,824 24,275 9,153 12,169 18,054 5,886 62,236

4,094 1,426 12,188 4,069 6,180 8,725 2,545 30,501 3,845 1,331 11,674 4,159 6,807 10,729 3,922 31,739 7,939 2,757 23,862 8,228 12,987 19,454 6,467 62,240

4,108 1,415 12,092 3,740 6,145 9,103 2,958 30,458 3,858 1,320 11,524 3,792 6,715 11,138 4,423 31,633 7,966 2,735 23,616 7,532 12,860 20,241 7,381 62,090

4,096 1,420 11,998 3,643 5,754 9,146 3,391 30,303 3,847 1,325 11,403 3,630 6,259 11,209 4,950 31,414 7,942 2,745 23,401 7,273 12,013 20,355 8,341 61,717

4,046 1,431 11,958 3,596 5,317 9,011 3,694 30,042 3,800 1,335 11,349 3,536 5,722 11,051 5,329 31,071 7,846 2,766 23,307 7,132 11,039 20,062 9,023 61,113

3,981 1,429 11,891 3,597 5,069 8,827 3,758 29,724 3,738 1,333 11,265 3,520 5,365 10,776 5,411 30,634 7,719 2,762 23,156 7,117 10,434 19,603 9,169 60,358

A1.3 - Demographic indicators

2000 Elderly dependency ratio (e) Youth dependency ratio (f) Total dependency ratio (g) Ageing index (h) 29.1% 31.7% 60.8% 2005 31.7% 31.0% 62.7% 2010 33.4% 31.1% 64.4% 2015 36.3% 31.2% 67.5% 2020 38.8% 31.4% 70.2% 2025 42.0% 31.3% 73.3% 2030 47.3% 31.5% 78.8% 2035 54.0% 32.2% 86.2% 2040 60.6% 33.3% 94.0% 2045 65.0% 34.4% 2050 66.4% 34.8% 2055 65.9% 34.9% 2060 64.8% 34.6% 99.4%

99.3% 101.2% 100.8%

91.9% 102.1% 107.3% 116.4% 123.7% 134.2% 150.3% 167.9% 181.9% 189.2% 190.4% 189.0% 187.0%

(a) Source: Istat (2008). (b) Source: for the year 2000: Istat, Movimento e calcolo della popolazione residente annuale;for the years 2005-2006: Istat, Demo.Istat.it, Bilancio demografico e popolazione residente al 31 Dicembre, anni vari (c) Source: Demo.Istat.it, Rilevazione degli iscritti in anagrafe per nascita. (d) Source: Istat, Tavole di mortalità della popolazione italiana. (e) pop.[65+]/pop.[20-64]. (f) pop.[0-19]/pop.[20-64]. (g) (pop.[0-19]+pop.[65+])/pop.[20-64]. (h) pop.[65+]/pop.[0-19].

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A2 - National baseline scenario: macroeconomic assumptions

A2.1 - Employment(a), labour productivity and GDP

2000 Participation rate (b) Employment rate (c) Labour force (thousands ) Employment (thousands ) Unemployment rate GDP in real terms (billions 2000 ) GDP in nominal terms (billions ) GDP per capita ( 2000 ) (d) GDP per worker ( 2000 ) (e) GDP per capita () (d) GDP per worker () (e) GDP deflator CPI deflator (f) 41.5% 37.3% 23,598 21,210 10.1% 1,191.1 1,191.1 20,924 56,155 20,924 56,155 100.0 100.0 2005 41.8% 38.6% 24,451 22,563 7.7% 1,244.8 1,429.5 21,292 55,170 24,451 63,355 114.8 111.8 2010 41.7% 38.2% 25,136 23,021 8.4% 1,227.6 1,572.4 20,384 53,325 26,109 68,302 128.1 122.6 2015 42.8% 39.7% 26,160 24,302 7.1% 1,360.2 1,914.8 22,248 55,971 31,319 78,793 140.8 134.7 2020 43.4% 40.8% 26,764 25,117 6.2% 1,497.3 2,327.2 24,294 59,614 37,758 2025 43.4% 41.0% 26,871 25,416 5.4% 1,632.9 2,802.1 26,364 64,247 45,241 2030 42.7% 40.6% 26,501 25,207 4.9% 1,761.6 3,337.6 28,354 69,887 53,720 2035 41.6% 39.7% 25,880 24,699 4.6% 1,883.7 3,940.3 30,267 76,267 63,313 2040 40.4% 38.6% 25,121 24,000 4.5% 2,000.0 4,619.1 32,133 83,332 74,213 2045 39.5% 37.8% 24,534 23,440 4.5% 2,127.7 5,425.4 34,268 90,772 2050 39.4% 37.7% 24,342 23,257 4.5% 2,285.8 6,435.1 37,036 2055 39.5% 37.7% 24,112 23,037 4.5% 2,454.2 7,628.4 40,158 2060 39.7% 37.9% 23,962 22,894 4.5% 2,641.2 9,064.1 43,759

98,284 106,534 115,368

87,380 104,269 124,825 150,174

92,654 110,249 132,409 159,536 192,457 231,460 276,700 331,142 395,924 155.4 148.8 171.6 164.2 189.5 181.3 209.2 200.2 231.0 221.0 255.0 244.1 281.5 269.5 310.8 297.5 343.2 328.5

A2.2 - Participation rates by sex and age bracket(g)

2000 Male [15-24] [25-64] [15-64] Female [15-24] [25-64] [15-64] Male and Female [15-24] [25-64] [15-64] 0 43.3% 80.2% 73.6% 0.0% 37.1% 50.8% 48.5% 0 40.3% 65.4% 61.0% 2005 0 38.1% 81.4% 74.4% 0 28.7% 54.3% 50.4% 0 33.5% 67.8% 62.4% 2010 0 34.4% 80.9% 73.7% 0 24.9% 56.0% 51.4% 0 29.8% 68.4% 62.5% 2015 0 34.3% 83.8% 76.2% 0 25.1% 59.4% 54.4% 0 29.8% 71.5% 65.3% 2020 0 34.2% 84.8% 77.0% 0 25.2% 61.7% 56.4% 0 29.8% 73.2% 66.7% 2025 0 34.9% 85.1% 77.1% 0 25.6% 63.2% 57.5% 0 30.4% 74.1% 67.3% 2030 0 35.4% 85.4% 77.2% 0 26.0% 64.5% 58.5% 0 30.8% 75.0% 67.9% 2035 0 35.7% 85.9% 77.7% 0 26.2% 65.6% 59.4% 0 31.1% 75.9% 68.6% 2040 0 35.5% 86.5% 78.0% 0 26.0% 66.6% 60.1% 0 30.9% 76.7% 69.2% 2045 0 35.3% 86.6% 78.0% 0 25.9% 67.7% 60.9% 0 30.7% 77.3% 69.6% 2050 0 35.1% 86.9% 78.2% 0 25.7% 69.0% 61.8% 0 30.6% 78.1% 70.2% 2055 0 35.1% 86.5% 77.8% 0 25.7% 69.2% 61.9% 0 30.6% 78.0% 70.0% 2060 0 35.2% 86.4% 77.6% 0 25.8% 69.6% 62.2% 0 30.7% 78.2% 70.1%

A2.3 - Employment rates by age bracket(g)

2000 [15-24] [25-64] [15-64] 29.4% 60.1% 54.8% 2005 25.5% 93.7% 57.5% 2010 21.6% 63.6% 57.2% 2015 22.7% 67.3% 60.6% 2020 23.4% 69.4% 62.5% 2025 24.6% 70.8% 63.6% 2030 25.6% 71.9% 64.5% 2035 26.2% 72.9% 65.4% 2040 26.2% 73.8% 66.0% 2045 26.1% 74.4% 66.4% 2050 26.0% 75.2% 66.9% 2055 26.0% 75.1% 66.8% 2060 26.1% 75.2% 66.9%

(a) Labour market variables are consistent with the definition of the corrisponding aggregates in the Istat Labour force survey (Rilevazione Continua delle Forze di Lavoro). (b) Labour force divided by the population on the 1 st January. (c) Employment divided by the population on the 1 st January. (d) GDP divided by the population on the 1 st January. (e) GDP divided by the number of workers consistent with the labour force definition. This ratio is highter (8.1% in 2005) than that obtained dividing GDP by the number of workers consistent with the national accounts definition. (f) Consumer Price Index for the family of the employed (white and blue collar) without tobacco. (g) For the years 2000 and 2005, source: Istat, Rilevazione Continua delle Forze di Lavoro.

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MID LONG TERM TRENDS FOR THE PENSION, HEALTH AND LONG TERM CARE SYSTEMS ­ 2009 UPDATED

A3 - National baseline scenario: pension expenditure

A3.1 - Total pension expenditure/GDP and its decomposition

2000 Total pension expenditure/GDP Average pension/GDP per worker Number of pensions/workers 13.5% 15.4% 87.3% 2005 13.9% 16.6% 83.9% 2010 15.2% 18.1% 84.3% 2015 14.9% 18.1% 82.7% 2020 15.0% 17.9% 83.7% 2025 15.1% 17.2% 87.6% 2030 2035 2040 2045 2050 2055 2060 15.5% 15.7% 15.8% 15.5% 14.6% 13.9% 13.4% 16.5% 15.5% 14.6% 13.9% 13.2% 12.6% 12.3% 94.2% 101.2% 108.0% 111.6% 110.7% 110.4% 108.7%

A3.2 - Pension expenditure (2000 prices - millions )

2000 Total pension expenditure Public pensions Direct pensions for private sector employees for public sector employees for self-employed Survivors and child pensions for private sector employees for public sector employees for self-employed Old age means-tested transfers (a) (b) 2005 2010 2015 2020 2025 257,748 251,654 214,959 125,807 56,807 32,345 36,695 21,883 7,628 7,184 6,094 2030 285,279 277,513 239,180 144,298 60,351 34,531 38,333 22,786 7,922 7,625 7,766 2035 309,298 299,782 259,887 162,500 61,775 35,612 39,894 23,926 8,180 7,788 9,516 2040 330,387 319,404 278,127 180,448 62,030 35,649 41,277 25,225 8,331 7,721 10,983 2045 344,221 332,096 289,687 192,887 61,991 34,809 42,409 26,590 8,279 7,541 12,125 2050 348,459 335,083 291,701 195,397 62,126 34,178 43,382 28,005 8,018 7,359 13,376 2055 357,638 342,292 298,207 200,439 63,269 34,499 44,085 29,310 7,602 7,172 15,347 2060 369,576 353,004 308,747 207,886 65,427 35,434 44,257 30,211 7,135 6,912 16,572 160,582 178,263 195,307 212,412 234,387 158,305 175,219 192,084 208,846 229,775 130,185 144,786 160,487 175,469 194,728 79,886 88,649 95,486 102,584 112,459 31,561 34,622 40,543 46,008 52,343 18,738 21,516 24,459 26,877 29,926 28,120 30,433 31,597 33,377 35,047 18,353 19,224 19,618 20,393 21,137 6,638 6,889 6,976 7,201 7,379 3,128 4,320 5,003 5,783 6,531 2,277 3,044 3,224 3,566 4,612

A3.3 - Number of pensions (thousands)

2000 Number of pensions Public pensions Direct pensions for private sector employees for public sector employees for self-employed Survivors and child pensions for private sector employees for public sector employees for self-employed Old age means-tested transfers (a) (b) 18,511 17,802 13,178 7,842 1,828 3,507 4,624 3,034 565 1,026 709 2005 18,921 18,131 13,394 7,680 1,895 3,820 4,737 3,037 622 1,079 790 2010 19,416 18,570 13,772 7,657 2,102 4,013 4,798 3,000 650 1,148 846 2015 20,109 19,206 14,289 7,876 2,299 4,114 4,918 3,006 675 1,237 902 2020 21,036 19,965 15,078 8,437 2,492 4,149 4,887 2,920 681 1,286 1,071 2025 22,266 20,970 16,143 9,341 2,621 4,182 4,826 2,834 679 1,313 1,296 2030 23,746 22,214 17,442 10,549 2,707 4,186 4,772 2,792 674 1,306 1,532 2035 24,992 23,243 18,502 11,710 2,716 4,076 4,741 2,813 664 1,264 1,748 2040 25,912 24,020 19,289 12,719 2,703 3,868 4,731 2,887 644 1,200 1,892 2045 26,165 24,216 19,486 13,213 2,690 3,584 4,730 2,981 615 1,134 1,949 2050 25,738 23,749 19,022 13,014 2,673 3,335 4,727 3,070 579 1,078 1,990 2055 25,437 23,328 18,638 12,800 2,665 3,173 4,691 3,123 541 1,027 2,109 2060 24,896 22,827 18,243 12,540 2,660 3,043 4,584 3,110 507 967 2,069

A3.4 - Average pension (2000 prices)

2000 Average pension () Public pensions Direct pensions for private sector employees for public sector employees for self-employed Survivors and child pensions for private sector employees for public sector employees for self-employed Old age means-tested transfers (a) (b) 8,675 8,893 9,879 10,186 17,267 5,343 6,081 6,050 11,756 3,050 3,211 2005 9,421 9,664 10,810 11,543 18,273 5,633 6,424 6,330 11,082 4,004 3,853 2010 10,059 10,344 11,653 12,470 19,292 6,094 6,585 6,539 10,736 4,357 3,811 2015 10,563 10,874 12,280 13,025 20,011 6,534 6,787 6,784 10,664 4,677 3,952 2020 11,142 11,509 12,915 13,330 21,006 7,213 7,171 7,238 10,844 5,078 4,307 2025 11,576 12,001 13,316 13,469 21,677 7,734 7,603 7,722 11,229 5,471 4,701 2030 12,014 12,493 13,713 13,679 22,293 8,249 8,033 8,162 11,751 5,837 5,070 2035 12,376 12,898 14,046 13,877 22,744 8,737 8,415 8,505 12,327 6,161 5,443 2040 12,750 13,297 14,419 14,188 22,947 9,218 8,725 8,739 12,928 6,434 5,806 2045 13,156 13,714 14,866 14,599 23,047 9,713 8,966 8,919 13,468 6,650 6,221 2050 13,539 14,110 15,335 15,015 23,239 10,248 9,178 9,122 13,855 6,827 6,723 2055 14,060 14,673 16,000 15,660 23,739 10,873 9,398 9,386 14,042 6,986 7,278 2060 14,845 15,464 16,924 16,578 24,597 11,644 9,654 9,714 14,080 7,145 8,010

A3.5 - Number of pensioners(c) (thousands)

2005 Total number of pensioners - of which with 65+ Male - of which with 65+ Female - of which with 65+ 15,594 11,530 7,182 5,082 8,412 6,449 2010 15,812 12,085 7,334 5,380 8,478 6,705 2015 16,179 13,025 7,447 5,913 8,732 7,112 2020 16,852 13,719 7,729 6,232 9,123 7,487 2025 17,922 14,653 8,202 6,668 9,721 7,985 2030 19,380 16,122 8,894 7,357 10,486 8,765 2035 20,625 17,663 9,447 8,090 11,178 9,573 2040 21,513 18,964 9,903 8,723 11,610 10,241 2045 21,780 19,574 10,069 8,990 11,711 10,584 2050 21,452 19,522 9,913 8,960 11,539 10,562 2055 21,300 19,096 9,862 8,764 11,439 10,332 2060 20,949 18,730 9,719 8,610 11,230 10,120

(a) Social pensions and old age allowances starting from 1996. (b) Net of reimbursements of pensions (or part of their amount) unduly paid. (c) Includes non-resinent people.

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MID LONG TERM TRENDS FOR THE PENSION, HEALTH AND LONG TERM CARE SYSTEMS ­ 2009 UPDATED

A4.a - National baseline scenario: health care expenditure

A4.1 - Health care expenditure/GDP by age bracket - Pure ageing scenario(a)

2000 Acute e Long Term Care [0-64] [65-79] [80+] total Acute Care [0-64] [65-79] [80+] total Long Term Care [0-64] [65-79] [80+] total 3.3% 1.7% 0.7% 5.7% 3.0% 1.5% 0.5% 5.0% 0.3% 0.2% 0.2% 0.6% 2005 3.8% 2.0% 1.0% 6.7% 3.4% 1.8% 0.7% 5.9% 0.3% 0.2% 0.3% 0.8% 2010 4.1% 2.1% 1.2% 7.4% 3.7% 1.9% 0.8% 6.4% 0.4% 0.2% 0.4% 1.0% 2015 4.0% 2.1% 1.3% 7.4% 3.6% 1.9% 0.9% 6.4% 0.4% 0.2% 0.4% 1.0% 2020 4.0% 2.2% 1.5% 7.7% 3.6% 2.0% 1.0% 6.6% 0.4% 0.2% 0.5% 1.1% 2025 4.0% 2.3% 1.6% 7.9% 3.6% 2.1% 1.1% 6.8% 0.4% 0.2% 0.5% 1.1% 2030 3.9% 2.5% 1.8% 8.1% 3.5% 2.2% 1.2% 7.0% 0.4% 0.2% 0.6% 1.2% 2035 3.7% 2.7% 1.9% 8.4% 3.4% 2.5% 1.3% 7.2% 0.4% 0.3% 0.6% 1.2% 2040 3.6% 3.0% 2.1% 8.6% 3.2% 2.7% 1.4% 7.3% 0.3% 0.3% 0.7% 1.3% 2045 3.5% 3.0% 2.4% 8.8% 3.1% 2.7% 1.7% 7.5% 0.3% 0.3% 0.7% 1.4% 2050 3.4% 2.8% 2.7% 9.0% 3.1% 2.5% 1.9% 7.5% 0.3% 0.3% 0.8% 1.4% 2055 3.4% 2.6% 3.0% 9.0% 3.1% 2.3% 2.0% 7.5% 0.3% 0.3% 0.9% 1.5% 2060 3.4% 2.5% 3.1% 9.0% 3.1% 2.2% 2.1% 7.4% 0.3% 0.2% 1.0% 1.5%

A4.2 - Health care expenditure/GDP by age bracket - Reference scenario(b)

2000 Acute e Long Term Care [0-64] [65-79] [80+] total Acute Care [0-64] [65-79] [80+] total Long Term Care [0-64] [65-79] [80+] total 3.3% 1.7% 0.7% 5.7% 3.0% 1.5% 0.5% 5.0% 0.3% 0.2% 0.2% 0.6% 2005 3.8% 2.0% 1.0% 6.7% 3.4% 1.8% 0.7% 5.9% 0.3% 0.2% 0.3% 0.8% 2010 4.1% 2.1% 1.2% 7.4% 3.7% 1.9% 0.8% 6.4% 0.4% 0.2% 0.4% 1.0% 2015 4.0% 2.1% 1.3% 7.4% 3.6% 1.9% 0.9% 6.4% 0.4% 0.2% 0.4% 1.0% 2020 4.0% 2.1% 1.5% 7.6% 3.6% 2.0% 1.0% 6.6% 0.4% 0.2% 0.4% 1.0% 2025 4.0% 2.3% 1.6% 7.8% 3.6% 2.1% 1.1% 6.8% 0.4% 0.2% 0.5% 1.0% 2030 3.9% 2.4% 1.7% 8.1% 3.5% 2.2% 1.2% 7.0% 0.4% 0.2% 0.5% 1.1% 2035 3.7% 2.7% 1.9% 8.3% 3.4% 2.5% 1.3% 7.2% 0.3% 0.2% 0.6% 1.1% 2040 3.6% 2.9% 2.1% 8.6% 3.3% 2.6% 1.4% 7.4% 0.3% 0.3% 0.6% 1.2% 2045 3.5% 2.9% 2.4% 8.8% 3.2% 2.6% 1.7% 7.5% 0.3% 0.3% 0.7% 1.3% 2050 3.5% 2.7% 2.7% 8.9% 3.1% 2.5% 1.9% 7.5% 0.3% 0.2% 0.8% 1.4% 2055 3.5% 2.5% 2.9% 8.9% 3.1% 2.3% 2.1% 7.5% 0.3% 0.2% 0.9% 1.4% 2060 3.5% 2.4% 3.0% 8.9% 3.1% 2.2% 2.1% 7.4% 0.3% 0.2% 0.9% 1.5%

A4.3 - Health care expenditure/GDP - Different hypotheses

2005 Pure ageing scenario + unit cost linked to GDP per worker - of which acute care Pure ageing scenario + dynamic health care consumption profiles (c) - of which acute care Pure ageing scenario + elasticity of unit cost to GDP per capita above 1 - of which acute care 6.7% 5.9% 6.7% 5.9% 6.7% 5.9% 2010 7.4% 6.4% 7.4% 6.4% 7.4% 6.4% 2015 7.3% 6.3% 7.4% 6.4% 7.5% 6.5% 2020 7.3% 6.3% 7.5% 6.5% 7.7% 6.7% 2025 7.5% 6.4% 7.7% 6.7% 8.0% 6.9% 2030 7.8% 6.7% 7.9% 6.8% 8.3% 7.1% 2035 8.2% 7.0% 8.1% 7.0% 8.6% 7.4% 2040 8.7% 7.4% 8.4% 7.1% 8.9% 7.6% 2045 9.1% 7.7% 8.6% 7.2% 9.1% 7.7% 2050 9.3% 7.8% 8.7% 7.3% 9.2% 7.8% 2055 9.3% 7.7% 8.7% 7.2% 9.3% 7.7% 2060 9.2% 7.7% 8.6% 7.2% 9.3% 7.7%

A4.4 - Health care expenditure/GDP - Hypotheses adopted by EPC-WGA(d)

2005 Reference scenario + partial dynamic equilibrium for every health care provision (including hospital care) - of which acute care 6.7% 5.9% 2010 7.4% 6.4% 2015 7.4% 6.4% 2020 7.6% 6.6% 2025 7.8% 6.8% 2030 8.1% 7.0% 2035 8.3% 7.2% 2040 8.6% 7.4% 2045 8.8% 7.5% 2050 8.9% 7.5% 2055 8.9% 7.5% 2060 8.9% 7.4%

(a) Unit cost (CPS) linked to GDP per capita and constant age-related expenditure profiles. (b) Unit cost (CPS) linked to GDP per capita for acute care, and to GDP per worker, for long term care; elasticity of CPS to GDP per capita above one; application of death-related costs to the hospital care expenditure profile and partial dynamic equilibrium (50% of changes in life expectancy) to the other health care provisions. (c) Age-related expenditure profiles change according to the methodology of death-related costs, for the hospital care expenditure profile, and the methodology of partial dynamic equilibrium, for the other health care provisions. (d) Differs from the reference scenario insofar as the age-related expenditure profile evolves accordingly to the partial dynamic equilibrium methodology for each health care provision.

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MID LONG TERM TRENDS FOR THE PENSION, HEALTH AND LONG TERM CARE SYSTEMS ­ 2009 UPDATED

A5 - National baseline scenario: LTC expenditure

A5.1 -LTC expenditure/GDP by age bracket - Pure ageing scenario(a)

2000 LTC expenditure/GDP Health care component Attendance allowances Other LTC provisions Distribution by age bracket Total expenditure [0-64] [65-79] [80+] total Health care component [0-64] [65-79] [80+] total Attendance allowances [0-64] [65-79] [80+] total Other LTC provisions [0-64] [65-79] [80+] total 1.3% 0.6% 0.5% 0.1% 2005 1.6% 0.8% 0.6% 0.1% 2010 1.9% 1.0% 0.8% 0.2% 2015 2.0% 1.0% 0.8% 0.2% 2020 2.1% 1.1% 0.8% 0.2% 2025 2.2% 1.1% 0.9% 0.2% 2030 2.3% 1.2% 0.9% 0.2% 2035 2.5% 1.2% 1.0% 0.2% 2040 2.6% 1.3% 1.1% 0.3% 2045 2.9% 1.4% 1.2% 0.3% 2050 3.1% 1.4% 1.3% 0.3% 2055 3.3% 1.5% 1.4% 0.3% 2060 3.3% 1.5% 1.5% 0.3%

33.7% 24.3% 42.0% 100% 42.7% 22.0% 35.3% 100% 24.6% 26.7% 48.7% 100% 23.8% 26.4% 49.8% 100%

31.9% 22.9% 45.2% 100% 41.5% 20.7% 37.8% 100% 22.1% 25.3% 52.6% 100% 21.8% 24.4% 53.9% 100%

29.5% 21.8% 48.7% 100% 38.6% 20.2% 41.2% 100% 20.1% 23.5% 56.4% 100% 19.8% 23.3% 56.9% 100%

27.6% 20.8% 51.6% 100% 36.4% 19.7% 43.9% 100% 18.7% 22.0% 59.3% 100% 18.5% 22.2% 59.3% 100%

26.0% 21.2% 52.8% 100% 34.4% 20.4% 45.2% 100% 17.5% 21.9% 60.6% 100% 17.5% 22.6% 59.9% 100%

23.7% 21.1% 55.1% 100% 31.7% 20.6% 47.7% 100% 15.9% 21.5% 62.6% 100% 15.9% 22.3% 61.7% 100%

21.5% 22.1% 56.5% 100% 29.1% 21.8% 49.1% 100% 14.1% 22.1% 63.7% 100% 14.4% 23.1% 62.5% 100%

19.2% 22.5% 58.2% 100% 26.4% 22.4% 51.1% 100% 12.4% 22.4% 65.1% 100% 12.8% 23.5% 63.7% 100%

17.4% 21.3% 61.3% 100% 24.2% 21.4% 54.5% 100% 11.1% 21.2% 67.8% 100% 11.4% 22.0% 66.6% 100%

16.0% 19.0% 65.0% 100% 22.6% 19.2% 58.2% 100% 10.0% 18.7% 71.3% 100% 10.4% 19.5% 70.1% 100%

15.1% 16.6% 68.2% 100% 21.7% 17.0% 61.3% 100% 9.3% 16.1% 74.6% 100% 9.9% 17.1% 72.9% 100%

14.8% 15.2% 70.0% 100% 21.4% 15.8% 62.8% 100% 9.0% 14.4% 76.6% 100% 9.8% 15.9% 74.2% 100%

A5.2 - LTC expenditure/GDP by age bracket - Reference scenario(b)

2000 LTC expenditure/GDP Health care component Attendance allowances Other LTC provisions Distribution by age bracket Total expenditure [0-64] [65-79] [80+] total Health care component [0-64] [65-79] [80+] total Attendance allowances [0-64] [65-79] [80+] total Other LTC provisions [0-64] [65-79] [80+] total 1.3% 0.6% 0.5% 0.1% 2005 1.6% 0.8% 0.6% 0.1% 2010 1.9% 1.0% 0.8% 0.2% 2015 2.0% 1.0% 0.8% 0.2% 2020 2.0% 1.0% 0.8% 0.2% 2025 2.1% 1.0% 0.8% 0.2% 2030 2.2% 1.1% 0.9% 0.2% 2035 2.3% 1.1% 1.0% 0.2% 2040 2.5% 1.2% 1.0% 0.2% 2045 2.7% 1.3% 1.1% 0.3% 2050 2.9% 1.4% 1.2% 0.3% 2055 3.0% 1.4% 1.3% 0.3% 2060 3.1% 1.5% 1.3% 0.3%

33.7% 24.3% 42.0% 100% 42.7% 22.0% 35.3% 100% 24.6% 26.7% 48.7% 100% 23.8% 26.4% 49.8% 100%

31.9% 22.9% 45.2% 100% 41.5% 20.7% 37.8% 100% 22.1% 25.3% 52.6% 100% 21.8% 24.4% 53.9% 100%

29.7% 21.6% 48.7% 100% 39.0% 19.9% 41.1% 100% 20.1% 23.4% 56.5% 100% 20.1% 23.0% 56.9% 100%

27.9% 20.3% 51.8% 100% 37.0% 19.1% 43.8% 100% 18.9% 21.3% 59.8% 100% 19.0% 21.6% 59.4% 100%

26.5% 20.3% 53.2% 100% 35.3% 19.5% 45.1% 100% 17.8% 20.9% 61.3% 100% 18.1% 21.8% 60.1% 100%

24.5% 20.0% 55.5% 100% 32.9% 19.5% 47.6% 100% 16.3% 20.2% 63.5% 100% 16.6% 21.3% 62.0% 100%

22.4% 20.6% 57.0% 100% 30.4% 20.4% 49.1% 100% 14.5% 20.6% 64.9% 100% 15.1% 21.9% 63.0% 100%

20.3% 20.9% 58.8% 100% 28.0% 20.9% 51.2% 100% 12.9% 20.7% 66.4% 100% 13.6% 22.1% 64.3% 100%

18.5% 19.7% 61.8% 100% 25.8% 19.7% 54.5% 100% 11.5% 19.4% 69.1% 100% 12.3% 20.5% 67.3% 100%

17.2% 17.3% 65.5% 100% 24.2% 17.5% 58.2% 100% 10.5% 16.9% 72.6% 100% 11.3% 18.0% 70.7% 100%

16.3% 14.9% 68.7% 100% 23.3% 15.3% 61.4% 100% 9.7% 14.4% 75.9% 100% 10.8% 15.6% 73.6% 100%

15.9% 13.5% 70.6% 100% 23.1% 14.0% 62.9% 100% 9.3% 12.7% 77.9% 100% 10.7% 14.2% 75.0% 100%

(a) Unit cost (CPS) linked to GDP per capita and constant age-related expenditure profiles. (b) Unit cost (CPS) linked to GDP per capita for attendance allowances, and to GDP per worker, for health care component and 'other LTC provisions'; application of partial dynamic equilibrium (50% of changes in life expectancy) to all LTC provisions.

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MID LONG TERM TRENDS FOR THE PENSION, HEALTH AND LONG TERM CARE SYSTEMS ­ 2009 UPDATED

B1 - EPC-WGA baseline scenario: demographic assumptions - Eurostat, base 2007

B1.1 - Demographic parameters

2005 Migratory flow (thousands) Fertility rate (children per woman) Life expectancy Male Female 260.7 1.32 78.1 83.7 2010 255.9 1.39 78.9 84.5 2015 248.6 1.41 79.6 85.1 2020 240.8 1.42 80.3 85.7 2025 240.8 1.44 81.0 86.3 2030 248.7 1.46 81.7 86.9 2035 239.9 1.47 82.4 87.5 2040 229.5 1.49 83.1 88.0 2045 206.9 1.51 83.7 88.5 2050 193.4 1.52 84.3 89.0

(a)

2055 185.8 1.54 84.9 89.5

2060 174.3 1.55 85.5 90.0

B1.2 - Population by sex and age bracket (1st of January - thousands)

2005 Male [0-14] [15-19] [20-54] [55-64] [65-79] [65+] [80+] total Female [0-14] [15-19] [20-54] [55-64] [65-79] [65+] [80+] total Male and Female [0-14] [15-19] [20-54] [55-64] [65-79] [65+] [80+] total 2010 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060

4,242 1,485 14,526 3,407 3,759 4,717 959 28,377 4,014 1,404 14,380 3,625 4,723 6,662 1,940 30,086 8,256 2,889 28,906 7,032 8,481 11,379 2,898 58,462

4,329 1,508 14,628 3,581 3,926 5,128 1,202 29,174 4,083 1,424 14,465 3,791 4,773 7,080 2,308 30,844 8,412 2,932 29,093 7,372 8,699 12,208 3,509 60,017

4,353 1,457 14,554 3,692 4,190 5,617 1,427 29,673 4,097 1,366 14,305 3,907 4,972 7,581 2,608 31,256 8,450 2,823 28,859 7,599 9,162 13,198 4,036 60,929

4,239 1,500 14,111 4,136 4,341 5,982 1,641 29,969 3,978 1,411 13,768 4,346 5,093 7,949 2,856 31,452 8,217 2,911 27,880 8,482 9,435 13,931 4,496 61,421

4,041 1,543 13,541 4,598 4,653 6,424 1,770 30,146 3,792 1,441 13,118 4,791 5,406 8,395 2,990 31,537 7,833 2,983 26,659 9,389 10,059 14,819 4,760 61,683

3,905 1,478 13,067 4,735 5,087 7,092 2,005 30,277 3,665 1,380 12,542 4,917 5,830 9,088 3,258 31,591 7,571 2,857 25,609 9,652 10,917 16,180 5,263 61,868

3,875 1,388 12,768 4,486 5,678 7,855 2,177 30,372 3,637 1,296 12,147 4,657 6,415 9,886 3,471 31,622 7,512 2,684 24,914 9,143 12,093 17,741 5,648 61,995

3,897 1,349 12,602 4,043 6,092 8,511 2,419 30,402 3,660 1,260 11,910 4,173 6,826 10,597 3,771 31,600 7,557 2,609 24,512 8,216 12,918 19,108 6,190 62,002

3,916 1,340 12,417 3,777 6,050 8,866 2,815 30,315 3,678 1,253 11,704 3,826 6,742 11,002 4,260 31,462 7,594 2,593 24,121 7,602 12,792 19,867 7,075 61,777

3,885 1,349 12,182 3,746 5,673 8,914 3,241 30,076 3,650 1,263 11,462 3,724 6,279 11,065 4,786 31,163 7,535 2,612 23,645 7,470 11,952 19,978 8,027 61,240

3,806 1,361 11,995 3,707 5,296 8,838 3,542 29,706 3,575 1,274 11,274 3,652 5,756 10,931 5,176 30,706 7,381 2,635 23,268 7,360 11,052 19,769 8,717 60,413

3,720 1,350 11,768 3,698 5,126 8,727 3,601 29,262 3,494 1,264 11,045 3,624 5,447 10,700 5,253 30,128 7,214 2,614 22,813 7,321 10,573 19,427 8,854 59,390

B1.3 - Demographic indicators

2005 Elderly dependency ratio (b) Youth dependency ratio (c) Total dependency ratio (d) Ageing index (e) 31.7% 31.0% 62.7% 102.1% 2010 33.5% 31.1% 64.6% 107.6% 2015 36.2% 30.9% 67.1% 117.1% 2020 38.3% 30.6% 68.9% 125.2% 2025 41.1% 30.0% 71.1% 137.0% 2030 45.9% 29.6% 75.5% 155.2% 2035 52.1% 29.9% 82.0% 174.0% 2040 58.4% 31.1% 89.4% 188.0% 2045 62.6% 32.1% 94.7% 195.0% 2050 64.2% 32.6% 96.8% 196.9% 2055 64.5% 32.7% 97.2% 197.4% 2060 64.5% 32.6% 97.1% 197.7%

(a) Source:Economic Policy Committee and European Commission (2008). (b) pop [65+]/pop [20-64]. (c) pop [0-19]/pop [20-64]. (d) (pop [0-19]+pop [65+])/pop [20-64]. (e) pop [65+]/pop [0-19].

26

MID LONG TERM TRENDS FOR THE PENSION, HEALTH AND LONG TERM CARE SYSTEMS ­ 2009 UPDATED

B2 - EPC-WGA baseline scenario: macroeconomic assumptions

B2.1 - Employment(a), labour productivity and GDP

2005 Participation rate (b) Employment rate (c) Labour force (thousands ) Employment (thousands ) Unemployment rate GDP in real terms (billions 2000 ) GDP in nominal terms (billions ) GDP per capita ( 2000 ) (d) GDP per worker ( 2000 ) (e) GDP per capita () (d) GDP per worker () (e) GDP deflator CPI deflator (f) 41.8% 38.6% 24,451 22,563 7.7% 1,244.8 1,429.5 21,292 55,170 24,451 63,355 114.8 111.8 2010 41.9% 38.4% 25,136 23,021 8.4% 1,227.6 1,572.4 20,454 53,325 26,199 68,301 128.1 122.6 2015 42.9% 39.9% 26,165 24,324 7.0% 1,366.7 1,927.1 22,431 56,187 31,628 79,224 141.0 135.0 2020 43.6% 41.1% 26,804 25,215 5.9% 1,524.3 2,373.0 24,818 60,453 38,635 2025 43.7% 41.2% 26,930 25,433 5.6% 1,667.3 2,865.8 27,030 65,558 46,459 2030 43.0% 40.6% 26,584 25,105 5.6% 1,788.3 3,393.6 28,905 71,231 54,852 2035 41.8% 39.5% 25,942 24,499 5.6% 1,896.7 3,973.9 30,594 77,417 64,100 2040 40.5% 38.2% 25,099 23,704 5.6% 1,994.1 4,612.8 32,161 84,124 74,397 2045 39.5% 37.3% 24,378 23,022 5.6% 2,105.9 5,378.6 34,089 91,474 87,064 2050 39.1% 36.9% 23,960 22,628 5.6% 2,252.3 6,351.0 36,778 2055 38.8% 36.7% 23,447 22,144 5.6% 2,400.3 7,473.0 39,732 2060 38.7% 36.6% 23,007 21,728 5.6% 2,564.1 8,813.6 43,173

99,536 108,397 118,006 103,708 123,699 148,403 280,676 337,476 405,631 282.0 269.9 311.3 298.0 343.7 329.0

94,111 112,680 155.7 149.0 171.9 164.5

135,173 162,203 194,600 233,627 189.8 181.6 209.5 200.5 231.3 221.4 255.4 244.4

B2.2 - Participation rates by sex and age bracket(g)

2005 Male [15-24] [25-64] [15-64] Female [15-24] [25-64] [15-64] Male and Female [15-24] [25-64] [15-64] 0 38.1% 81.4% 74.4% 0 28.7% 54.3% 50.4% 0 33.5% 67.8% 62.4% 2010 0 36.1% 80.5% 73.6% 0 25.7% 56.5% 51.9% 0 31.0% 68.5% 62.8%

(g)

2015 0 36.6% 82.9% 75.7% 0 26.0% 59.8% 54.8% 0 31.5% 71.3% 65.3%

2020 0 36.7% 83.9% 76.6% 0 25.9% 61.7% 56.5% 0 31.4% 72.8% 66.6%

2025 0 37.2% 84.4% 76.9% 0 26.2% 62.5% 57.0% 0 31.9% 73.5% 67.0%

2030 0 38.2% 84.7% 77.2% 0 26.8% 62.9% 57.3% 0 32.7% 73.9% 67.4%

2035 0 38.6% 85.4% 78.0% 0 27.1% 63.1% 57.6% 0 33.0% 74.4% 67.9%

2040 0 38.1% 85.9% 78.4% 0 26.8% 63.2% 57.6% 0 32.6% 74.7% 68.2%

2045 0 37.8% 86.1% 78.4% 0 26.5% 63.5% 57.8% 0 32.3% 75.0% 68.3%

2050 0 37.5% 86.3% 78.5% 0 26.3% 63.8% 57.9% 0 32.1% 75.3% 68.5%

2055 0 37.5% 85.9% 78.0% 0 26.3% 63.3% 57.4% 0 32.1% 74.9% 67.9%

2060 0 37.7% 85.8% 77.8% 0 26.4% 63.3% 57.3% 0 32.3% 74.8% 67.8%

B2.3 - Employment rates by age bracket

2005 [15-24] [25-64] [15-64] 25.5% 93.7% 57.5%

2010 22.8% 63.7% 57.4%

2015 24.3% 67.1% 60.7%

2020 25.2% 69.2% 62.6%

2025 25.9% 70.1% 63.2%

2030 26.7% 70.4% 63.5%

2035 27.0% 70.9% 64.0%

2040 26.6% 71.2% 64.3%

2045 26.3% 71.4% 64.4%

2050 26.2% 71.8% 64.6%

2055 26.1% 71.4% 64.1%

2060 26.3% 71.3% 63.9%

(a) Labour market variables are consistent with the definition of the corrisponding aggregates in the Istat Labour force survey (Rilevazione Continua delle Forze di Lavoro). (b) Labour force divided by the population on the 1 st January. (c) Employment divided by the population on the 1 st January. (d) GDP divided by the population on the 1 st January. (e) GDP divided by the number of workers consistent with the labour force definition. This ratio is highter (8.1% in 2005) than that obtained dividing GDP by the number of workers consistent with the national accounts definition. (f) Consumer Price Index for the family of the employed (white and blue collar) without tobacco. (g) For the years 2000 and 2005, source: Istat, Rilevazione Continua delle Forze di Lavoro.

27

MID LONG TERM TRENDS FOR THE PENSION, HEALTH AND LONG TERM CARE SYSTEMS ­ 2009 UPDATED

B3 - EPC-WGA baseline scenario: pension expenditure

B3.1 - Total pension expenditure/GDP and its decomposition

2005 Total pension expenditure/GDP Average pension/GDP per worker Number of pensions/workers 13.9% 16.6% 83.9% 2010 15.2% 18.1% 84.3% 2015 14.8% 18.0% 82.5% 2020 14.7% 17.7% 83.0% 2025 14.8% 17.1% 86.8% 2030 15.3% 16.4% 93.6% 2035 15.7% 15.6% 100.9% 2040 16.0% 14.8% 108.1% 2045 15.7% 14.0% 112.2% 2050 14.9% 13.3% 112.4% 2055 14.3% 12.6% 113.5% 2060 13.8% 12.2% 113.2%

B3.2 - Pension expenditure (2000 prices - millions )

2005 Total pension expenditure Public pensions Direct pensions for private sector employees for public sector employees for self-employed Survivors and child pensions for private sector employees for public sector employees for self-employed Old age means-tested transfers (a) (b) 178,263 175,219 144,786 88,649 34,622 21,516 30,433 19,224 6,889 4,320 3,044 2010 195,307 192,084 160,388 95,424 40,518 24,446 31,696 19,680 7,000 5,016 3,224 2015 212,035 208,278 174,707 102,103 45,829 26,775 33,571 20,510 7,252 5,810 3,758 2020 234,044 229,145 193,721 111,850 52,072 29,799 35,424 21,356 7,445 6,624 4,899 2025 258,030 251,573 214,363 125,561 56,625 32,176 37,211 22,182 7,713 7,316 6,457 2030 286,496 278,349 239,369 144,747 60,324 34,297 38,980 23,174 8,038 7,768 8,147 2035 311,289 301,428 260,749 163,643 61,831 35,276 40,679 24,435 8,329 7,916 9,860 2040 332,759 321,560 279,373 182,025 62,141 35,207 42,187 25,864 8,505 7,818 11,200 2045 346,336 334,174 290,758 194,456 62,019 34,283 43,416 27,324 8,475 7,617 12,161 2050 350,578 337,318 292,918 197,071 62,193 33,654 44,400 28,765 8,214 7,421 13,260 2055 359,437 344,144 299,098 201,562 63,475 34,061 45,046 30,041 7,786 7,220 15,292 2060 369,976 353,119 307,992 207,477 65,455 35,060 45,127 30,876 7,305 6,946 16,856

B3.3 - Number of pensions (thousands)

2005 Number of pensions Public pensions Direct pensions for private sector employees for public sector employees for self-employed Survivors and child pensions for private sector employees for public sector employees for self-employed Old age means-tested transfers (a) (b) 18,921 18,131 13,394 7,680 1,895 3,820 4,737 3,037 622 1,079 790 2010 19,416 18,570 13,772 7,657 2,102 4,013 4,798 3,000 650 1,148 846 2015 20,058 19,162 14,234 7,846 2,292 4,096 4,928 3,015 678 1,236 896 2020 20,923 19,864 14,955 8,370 2,475 4,110 4,909 2,934 685 1,290 1,059 2025 22,086 20,811 15,952 9,239 2,592 4,120 4,859 2,854 685 1,320 1,275 2030 23,508 22,008 17,189 10,420 2,666 4,103 4,818 2,823 681 1,314 1,501 2035 24,718 23,012 18,211 11,570 2,663 3,978 4,800 2,858 672 1,271 1,706 2040 25,616 23,782 18,981 12,571 2,644 3,766 4,801 2,943 653 1,204 1,834 2045 25,839 23,970 19,166 13,055 2,624 3,488 4,803 3,043 624 1,137 1,869 2050 25,424 23,534 18,743 12,875 2,613 3,255 4,792 3,125 586 1,080 1,890 2055 25,138 23,115 18,373 12,646 2,615 3,113 4,742 3,166 548 1,028 2,023 2060 24,594 22,558 17,938 12,330 2,608 3,000 4,621 3,140 512 969 2,036

B3.4 - Average pension (2000 prices)

2005 Average pension () Public pensions Direct pensions for private sector employees for public sector employees for self-employed Survivors and child pensions for private sector employees for public sector employees for self-employed Old age means-tested transfers (a) (b) 9,421 9,664 10,810 11,543 18,273 5,633 6,424 6,330 11,082 4,004 3,853 2010 10,059 10,344 11,646 12,462 19,280 6,091 6,606 6,560 10,774 4,368 3,811 2015 10,571 10,869 12,274 13,014 19,997 6,537 6,812 6,803 10,695 4,702 4,192 2020 11,186 11,536 12,954 13,363 21,042 7,250 7,216 7,278 10,869 5,133 4,627 2025 11,683 12,088 13,438 13,590 21,844 7,809 7,658 7,771 11,259 5,543 5,066 2030 12,187 12,648 13,926 13,891 22,625 8,360 8,090 8,210 11,795 5,910 5,429 2035 12,594 13,099 14,318 14,144 23,217 8,867 8,474 8,551 12,393 6,230 5,779 2040 12,990 13,521 14,719 14,479 23,503 9,349 8,788 8,787 13,017 6,494 6,106 2045 13,404 13,942 15,170 14,895 23,638 9,830 9,039 8,979 13,588 6,702 6,508 2050 13,789 14,333 15,628 15,306 23,803 10,340 9,266 9,203 14,007 6,873 7,017 2055 14,298 14,888 16,279 15,939 24,278 10,941 9,500 9,490 14,216 7,021 7,558 2060 15,043 15,654 17,170 16,827 25,095 11,688 9,767 9,834 14,260 7,171 8,280

B3.5 - Number of pensioners(c)

2005 Total number of pensioners - of which with 65+ Male - of which with 65+ Female - of which with 65 15,594 11,530 7,182 5,082 8,412 6,449 2010 15,814 12,081 7,327 5,371 8,487 6,710 2015 16,133 12,965 7,404 5,869 8,728 7,096 2020 16,746 13,590 7,649 6,153 9,097 7,438 2025 17,753 14,453 8,083 6,551 9,671 7,902 2030 19,159 15,860 8,738 7,205 10,421 8,655 2035 20,370 17,354 9,261 7,905 11,109 9,448 2040 21,232 18,629 9,691 8,508 11,541 10,121 2045 21,469 19,214 9,847 8,762 11,622 10,452 2050 21,157 19,167 9,709 8,748 11,448 10,419 2055 21,023 18,813 9,708 8,611 11,315 10,202 2060 20,682 18,491 9,613 8,517 11,068 9,974

(a) Social pensions and old age allowances starting from 1996. (b) Net of reimbursements of pensions (or part of their amount) unduly paid. (c) Includes non-resident people.

28

MID LONG TERM TRENDS FOR THE PENSION, HEALTH AND LONG TERM CARE SYSTEMS ­ 2009 UPDATED

B4 - EPC-WGA baseline scenario: health care expenditure

B4.1 - Health care expenditure/GDP by age bracket - Pure ageing scenario(a)

2005 Acute e Long Term Care [0-64] [65-79] [80+] total Acute Care [0-64] [65-79] [80+] total Long Term Care [0-64] [65-79] [80+] total 3.8% 2.0% 1.0% 6.7% 3.4% 1.8% 0.7% 5.9% 0.3% 0.2% 0.3% 0.8% 2010 4.1% 2.1% 1.2% 7.4% 3.7% 1.9% 0.8% 6.4% 0.4% 0.2% 0.4% 1.0% 2015 4.0% 2.1% 1.3% 7.4% 3.6% 1.9% 0.9% 6.4% 0.4% 0.2% 0.4% 1.0% 2020 4.0% 2.2% 1.5% 7.6% 3.6% 1.9% 1.0% 6.6% 0.4% 0.2% 0.5% 1.1% 2025 4.0% 2.3% 1.6% 7.8% 3.6% 2.1% 1.1% 6.7% 0.4% 0.2% 0.5% 1.1% 2030 3.9% 2.5% 1.7% 8.1% 3.5% 2.2% 1.2% 6.9% 0.4% 0.2% 0.5% 1.2% 2035 3.8% 2.7% 1.8% 8.3% 3.4% 2.5% 1.3% 7.1% 0.4% 0.3% 0.6% 1.2% 2040 3.6% 2.9% 2.0% 8.6% 3.2% 2.7% 1.4% 7.3% 0.4% 0.3% 0.6% 1.3% 2045 3.5% 3.0% 2.3% 8.8% 3.2% 2.7% 1.6% 7.4% 0.3% 0.3% 0.7% 1.4% 2050 3.5% 2.8% 2.6% 8.9% 3.1% 2.5% 1.8% 7.5% 0.3% 0.3% 0.8% 1.4% 2055 3.5% 2.6% 2.9% 9.0% 3.1% 2.4% 2.0% 7.5% 0.3% 0.3% 0.9% 1.5% 2060 3.5% 2.5% 3.0% 9.0% 3.1% 2.3% 2.0% 7.5% 0.3% 0.3% 1.0% 1.5%

B4.2 - Health care expenditure/GDP by age bracket - Reference scenario(b)

2005 Acute e Long Term Care [0-64] [65-79] [80+] total Acute Care [0-64] [65-79] [80+] total Long Term Care [0-64] [65-79] [80+] total 3.8% 2.0% 1.0% 6.7% 3.4% 1.8% 0.7% 5.9% 0.3% 0.2% 0.3% 0.8% 2010 4.1% 2.1% 1.2% 7.4% 3.7% 1.9% 0.8% 6.4% 0.4% 0.2% 0.4% 1.0% 2015 4.0% 2.1% 1.3% 7.4% 3.6% 1.9% 0.9% 6.4% 0.4% 0.2% 0.4% 1.0% 2020 4.0% 2.1% 1.4% 7.6% 3.6% 1.9% 1.0% 6.6% 0.4% 0.2% 0.4% 1.0% 2025 4.0% 2.3% 1.5% 7.8% 3.6% 2.1% 1.1% 6.8% 0.4% 0.2% 0.4% 1.0% 2030 3.9% 2.4% 1.7% 8.0% 3.6% 2.2% 1.2% 7.0% 0.4% 0.2% 0.5% 1.1% 2035 3.8% 2.7% 1.8% 8.3% 3.4% 2.5% 1.3% 7.1% 0.4% 0.2% 0.5% 1.1% 2040 3.6% 2.9% 2.0% 8.5% 3.3% 2.6% 1.4% 7.3% 0.3% 0.3% 0.6% 1.2% 2045 3.5% 2.9% 2.3% 8.7% 3.2% 2.6% 1.6% 7.4% 0.3% 0.3% 0.7% 1.3% 2050 3.5% 2.7% 2.6% 8.9% 3.1% 2.5% 1.8% 7.5% 0.3% 0.3% 0.8% 1.4% 2055 3.5% 2.6% 2.9% 8.9% 3.1% 2.3% 2.0% 7.5% 0.3% 0.2% 0.9% 1.5% 2060 3.5% 2.5% 3.0% 8.9% 3.1% 2.2% 2.1% 7.4% 0.3% 0.2% 0.9% 1.5%

B4.3 - Health care expenditure/GDP - Different hypotheses

2005 Pure ageing scenario + unit cost linked to GDP per worker - of which acute care Pure ageing scenario + dynamic health care consumption profiles (c) - of which acute care Pure ageing scenario + elasticity of unit cost to GDP per capita above 1 - of which acute care 6.7% 5.9% 6.7% 5.9% 6.7% 5.9% 2010 7.4% 6.4% 7.4% 6.4% 7.4% 6.4% 2015 7.2% 6.2% 7.4% 6.4% 7.5% 6.5% 2020 7.1% 6.1% 7.6% 6.5% 7.8% 6.7% 2025 7.3% 6.3% 7.7% 6.6% 8.0% 6.9% 2030 7.7% 6.6% 7.9% 6.8% 8.3% 7.1%

(d)

2035 8.1% 6.9% 8.1% 7.0% 8.6% 7.4%

2040 8.6% 7.3% 8.3% 7.1% 8.9% 7.6%

2045 9.1% 7.7% 8.5% 7.2% 9.1% 7.7%

2050 9.3% 7.8% 8.6% 7.2% 9.3% 7.8%

2055 9.4% 7.9% 8.6% 7.2% 9.4% 7.8%

2060 9.5% 7.9% 8.6% 7.2% 9.4% 7.8%

B4.4 - Health care expenditure/GDP - Hypotheses adopted by EPC-WGA

2005 Reference scenario + partial dynamic equilibrium for every health care provision (including hospital care) - of which acute care 6.7% 5.9% 2010 7.4% 6.4% 2015 7.4% 6.4% 2020 7.6% 6.6% 2025 7.8% 6.8%

2030 8.0% 7.0%

2035 8.3% 7.2%

2040 8.5% 7.3%

2045 8.7% 7.4%

2050 8.9% 7.5%

2055 9.0% 7.5%

2060 8.9% 7.4%

(a) Unit cost (CPS) linked to GDP per capita and constant age-related expenditure profiles. (b) Unit cost (CPS) linked to GDP per capita for acute care, and to GDP per worker, for long term care; elasticity of CPS to GDP per capita above one; application of death-related costs to the hospital care expenditure profile and partial dynamic equilibrium (50% of changes in life expectancy) to the other health care provisions. (c) Age-related expenditure profiles change according to the methodology of death-related costs, for the hospital care expenditure profile, and the methodology of partial dynamic equilibrium for the other health care provisions. (d) Differs from the reference scenario insofar as the age-related expenditure profile evolves accordingly to the partial dynamic equilibrium methodology for each health care provision.

29

MID LONG TERM TRENDS FOR THE PENSION, HEALTH AND LONG TERM CARE SYSTEMS ­ 2009 UPDATED

B5 - EPC-WGA baseline scenario: LTC expenditure

B5.1 -LTC expenditure/GDP by age bracket - Pure ageing scenario(a)

2005 LTC expenditure/GDP Health care component Attendance allowances Other LTC provisions Distribution by age bracket Total expenditure [0-64] [65-79] [80+] total Health care component [0-64] [65-79] [80+] total Attendance allowances [0-64] [65-79] [80+] total Other LTC provisions [0-64] [65-79] [80+] total 1.6% 0.8% 0.6% 0.1% 2010 1.9% 1.0% 0.8% 0.2% 2015 2.0% 1.0% 0.8% 0.2% 2020 2.1% 1.1% 0.9% 0.2% 2025 2.2% 1.1% 0.9% 0.2% 2030 2.3% 1.2% 1.0% 0.2% 2035 2.5% 1.2% 1.0% 0.2% 2040 2.6% 1.3% 1.1% 0.3% 2045 2.8% 1.4% 1.2% 0.3% 2050 3.1% 1.4% 1.3% 0.3% 2055 3.2% 1.5% 1.4% 0.3% 2060 3.3% 1.5% 1.5% 0.3%

33.7% 24.3% 42.0% 100% 42.7% 22.0% 35.3% 100% 24.6% 26.7% 48.7% 100% 23.8% 26.4% 49.8% 100%

31.9% 22.9% 45.2% 100% 41.5% 20.7% 37.8% 100% 22.1% 25.4% 52.6% 100% 21.7% 24.4% 53.9% 100%

29.6% 21.9% 48.5% 100% 38.8% 20.3% 41.0% 100% 20.2% 23.7% 56.1% 100% 19.9% 23.4% 56.7% 100%

27.9% 21.0% 51.0% 100% 36.8% 19.8% 43.4% 100% 19.0% 22.3% 58.7% 100% 18.8% 22.3% 58.9% 100%

26.5% 21.5% 52.0% 100% 35.1% 20.5% 44.4% 100% 17.9% 22.4% 59.7% 100% 17.8% 22.9% 59.3% 100%

24.5% 21.5% 54.0% 100% 32.6% 20.8% 46.6% 100% 16.4% 22.2% 61.4% 100% 16.4% 22.7% 60.9% 100%

22.3% 22.5% 55.1% 100% 30.2% 22.0% 47.8% 100% 14.8% 22.9% 62.3% 100% 14.8% 23.6% 61.6% 100%

20.1% 23.1% 56.7% 100% 27.6% 22.8% 49.7% 100% 13.1% 23.4% 63.6% 100% 13.2% 24.1% 62.7% 100%

18.2% 22.0% 59.9% 100% 25.2% 21.7% 53.1% 100% 11.7% 22.1% 66.3% 100% 11.8% 22.5% 65.7% 100%

16.7% 19.6% 63.7% 100% 23.5% 19.6% 57.0% 100% 10.6% 19.5% 69.9% 100% 10.8% 20.0% 69.2% 100%

15.7% 17.2% 67.2% 100% 22.3% 17.4% 60.3% 100% 9.8% 16.8% 73.4% 100% 10.2% 17.6% 72.2% 100%

15.2% 15.9% 68.9% 100% 21.9% 16.3% 61.8% 100% 9.3% 15.2% 75.4% 100% 10.0% 16.5% 73.5% 100%

B5.2 - LTC expenditure/GDP by age bracket - Reference scenario(b)

2005 LTC expenditure/GDP Health care component Attendance allowances Other LTC provisions Distribution by age bracket Total expenditure [0-64] [65-79] [80+] total Health care component [0-64] [65-79] [80+] total Attendance allowances(b) [0-64] [65-79] [80+] total Other LTC provisions [0-64] [65-79] [80+] total 1.6% 0.8% 0.6% 0.1% 2010 1.9% 1.0% 0.8% 0.2% 2015 2.0% 1.0% 0.8% 0.2% 2020 2.0% 1.0% 0.8% 0.2% 2025 2.1% 1.0% 0.9% 0.2% 2030 2.2% 1.1% 0.9% 0.2% 2035 2.3% 1.1% 1.0% 0.2% 2040 2.5% 1.2% 1.0% 0.2% 2045 2.7% 1.3% 1.1% 0.3% 2050 2.9% 1.4% 1.2% 0.3% 2055 3.1% 1.5% 1.3% 0.3% 2060 3.2% 1.5% 1.4% 0.3%

33.7% 24.3% 42.0% 100% 42.7% 22.0% 35.3% 100% 24.6% 26.7% 48.7% 100% 23.8% 26.4% 49.8% 100%

31.9% 22.9% 45.2% 100% 41.5% 20.7% 37.8% 100% 22.1% 25.4% 52.6% 100% 21.7% 24.4% 53.9% 100%

29.6% 21.7% 48.7% 100% 39.0% 20.0% 40.9% 100% 20.3% 23.3% 56.4% 100% 20.1% 23.2% 56.8% 100%

28.1% 20.5% 51.5% 100% 37.3% 19.3% 43.4% 100% 19.1% 21.5% 59.3% 100% 19.1% 21.9% 59.0% 100%

26.8% 20.7% 52.6% 100% 35.8% 19.8% 44.4% 100% 18.2% 21.4% 60.5% 100% 18.3% 22.2% 59.5% 100%

24.9% 20.4% 54.6% 100% 33.5% 19.8% 46.7% 100% 16.7% 20.8% 62.5% 100% 16.9% 21.8% 61.3% 100%

23.0% 21.2% 55.9% 100% 31.2% 20.8% 48.0% 100% 15.1% 21.3% 63.6% 100% 15.4% 22.4% 62.1% 100%

21.0% 21.5% 57.5% 100% 28.8% 21.3% 49.9% 100% 13.4% 21.5% 65.1% 100% 13.9% 22.7% 63.4% 100%

19.1% 20.3% 60.6% 100% 26.5% 20.2% 53.3% 100% 12.0% 20.2% 67.8% 100% 12.5% 21.1% 66.4% 100%

17.7% 17.9% 64.4% 100% 24.8% 17.9% 57.2% 100% 10.9% 17.7% 71.5% 100% 11.5% 18.4% 70.1% 100%

16.7% 15.4% 67.9% 100% 23.7% 15.7% 60.6% 100% 10.0% 15.0% 75.0% 100% 10.9% 16.0% 73.1% 100%

16.2% 14.0% 69.8% 100% 23.3% 14.5% 62.2% 100% 9.6% 13.4% 77.1% 100% 10.7% 14.7% 74.6% 100%

(a) Unit cost (CPS) linked to GDP per capita and constant age-related expenditure profiles. (b) Unit cost (CPS) linked to GDP per capita for attendance allowances, and to GDP per worker, for health care component and 'other LTC provisions'; application of partial dynamic equilibrium (50% of changes in life expectancy) for all the LTC provisions.

30

MID LONG TERM TRENDS FOR THE PENSION, HEALTH AND LONG TERM CARE SYSTEMS ­ 2009 UPDATED

Annex 4: assumptions and results of the sensitive analysis ­ Tables

C.1.a - Demographic assumptions: high variant. C.1.b - Demographic assumptions: low variant. C.2.a - Fertility rate: +0.17 in 2060. C.2.b - Fertility rate: -0.19 in 2060. C.3.a - Life expectancy: +2.5 years for males, +2.3 years for females in 2060. C.3.b - Life expectancy: -2.8 years for males, -2.6 years for females in 2060. C.4.a -Net flow of immigrants: +40 thousand units. C.4.b - Net flow of immigrants: -40 thousand units. C.5.a - Participation rates: +2 percentage points in 2060. C.5.b - Participation rates: -2 percentage points in 2060. C.6.a - Productivity: +0.25% per year. C.6.b - Productivity: -0.25% per year. C.7.a - Unemployment rate: +1.6 percentage points in 2060.

31

MID LONG TERM TRENDS FOR THE PENSION, HEALTH AND LONG TERM CARE SYSTEMS ­ 2009 UPDATED

(a)

C.1.a - Demographic assumptions: high variant

2005 Population [0-19] Population [20-64] Population [65+] Population - Total Elderly dependency ratio (b) Youth dependency ratio (c) Total dependency ratio (d) Ageing index (e) 11,145 35,938 11,379 58,462 31.7 31.0 62.7 102.1 2010 11,413 36,662 12,247 60,322 33.4 31.1 64.5 107.3 2015 11,510 36,647 13,420 61,577 36.6 31.4 68.0 116.6 2020

C.1.a.1 - Population by sex and age bracket (1st January - thousands)

2025 11,658 36,258 15,601 63,516 43.0 32.2 75.2 133.8 2030 11,650 35,509 17,259 64,419 48.6 32.8 81.4 148.1 2035 11,703 34,466 19,110 65,280 55.4 34.0 89.4 163.3 2040 11,891 33,435 20,754 66,079 62.1 35.6 97.6 174.5 2045 12,137 32,830 21,796 66,763 66.4 37.0 103.4 179.6 2050 12,349 32,722 22,177 67,248 67.8 37.7 105.5 179.6 2055 12,477 32,877 22,155 67,509 67.4 38.0 105.3 177.6 2060 12,532 33,128 21,953 67,613 66.3 37.8 104.1 175.2 11,632 36,531 14,417 62,579 39.5 31.8 71.3 123.9

C.1.a.2 - Macroeconomic assumptions

2005 GDP in real terms (billions 2000)) GDP per capita ( 2000) GDP per worker ( 2000) Participation rate [15-64] Unemployment rate Employment rate [15-64] 1,245 21,292 55,170 62.4% 7.7% 57.5% 2010 1,229 20,368 53,325 62.5% 8.4% 57.2% 2015 1,365 22,173 55,950 65.3% 7.1% 60.6% 2020 1,508 24,104 59,525 66.7% 6.2% 62.5% 2025 1,653 26,025 64,070 67.4% 5.4% 63.6% 2030 1,794 27,854 69,593 67.9% 4.9% 64.5% 2035 1,933 29,612 75,827 68.6% 4.6% 65.3% 2040 2,070 31,333 82,713 69.1% 4.5% 65.9% 2045 2,225 33,320 89,950 69.4% 4.5% 66.2% 2050 2,415 35,909 2055 2,622 38,840 2060 2,856 42,240

97,260 105,287 113,881 69.9% 4.5% 66.7% 69.7% 4.5% 66.5% 69.8% 4.5% 66.6%

C.1.a.3 - Pubblic pension expenditure

2005 Total pension expenditure/GDP Average pension/GDP per worker Number of pensions/numbers of workers Total pension expenditure (billions 2000) Average pension ( 2000 ) Total number of pensioners (thousands) - of which of 65+ 13.9% 16.6% 83.9% 178.3 9,421 15,594 11,530 2010 15.2% 18.1% 84.3% 195.4 10,059 15,825 12,107 2015 15.0% 18.1% 82.9% 213.7 10,562 16,305 13,170 2020 15.1% 17.9% 84.2% 237.3 11,122 17,154 14,048 2025 15.2% 17.2% 88.3% 262.4 11,524 18,426 15,190 2030 15.6% 16.4% 2035 15.7% 15.5% 2040 15.7% 14.5% 2045 15.3% 13.7% 2050 14.4% 13.0% 2055 13.7% 12.5% 2060 13.1% 12.1%

94.9% 101.6% 108.1% 111.4% 110.3% 109.9% 108.0% 291.5 11,921 20,095 16,873 317.2 12,240 21,556 18,628 340.0 12,567 22,679 20,152 356.0 12,922 23,196 20,997 363.1 13,259 23,128 21,190 375.7 13,729 23,248 21,014 391.5 14,450 23,147 20,883

C.1.a.4 - Pubblic expenditure for health care and Long Term Care

2005 Health care expenditure - of which acute care Social component of LTC LTC expenditure Health care and LTC expenditure 6.7% 5.9% 0.8% 1.6% 7.5% 2010 7.4% 6.4% 1.0% 1.9% 8.3% 2015 7.4% 6.4% 1.0% 2.0% 8.4% 2020 7.6% 6.6% 1.0% 2.0% 8.6% 2025 7.8% 6.8% 1.1% 2.1% 8.9% 2030 8.0% 6.9% 1.1% 2.2% 9.2% 2035 8.3% 7.1% 1.2% 2.4% 9.5% 2040 8.5% 7.3% 1.3% 2.6% 9.8% 2045 8.7% 7.4% 1.4% 2.8% 10.1% 2050 8.8% 7.4% 1.5% 2.9% 10.3% 2055 8.8% 7.4% 1.6% 3.1% 10.5% 2060 8.8% 7.3% 1.7% 3.2% 10.5%

(a) Fertility rate: +0.17 in 2060; life expectancy: +2.5 years for males, +2.3 years for females in 2060;net flow of immigrants: +40,000 units as of 2020, level gradually reached starting from 2007. (b) pop.[65+]/pop.[20-64]. (c) pop.[0-19]/pop.[20-64]. (d) (pop.[0-19]+pop.[65+])/pop.[20-64]. (e) pop.[65+]/pop.[0-19].

32

MID LONG TERM TRENDS FOR THE PENSION, HEALTH AND LONG TERM CARE SYSTEMS ­ 2009 UPDATED

(a)

C.1.b - Demographic assumptions: low variant

2005 Population [0-19] Population [20-64] Population [65+] Population - Total Elderly dependency ratio (b) Youth dependency ratio (c) Total dependency ratio (d) Ageing index (e) 11,145 35,938 11,379 58,462 31.7 31.0 62.7 102.1 2010 11,354 36,587 12,185 60,126 33.3 31.0 64.3 107.3 2015 11,259 36,336 13,084 60,679 36.0 31.0 67.0 116.2

C.1.b.1 - Population by sex and age bracket (1st January - thousands)

2020 11,072 35,887 13,677 60,636 38.1 30.9 69.0 123.5 2025 10,673 35,197 14,395 60,264 40.9 30.3 71.2 134.9 2030 10,172 33,963 15,563 59,698 45.8 30.0 75.8 153.0 2035 9,732 32,358 16,917 59,007 52.3 30.1 82.4 173.8 2040 9,428 30,697 18,053 58,178 58.8 30.7 89.5 191.5 2045 9,199 29,398 18,566 57,163 63.2 31.3 94.4 201.8 2050 8,973 28,537 18,401 55,911 64.5 31.4 95.9 205.1 2055 8,713 27,892 17,838 54,443 64.0 31.2 95.2 204.7 2060 8,422 27,292 17,143 52,857 62.8 30.9 93.7 203.6

C.1.b.2 - Macroeconomic assumptions

2005 GDP in real terms (billions 2000)) GDP per capita ( 2000) GDP per worker ( 2000) Participation rate [15-64] Unemployment rate Employment rate [15-64] 1,245 21,292 55,170 62.4% 7.7% 57.5% 2010 1,227 20,400 53,326 62.5% 8.4% 57.2% 2015 1,355 22,330 55,993 65.3% 7.1% 60.6% 2020 1,486 24,507 59,705 66.7% 6.2% 62.5% 2025 1,612 26,754 64,434 67.3% 5.4% 63.6% 2030 1,728 28,944 70,202 68.0% 4.9% 64.6% 2035 1,833 31,057 76,748 68.7% 4.6% 65.5% 2040 1,927 33,118 84,023 69.4% 4.5% 66.2% 2045 2,027 35,454 91,714 69.9% 4.5% 66.7% 2050 2,151 38,465 2055 2,278 41,844 2060 2,416 45,704

99,489 108,037 117,206 70.5% 4.5% 67.3% 70.4% 4.5% 67.2% 70.5% 4.5% 67.3%

C.1.b.3 - Pubblic pension expenditure

2005 Total pension expenditure/GDP Average pension/GDP per worker Number of pensions/numbers of workers Total pension expenditure (billions 2000) Average pension ( 2000 ) Total number of pensioners (thousands) - of which of 65+ 13.9% 16.6% 83.9% 178.3 9,421 15,594 11,530 2010 15.2% 18.1% 84.3% 195.2 10,059 15,800 12,062 2015 14.9% 18.1% 82.6% 211.0 10,564 16,046 12,870 2020 14.9% 17.9% 83.2% 231.2 11,163 16,530 13,366 2025 15.0% 17.3% 86.8% 252.7 11,630 17,383 14,074 2030 15.4% 16.5% 2035 15.7% 15.6% 2040 15.9% 14.8% 2045 15.6% 14.0% 2050 14.8% 13.3% 2055 14.2% 12.8% 2060 13.7% 12.5%

93.4% 100.5% 107.6% 111.6% 110.8% 110.8% 109.4% 278.4 12,114 18,613 15,310 300.7 12,529 19,622 16,616 319.8 12,963 20,253 17,670 331.2 13,431 20,250 18,025 332.3 13,870 19,652 17,717 337.8 14,456 19,230 17,046 345.5 15,320 18,645 16,463

C.1.b.4 - Pubblic expenditure for health care and Long Term Care

2005 Health care expenditure - of which acute care Social component of LTC LTC expenditure Health care and LTC expenditure 6.7% 5.9% 0.8% 1.6% 7.5% 2010 7.4% 6.4% 1.0% 1.9% 8.4% 2015 7.4% 6.5% 1.0% 1.9% 8.4% 2020 7.6% 6.6% 1.0% 2.0% 8.6% 2025 7.8% 6.8% 1.0% 2.0% 8.9% 2030 8.1% 7.1% 1.1% 2.1% 9.2% 2035 8.4% 7.3% 1.1% 2.2% 9.5% 2040 8.6% 7.5% 1.2% 2.4% 9.9% 2045 8.9% 7.6% 1.3% 2.6% 10.2% 2050 9.0% 7.6% 1.4% 2.8% 10.4% 2055 9.0% 7.6% 1.5% 2.9% 10.6% 2060 9.0% 7.6% 1.6% 3.0% 10.6%

(a) Fertility rate: -0.19 in 2060; life expectancy: -2.8 years for males, -2.6 years for females in 2060; net flow of immigrants: -40 ,000 units as of 2020, level gradually reached starting from 2007. (b) pop.[65+]/pop.[20-64]. (c) pop.[0-19]/pop.[20-64]. (d) (pop.[0-19]+pop.[65+])/pop.[20-64]. (e) pop.[65+]/pop.[0-19].

33

MID LONG TERM TRENDS FOR THE PENSION, HEALTH AND LONG TERM CARE SYSTEMS ­ 2009 UPDATED

C.2.a - Fertility rate: +0.17 in 2060

C.2.a.1 - Population by sex and age bracket (1st January - thousands)

2005 Population [0-19] Population [20-64] Population [65+] Population - Total Elderly dependency ratio (a) Youth dependency ratio (b) Total dependency ratio (c) Ageing index (d) 11,145 35,938 11,379 58,462 31.7 31.0 62.7 102.1 2010 11,404 36,625 12,217 60,246 33.4 31.1 64.5 107.1 2015 11,474 36,493 13,257 61,224 36.3 31.4 67.8 115.5 2020 11,547 36,213 14,060 61,821 38.8 31.9 70.7 121.8 2025 11,507 35,735 15,019 62,261 42.0 32.2 74.2 130.5 2030 11,418 34,768 16,442 62,629 47.3 32.8 80.1 144.0 2035 11,386 33,514 18,055 62,956 53.9 34.0 87.8 158.6 2040 11,492 32,275 19,455 63,223 60.3 35.6 95.9 169.3 2045 11,663 31,469 20,243 63,374 64.3 37.1 101.4 173.6 2050 11,806 31,170 20,355 63,332 65.3 37.9 103.2 172.4 2055 11,872 31,151 20,062 63,084 64.4 38.1 102.5 169.0 2060 11,866 31,245 19,603 62,714 62.7 38.0 100.7 165.2

C.2.a.2 - Macroeconomic assumptions

2005 GDP in real terms (billions 2000)) GDP per capita ( 2000) GDP per worker ( 2000) Participation rate [15-64] Unemployment rate Employment rate [15-64] 1,245 21,292 55,170 62.4% 7.7% 57.5% 2010 1,228 20,377 53,325 62.5% 8.4% 57.2% 2015 1,360 22,217 55,971 65.3% 7.1% 60.6% 2020 1,497 24,221 59,613 66.7% 6.2% 62.5% 2025 1,633 26,228 64,246 67.3% 5.4% 63.6% 2030 1,762 28,141 69,874 67.8% 4.9% 64.4% 2035 1,887 29,968 76,219 68.4% 4.6% 65.2% 2040 2,007 31,751 83,220 68.9% 4.5% 65.7% 2045 2,143 33,808 90,556 69.2% 4.5% 66.0% 2050 2,312 36,505 2055 2,496 39,574 2060 2,706 43,142

97,933 106,005 114,619 69.7% 4.5% 66.5% 69.5% 4.5% 66.4% 69.6% 4.5% 66.4%

C.2.a.3 - Pubblic pension expenditure

2005 Total pension expenditure/GDP Average pension/GDP per worker Number of pensions/numbers of workers Total pension expenditure (billions 2000) Average pension ( 2000 ) Total number of pensioners (thousands) - of which of 65+ 13.9% 16.6% 83.9% 178.3 9,421 15,594 11,530 2010 15.2% 18.1% 84.3% 195.3 10,059 15,812 12,085 2015 14.9% 18.1% 82.7% 212.4 10,563 16,179 13,025 2020 15.0% 17.9% 83.7% 234.3 11,140 16,852 13,720 2025 15.1% 17.2% 87.6% 257.6 11,571 17,923 14,653 2030 15.5% 16.4% 2035 15.7% 15.5% 2040 15.7% 14.6% 2045 15.4% 13.9% 2050 14.4% 13.2% 2055 13.7% 12.7% 2060 13.1% 12.4%

94.2% 101.0% 107.5% 110.6% 109.1% 108.1% 105.6% 285.1 12,006 19,383 16,123 309.1 12,366 20,632 17,664 330.2 12,738 21,523 18,965 344.1 13,144 21,790 19,575 348.4 13,529 21,464 19,523 357.8 14,058 21,316 19,097 370.2 14,857 20,969 18,731

C.2.a.4 - Pubblic expenditure for health care and Long Term Care

2005 Health care expenditure - of which acute care Social component of LTC LTC expenditure Health care and LTC expenditure 6.7% 5.9% 0.8% 1.6% 7.5% 2010 7.4% 6.4% 1.0% 1.9% 8.3% 2015 7.4% 6.4% 1.0% 2.0% 8.4% 2020 7.6% 6.6% 1.0% 2.0% 8.6% 2025 7.8% 6.8% 1.0% 2.1% 8.8% 2030 8.0% 7.0% 1.1% 2.2% 9.1% 2035 8.3% 7.1% 1.2% 2.3% 9.4% 2040 8.5% 7.3% 1.3% 2.5% 9.8% 2045 8.7% 7.4% 1.4% 2.7% 10.0% 2050 8.8% 7.4% 1.5% 2.8% 10.2% 2055 8.8% 7.4% 1.5% 3.0% 10.3% 2060 8.7% 7.3% 1.6% 3.0% 10.3%

(a) pop.[65+]/pop.[20-64]. (b) pop.[0-19]/pop.[20-64]. (c) (pop.[0-19]+pop.[65+])/pop.[20-64]. (d) pop.[65+]/pop.[0-19].

34

MID LONG TERM TRENDS FOR THE PENSION, HEALTH AND LONG TERM CARE SYSTEMS ­ 2009 UPDATED

C.2.b - Fertility rate: -0.19 in 2060

C.2.b.1 - Population by sex and age bracket (1st January - thousands)

2005 Population [0-19] Population [20-64] Population [65+] Population - Total Elderly dependency ratio (a) Youth dependency ratio (b) Total dependency ratio (c) Ageing index (d) 11,145 35,938 11,379 58,462 31.7 31.0 62.7 102.1 2010 11,362 36,625 12,217 60,203 33.4 31.0 64.4 107.5 2015 11,295 36,493 13,257 61,046 36.3 31.0 67.3 117.4 2020 11,153 36,213 14,060 61,426 38.8 30.8 69.6 126.1 2025 10,815 35,735 15,019 61,569 42.0 30.3 72.3 138.9 2030 10,385 34,726 16,442 61,553 47.3 29.9 77.3 158.3 2035 10,016 33,336 18,055 61,407 54.2 30.0 84.2 180.3 2040 9,775 31,882 19,455 61,113 61.0 30.7 91.7 199.0 2045 9,601 30,780 20,243 60,624 65.8 31.2 97.0 210.8 2050 9,425 30,101 20,355 59,881 67.6 31.3 98.9 216.0 2055 9,208 29,612 20,062 58,882 67.7 31.1 98.8 217.9 2060 8,958 29,150 19,603 57,710 67.2 30.7 98.0 218.8

C.2.b.2 - Macroeconomic assumptions

2005 GDP in real terms (billions 2000)) GDP per capita ( 2000) GDP per worker ( 2000) Participation rate [15-64] Unemployment rate Employment rate [15-64] 1,245 21,292 55,170 62.4% 7.7% 57.5% 2010 1,228 20,391 53,325 62.5% 8.4% 57.2% 2015 1,360 22,282 55,971 65.3% 7.1% 60.6% 2020 1,497 24,376 59,613 66.7% 6.2% 62.5% 2025 1,633 26,522 64,247 67.4% 5.4% 63.7% 2030 1,761 28,607 69,901 68.1% 4.9% 64.6% 2035 1,881 30,624 76,320 68.9% 4.6% 65.6% 2040 1,992 32,592 83,461 69.6% 4.5% 66.4% 2045 2,111 34,816 91,025 70.1% 4.5% 66.8% 2050 2,256 37,668 2055 2,405 40,847 2060 2,567 44,473

98,703 107,172 116,278 70.7% 4.5% 67.5% 70.6% 4.5% 67.4% 70.7% 4.5% 67.4%

C.2.b.3 - Pubblic pension expenditure

2005 Total pension expenditure/GDP Average pension/GDP per worker Number of pensions/numbers of workers Total pension expenditure (billions 2000) Average pension ( 2000 ) Total number of pensioners (thousands) - of which of 65+ 13.9% 16.6% 83.9% 178.3 9,421 15,594 11,530 2010 15.2% 18.1% 84.3% 195.3 10,059 15,812 12,085 2015 14.9% 18.1% 82.7% 212.4 10,564 16,179 13,025 2020 15.0% 17.9% 83.7% 234.5 11,145 16,852 13,720 2025 15.1% 17.3% 87.6% 257.9 11,581 17,922 14,653 2030 15.5% 16.5% 2035 15.8% 15.5% 2040 15.9% 14.6% 2045 15.6% 13.8% 2050 14.8% 13.1% 2055 14.2% 12.6% 2060 13.8% 12.2%

94.3% 101.4% 108.5% 112.8% 112.6% 113.3% 112.7% 285.5 12,023 19,379 16,123 309.5 12,389 20,619 17,664 330.6 12,765 21,504 18,965 344.5 13,170 21,771 19,575 348.6 13,551 21,441 19,523 357.5 14,063 21,284 19,097 368.9 14,831 20,927 18,730

C.2.b.4 - Pubblic expenditure for health care and Long Term Care

2005 Health care expenditure - of which acute care Social component of LTC LTC expenditure Health care and LTC expenditure 6.7% 5.9% 0.8% 1.6% 7.5% 2010 7.4% 6.4% 1.0% 1.9% 8.3% 2015 7.4% 6.4% 1.0% 2.0% 8.4% 2020 7.6% 6.6% 1.0% 2.0% 8.6% 2025 7.8% 6.8% 1.0% 2.1% 8.9% 2030 8.1% 7.0% 1.1% 2.2% 9.2% 2035 8.4% 7.2% 1.2% 2.3% 9.6% 2040 8.7% 7.4% 1.3% 2.5% 9.9% 2045 8.9% 7.6% 1.4% 2.7% 10.3% 2050 9.0% 7.6% 1.5% 2.9% 10.6% 2055 9.1% 7.6% 1.6% 3.1% 10.7% 2060 9.1% 7.6% 1.7% 3.2% 10.8%

(a) pop.[65+]/pop.[20-64]. (b) pop.[0-19]/pop.[20-64]. (c) (pop.[0-19]+pop.[65+])/pop.[20-64]. (d) pop.[65+]/pop.[0-19].

35

MID LONG TERM TRENDS FOR THE PENSION, HEALTH AND LONG TERM CARE SYSTEMS ­ 2009 UPDATED

C.3.a - Life expectancy: +2.5 years for males, +2.3 years for females in 2060

C.3.a.1 - Population by sex and age bracket (1st January - thousands)

2005 Population [0-19] Population [20-64] Population [65+] Population - Total Elderly dependency ratio (a) Youth dependency ratio (b) Total dependency ratio (c) Ageing index (d) 11,145 35,938 11,379 58,462 31.7 31.0 62.7 102.1 2010 11,384 36,630 12,247 60,262 33.4 31.1 64.5 107.6 2015 11,390 36,519 13,418 61,328 36.7 31.2 67.9 117.8 2020 11,366 36,264 14,412 62,042 39.7 31.3 71.1 126.8 2025 11,190 35,810 15,588 62,589 43.5 31.2 74.8 139.3 2030 10,946 34,840 17,236 63,021 49.5 31.4 80.9 157.5 2035 10,759 33,528 19,067 63,354 56.9 32.1 89.0 177.2 2040 10,702 32,189 20,679 63,570 64.2 33.2 97.5 193.2 2045 10,709 31,245 21,669 63,622 69.4 34.3 103.6 202.4 2050 10,696 30,772 21,969 63,437 71.4 34.8 106.2 205.4 2055 10,622 30,537 21,841 62,999 71.5 34.8 106.3 205.6 2060 10,492 30,373 21,509 62,374 70.8 34.5 105.4 205.0

C.3.a.2 - Macroeconomic assumptions

2005 GDP in real terms (billions 2000)) GDP per capita ( 2000) GDP per worker ( 2000) Participation rate [15-64] Unemployment rate Employment rate [15-64] 1,245 21,292 55,170 62.4% 7.7% 57.5% 2010 1,228 20,374 53,326 62.5% 8.4% 57.2% 2015 1,361 22,194 55,968 65.3% 7.1% 60.6% 2020 1,499 24,165 59,600 66.7% 6.2% 62.5% 2025 1,636 26,142 64,223 67.4% 5.4% 63.6% 2030 1,766 28,028 69,855 67.9% 4.9% 64.5% 2035 1,890 29,832 76,227 68.7% 4.6% 65.4% 2040 2,007 31,579 83,292 69.2% 4.5% 66.0% 2045 2,136 33,573 90,743 69.6% 4.5% 66.4% 2050 2,295 36,179 2055 2,464 39,118 2060 2,652 42,524

98,263 106,521 115,363 70.2% 4.5% 67.0% 70.0% 4.5% 66.8% 70.1% 4.5% 66.9%

C.3.a.3 - Pubblic pension expenditure

2005 Total pension expenditure/GDP Average pension/GDP per worker Number of pensions/numbers of workers Total pension expenditure (billions 2000) Average pension ( 2000 ) Total number of pensioners (thousands) - of which of 65+ 13.9% 16.6% 83.9% 178.3 9,421 15,594 11,530 2010 15.2% 18.1% 84.4% 195.5 10,059 15,824 12,107 2015 15.0% 18.1% 83.2% 213.7 10,563 16,304 13,170 2020 15.2% 17.9% 84.8% 237.3 11,124 17,150 14,045 2025 15.3% 17.2% 89.3% 262.3 11,526 18,414 15,181 2030 15.8% 16.3% 2035 16.0% 15.4% 2040 16.1% 14.4% 2045 15.8% 13.6% 2050 14.9% 12.9% 2055 14.3% 12.3% 2060 13.7% 11.9%

96.6% 104.3% 111.8% 116.3% 116.1% 116.6% 115.5% 291.2 11,920 20,067 16,854 316.3 12,233 21,498 18,591 338.3 12,549 22,579 20,084 353.1 12,892 23,034 20,878 358.4 13,215 22,873 20,993 368.4 13,661 22,870 20,710 380.9 14,348 22,627 20,453

C.3.a.4 - Pubblic expenditure for health care and Long Term Care

2005 Health care expenditure - of which acute care Social component of LTC LTC expenditure Health care and LTC expenditure 6.7% 5.9% 0.8% 1.6% 7.5% 2010 7.4% 6.4% 1.0% 1.9% 8.3% 2015 7.4% 6.4% 1.0% 2.0% 8.4% 2020 7.6% 6.6% 1.0% 2.0% 8.7% 2025 7.8% 6.8% 1.1% 2.1% 8.9% 2030 8.1% 7.0% 1.2% 2.3% 9.3% 2035 8.4% 7.2% 1.3% 2.4% 9.6% 2040 8.7% 7.4% 1.4% 2.6% 10.0% 2045 8.9% 7.5% 1.5% 2.9% 10.4% 2050 9.0% 7.6% 1.6% 3.1% 10.7% 2055 9.1% 7.6% 1.7% 3.3% 10.8% 2060 9.1% 7.5% 1.8% 3.4% 10.9%

(a) pop.[65+]/pop.[20-64]. (b) pop.[0-19]/pop.[20-64]. (c) (pop.[0-19]+pop.[65+])/pop.[20-64]. (d) pop.[65+]/pop.[0-19].

36

MID LONG TERM TRENDS FOR THE PENSION, HEALTH AND LONG TERM CARE SYSTEMS ­ 2009 UPDATED

C.3.b - Life expectancy: -2.8 years for males, -2.6 years for females in 2060

C.3.b.1 - Population by sex and age bracket (1st January - thousands)

2005 Population [0-19] Population [20-64] Population [65+] Population - Total Elderly dependency ratio (a) Youth dependency ratio (b) Total dependency ratio (c) Ageing index (d) 11,145 35,938 11,379 58,462 31.7 31.0 62.7 102.1 2010 11,384 36,618 12,186 60,188 33.3 31.1 64.4 107.1 2015 11,389 36,465 13,087 60,941 35.9 31.2 67.1 114.9 2020 11,362 36,154 13,685 61,201 37.9 31.4 69.3 120.4 2025 11,183 35,645 14,409 61,236 40.4 31.4 71.8 128.8 2030 10,937 34,634 15,588 61,159 45.0 31.6 76.6 142.5 2035 10,747 33,306 16,960 61,013 50.9 32.3 83.2 157.8 2040 10,688 31,967 18,125 60,780 56.7 33.4 90.1 169.6 2045 10,691 31,025 18,686 60,402 60.2 34.5 94.7 174.8 2050 10,677 30,547 18,594 59,817 60.9 35.0 95.8 174.1 2055 10,600 30,304 18,127 59,032 59.8 35.0 94.8 171.0 2060 10,468 30,134 17,548 58,149 58.2 34.7 93.0 167.6

C.3.b.2 - Macroeconomic assumptions

2005 GDP in real terms (billions 2000)) GDP per capita ( 2000) GDP per worker ( 2000) Participation rate [15-64] Unemployment rate Employment rate [15-64] 1,245 21,292 55,170 62.4% 7.7% 57.5% 2010 1,227 20,394 53,325 62.5% 8.4% 57.2% 2015 1,359 22,304 55,975 65.3% 7.1% 60.6% 2020 1,495 24,430 59,629 66.7% 6.2% 62.5% 2025 1,629 26,604 64,276 67.3% 5.4% 63.6% 2030 1,756 28,711 69,929 67.9% 4.9% 64.5% 2035 1,876 30,749 76,319 68.6% 4.6% 65.4% 2040 1,991 32,754 83,385 69.2% 4.5% 66.0% 2045 2,117 35,054 90,815 69.6% 4.5% 66.4% 2050 2,274 38,015 2055 2,441 41,349 2060 2,626 45,165

98,320 106,562 115,389 70.1% 4.5% 66.9% 70.0% 4.5% 66.8% 70.1% 4.5% 66.8%

C.3.b.3 - Pubblic pension expenditure

2005 Total pension expenditure/GDP Average pension/GDP per worker Number of pensions/numbers of workers Total pension expenditure (billions 2000) Average pension ( 2000 ) Total number of pensioners (thousands) - of which of 65+ 13.9% 16.6% 83.9% 178.3 9,421 15,594 11,530 2010 15.2% 18.1% 84.3% 195.2 10,059 15,800 12,062 2015 14.9% 18.1% 82.3% 211.0 10,563 16,048 12,872 2020 14.8% 17.9% 82.6% 231.2 11,160 16,535 13,370 2025 14.8% 17.3% 85.8% 252.8 11,627 17,397 14,084 2030 15.2% 16.6% 91.6% 278.8 12,115 18,643 15,330 2035 15.4% 15.7% 2040 15.5% 14.9% 2045 15.1% 14.2% 2050 14.2% 13.6% 2055 13.5% 13.1% 2060 13.0% 12.8%

97.9% 103.8% 106.5% 104.7% 103.7% 101.4% 301.6 12,536 19,682 16,653 321.6 12,982 20,355 17,736 334.3 13,464 20,411 18,139 337.1 13,921 19,902 17,903 345.3 14,537 19,595 17,329 356.6 15,443 19,141 16,858

C.3.b.4 - Pubblic expenditure for health care and Long Term Care

2005 Health care expenditure - of which acute care Social component of LTC LTC expenditure Health care and LTC expenditure 6.7% 5.9% 0.8% 1.6% 7.5% 2010 7.4% 6.4% 1.0% 1.9% 8.3% 2015 7.4% 6.4% 1.0% 1.9% 8.4% 2020 7.6% 6.6% 1.0% 2.0% 8.6% 2025 7.8% 6.8% 1.0% 2.0% 8.8% 2030 8.0% 7.0% 1.1% 2.1% 9.1% 2035 8.3% 7.2% 1.1% 2.2% 9.4% 2040 8.5% 7.3% 1.2% 2.3% 9.7% 2045 8.7% 7.4% 1.3% 2.5% 9.9% 2050 8.7% 7.4% 1.4% 2.7% 10.1% 2055 8.7% 7.4% 1.4% 2.8% 10.2% 2060 8.7% 7.3% 1.5% 2.8% 10.1%

(a) pop.[65+]/pop.[20-64]. (b) pop.[0-19]/pop.[20-64]. (c) (pop.[0-19]+pop.[65+])/pop.[20-64]. (d) pop.[65+]/pop.[0-19].

37

MID LONG TERM TRENDS FOR THE PENSION, HEALTH AND LONG TERM CARE SYSTEMS ­ 2009 UPDATED

C.4.a -Net flow of immigrants: +40 thousand units(a)

C.4.a.1 - Population by sex and age bracket (1st January - thousands)

2005 Population [0-19] Population [20-64] Population [65+] Population - Total Elderly dependency ratio (b) Youth dependency ratio (c) Total dependency ratio (d) Ageing index (e) 11,145 35,938 11,379 58,462 31.7 31.0 62.7 102.1 2010 11,392 36,656 12,218 60,265 33.3 31.1 64.4 107.3 2015 11,424 36,622 13,260 61,306 36.2 31.2 67.4 116.1 2020 11,443 36,481 14,066 61,991 38.6 31.4 69.9 122.9 2025 11,328 36,184 15,032 62,543 41.5 31.3 72.9 132.7 2030 11,158 35,398 16,466 63,022 46.5 31.5 78.0 147.6 2035 11,046 34,285 18,098 63,429 52.8 32.2 85.0 163.8 2040 11,059 33,153 19,528 63,740 58.9 33.4 92.3 176.6 2045 11,125 32,410 20,366 63,900 62.8 34.3 97.2 183.1 2050 11,162 32,119 20,555 63,836 64.0 34.8 98.7 184.2 2055 11,131 32,043 20,366 63,540 63.6 34.7 98.3 183.0 2060 11,044 32,018 20,030 63,093 62.6 34.5 97.1 181.4

C.4.a.2 - Macroeconomic assumptions

2005 GDP in real terms (billions 2000)) GDP per capita ( 2000) GDP per worker ( 2000) Participation rate [15-64] Unemployment rate Employment rate [15-64] 1,245 21,292 55,170 62.4% 7.7% 57.5% 2010 1,229 20,385 53,325 62.5% 8.4% 57.2% 2015 1,364 22,257 55,953 65.3% 7.1% 60.6% 2020 1,507 24,302 59,538 66.7% 6.2% 62.5% 2025 1,650 26,378 64,093 67.4% 5.4% 63.7% 2030 1,789 28,386 69,637 68.0% 4.9% 64.6% 2035 1,924 30,333 75,911 68.8% 4.6% 65.5% 2040 2,056 32,252 82,859 69.3% 4.5% 66.1% 2045 2,201 34,449 90,185 69.7% 4.5% 66.5% 2050 2,379 37,268 2055 2,569 40,424 2060 2,778 44,036

97,619 105,810 114,608 70.3% 4.5% 67.1% 70.2% 4.5% 66.9% 70.2% 4.5% 67.0%

C.4.a.3 - Pubblic pension expenditure

2005 Total pension expenditure/GDP Average pension/GDP per worker Number of pensions/numbers of workers Total pension expenditure (billions 2000) Average pension ( 2000 ) Total number of pensioners (thousands) - of which of 65+ 13.9% 16.6% 83.9% 178.3 9,421 15,594 11,530 2010 15.2% 18.1% 84.3% 195.3 10,059 15,813 12,085 2015 14.9% 18.1% 82.5% 212.4 10,563 16,181 13,026 2020 14.9% 17.9% 83.1% 234.4 11,143 16,857 13,724 2025 15.0% 17.3% 86.5% 257.9 11,579 17,935 14,662 2030 15.3% 16.5% 92.5% 285.8 12,023 19,408 16,142 2035 15.4% 15.6% 2040 15.5% 14.8% 2045 15.1% 14.0% 2050 14.2% 13.3% 2055 13.6% 12.8% 2060 13.1% 12.5%

98.8% 104.8% 107.8% 106.6% 106.3% 104.9% 310.4 12,395 20,678 17,700 332.4 12,782 21,605 19,031 347.4 13,200 21,933 19,691 353.3 13,596 21,695 19,715 364.9 14,137 21,658 19,392 379.8 14,943 21,438 19,145

C.4.a.4 - Pubblic expenditure for health care and Long Term Care

2005 Health care expenditure - of which acute care Social component of LTC LTC expenditure Health care and LTC expenditure 6.7% 5.9% 0.8% 1.6% 7.5% 2010 7.4% 6.4% 1.0% 1.9% 8.3% 2015 7.4% 6.4% 1.0% 2.0% 8.4% 2020 7.6% 6.6% 1.0% 2.0% 8.6% 2025 7.8% 6.8% 1.0% 2.0% 8.8% 2030 8.0% 7.0% 1.1% 2.2% 9.1% 2035 8.3% 7.1% 1.2% 2.3% 9.4% 2040 8.5% 7.3% 1.2% 2.4% 9.7% 2045 8.7% 7.4% 1.3% 2.6% 10.0% 2050 8.8% 7.4% 1.4% 2.8% 10.2% 2055 8.8% 7.4% 1.5% 2.9% 10.3% 2060 8.8% 7.4% 1.6% 3.0% 10.4%

(a) As of 2020, level gradually reached starting from 2007. (b) pop.[65+]/pop.[20-64]. (c) pop.[0-19]/pop.[20-64]. (d) (pop.[0-19]+pop.[65+])/pop.[20-64]. (e) pop.[65+]/pop.[0-19].

38

MID LONG TERM TRENDS FOR THE PENSION, HEALTH AND LONG TERM CARE SYSTEMS ­ 2009 UPDATED

C.4.b - Net flow of immigrants: -40 thousand units

2005 Population [0-19] Population [20-64] Population [65+] Population - Total Elderly dependency ratio (b) Youth dependency ratio (c) Total dependency ratio (d) Ageing index (e) 11,145 35,938 11,379 58,462 31.7 31.0 62.7 102.1 2010 11,376 36,594 12,216 60,186 33.4 31.1 64.5 107.4 2015 11,355 36,366 13,255 60,975 36.4 31.2 67.7 116.7 2020 11,285 35,946 14,054 61,286 39.1 31.4 70.5 124.5

(a)

C.4.b.1 - Population by sex and age bracket (1st January - thousands)

2025 11,046 35,288 15,007 61,341 42.5 31.3 73.8 135.9 2030 10,726 34,099 16,419 61,244 48.2 31.5 79.6 153.1 2035 10,460 32,577 18,013 61,050 55.3 32.1 87.4 172.2 2040 10,332 31,032 19,383 60,747 62.5 33.3 95.8 187.6 2045 10,276 29,889 20,121 60,286 67.3 34.4 101.7 195.8 2050 10,212 29,230 20,156 59,598 69.0 34.9 103.9 197.4 2055 10,091 28,830 19,759 58,680 68.5 35.0 103.5 195.8 2060 9,915 28,522 19,177 57,613 67.2 34.8 102.0 193.4

C.4.b.2 - Macroeconomic assumptions

2005 GDP in real terms (billions 2000)) GDP per capita ( 2000) GDP per worker ( 2000) Participation rate [15-64] Unemployment rate Employment rate [15-64] 1,245 21,292 55,170 62.4% 7.7% 57.5% 2010 1,227 20,383 53,326 62.5% 8.4% 57.2% 2015 1,356 22,239 55,990 65.3% 7.1% 60.6% 2020 1,488 24,284 59,689 66.7% 6.2% 62.5% 2025 1,616 26,349 64,403 67.3% 5.4% 63.6% 2030 1,734 28,320 70,145 67.8% 4.9% 64.4% 2035 1,844 30,197 76,638 68.5% 4.6% 65.3% 2040 1,944 32,007 83,832 69.1% 4.5% 65.9% 2045 2,054 34,073 91,402 69.5% 4.5% 66.3% 2050 2,192 36,787 2055 2,340 39,870 2060 2,504 43,455

99,010 107,336 116,222 70.0% 4.5% 66.8% 69.9% 4.5% 66.7% 69.9% 4.5% 66.7%

C.4.b.3 - Pubblic pension expenditure

2005 Total pension expenditure/GDP Average pension/GDP per worker Number of pensions/numbers of workers Total pension expenditure (billions 2000) Average pension ( 2000 ) Total number of pensioners (thousands) - of which of 65+ 13.9% 16.6% 83.9% 178.3 9,421 15,594 11,530 2010 15.2% 18.1% 84.4% 195.3 10,059 15,812 12,085 2015 15.0% 18.1% 83.0% 212.4 10,563 16,178 13,024 2020 15.1% 17.9% 84.4% 234.4 11,142 16,848 13,716 2025 15.3% 17.2% 88.7% 257.6 11,573 17,911 14,644 2030 15.7% 16.4% 2035 16.0% 15.4% 2040 16.2% 14.5% 2045 15.9% 13.7% 2050 15.0% 13.0% 2055 14.3% 12.5% 2060 13.7% 12.1%

95.9% 103.7% 111.3% 115.8% 115.1% 115.0% 113.2% 284.8 12,005 19,354 16,104 308.2 12,357 20,574 17,628 328.4 12,718 21,423 18,898 341.0 13,110 21,630 19,459 343.6 13,480 21,213 19,330 350.4 13,981 20,945 18,803 359.4 14,744 20,462 18,316

C.4.b.4 - Pubblic expenditure for health care and Long Term Care

2005 Health care expenditure - of which acute care Social component of LTC LTC expenditure Health care and LTC expenditure 6.7% 5.9% 0.8% 1.6% 7.5% 2010 7.4% 6.4% 1.0% 1.9% 8.4% 2015 7.4% 6.4% 1.0% 2.0% 8.4% 2020 7.6% 6.6% 1.0% 2.0% 8.6% 2025 7.9% 6.8% 1.1% 2.1% 8.9% 2030 8.1% 7.0% 1.1% 2.2% 9.2% 2035 8.4% 7.2% 1.2% 2.4% 9.6% 2040 8.7% 7.4% 1.3% 2.5% 10.0% 2045 8.9% 7.5% 1.4% 2.8% 10.3% 2050 9.0% 7.6% 1.5% 3.0% 10.6% 2055 9.1% 7.6% 1.6% 3.1% 10.7% 2060 9.0% 7.5% 1.7% 3.2% 10.7%

(a) As of 2020, level gradually reached starting from 2007. (b) pop.[65+]/pop.[20-64]. (c) pop.[0-19]/pop.[20-64]. (d) (pop.[0-19]+pop.[65+])/pop.[20-64]. (e) pop.[65+]/pop.[0-19].

39

MID LONG TERM TRENDS FOR THE PENSION, HEALTH AND LONG TERM CARE SYSTEMS ­ 2009 UPDATED

C.5.a - Participation rates: +2 percentage points in 2060

C.5.a.1 - Population by sex and age bracket (1st January - thousands)

2005 Population [0-19] Population [20-64] Population [65+] Population - Total Elderly dependency ratio (a) Youth dependency ratio (b) Total dependency ratio (c) Ageing index (d) 11,145 35,938 11,379 58,462 31.7 31.0 62.7 102.1 2010 11,384 36,624 12,216 60,224 33.4 31.1 64.4 107.3 2015 11,389 36,492 13,256 61,138 36.3 31.2 67.5 116.4 2020 11,364 36,212 14,058 61,634 38.8 31.4 70.2 123.7 2025 11,187 35,733 15,018 61,938 42.0 31.3 73.3 134.2 2030 10,942 34,746 16,441 62,129 47.3 31.5 78.8 150.3 2035 10,753 33,428 18,054 62,236 54.0 32.2 86.2 167.9 2040 10,696 32,090 19,454 62,240 60.6 33.3 94.0 181.9 2045 10,701 31,148 20,241 62,090 65.0 34.4 99.3 189.2 2050 10,688 30,674 20,355 61,717 66.4 34.8 101.2 190.4 2055 10,612 30,439 20,062 61,113 65.9 34.9 100.8 189.0 2060 10,481 30,273 19,603 60,358 64.8 34.6 99.4 187.0

C.5.a.2 - Macroeconomic assumptions

2005 GDP in real terms (billions 2000)) GDP per capita ( 2000) GDP per worker ( 2000) Participation rate [15-64] Unemployment rate Employment rate [15-64] 1,245 21,292 55,170 62.4% 7.7% 57.5% 2010 1,228 20,385 53,325 62.5% 8.4% 57.2% 2015 1,361 22,257 55,964 65.3% 7.1% 60.6% 2020 1,499 24,325 59,577 66.8% 6.2% 62.6% 2025 1,638 26,440 64,155 67.6% 5.4% 63.9% 2030 1,771 28,503 69,712 68.5% 4.9% 65.0% 2035 1,899 30,512 75,989 69.5% 4.6% 66.2% 2040 2,023 32,496 82,937 70.4% 4.5% 67.1% 2045 2,159 34,768 90,258 71.1% 4.5% 67.8% 2050 2,326 37,690 2055 2,504 40,973 2060 2,700 44,734

97,670 105,842 114,638 71.9% 4.5% 68.6% 72.0% 4.5% 68.7% 72.1% 4.5% 68.8%

C.5.a.3 - Pubblic pension expenditure

2005 Total pension expenditure/GDP Average pension/GDP per worker Number of pensions/numbers of workers Total pension expenditure (billions 2000) Average pension ( 2000 ) Total number of pensioners (thousands) - of which of 65+ 13.9% 16.6% 83.9% 178.3 9,421 15,594 11,530 2010 15.2% 18.1% 84.3% 195.3 10,059 15,812 12,085 2015 14.9% 18.1% 82.7% 212.4 10,563 16,179 13,025 2020 15.0% 17.9% 83.6% 234.4 11,144 16,852 13,719 2025 15.1% 17.3% 87.2% 257.8 11,579 17,922 14,653 2030 15.4% 16.5% 2035 15.6% 15.6% 2040 15.7% 14.7% 2045 15.3% 14.0% 2050 14.4% 13.3% 2055 13.8% 12.8% 2060 13.2% 12.5%

93.5% 100.0% 106.3% 109.4% 108.2% 107.7% 106.1% 285.5 12,022 19,380 16,122 309.7 12,392 20,624 17,663 331.1 12,777 21,513 18,964 345.3 13,194 21,785 19,574 350.0 13,589 21,471 19,526 360.1 14,127 21,345 19,115 373.3 14,934 21,031 18,774

C.5.a.4 - Pubblic expenditure for health care and Long Term Care

2005 Health care expenditure - of which acute care Social component of LTC LTC expenditure Health care and LTC expenditure 6.7% 5.9% 0.8% 1.6% 7.5% 2010 7.4% 6.4% 1.0% 1.9% 8.4% 2015 7.4% 6.4% 1.0% 2.0% 8.4% 2020 7.6% 6.6% 1.0% 2.0% 8.6% 2025 7.9% 6.8% 1.1% 2.1% 8.9% 2030 8.1% 7.0% 1.1% 2.2% 9.2% 2035 8.4% 7.2% 1.2% 2.4% 9.6% 2040 8.7% 7.4% 1.3% 2.5% 10.0% 2045 8.9% 7.5% 1.4% 2.8% 10.3% 2050 9.0% 7.6% 1.5% 3.0% 10.6% 2055 9.1% 7.6% 1.6% 3.1% 10.7% 2060 9.0% 7.5% 1.7% 3.2% 10.7%

(a) pop.[65+]/pop.[20-64]. (b) pop.[0-19]/pop.[20-64]. (c) (pop.[0-19]+pop.[65+])/pop.[20-64]. (d) pop.[65+]/pop.[0-19].

40

MID LONG TERM TRENDS FOR THE PENSION, HEALTH AND LONG TERM CARE SYSTEMS ­ 2009 UPDATED

C.5.b - Participation rates: -2 percentage points in 2060

C.5.b.1 - Population by sex and age bracket (1st January - thousands)

2005 Population [0-19] Population [20-64] Population [65+] Population - Total Elderly dependency ratio (a) Youth dependency ratio (b) Total dependency ratio (c) Ageing index (d) 11,145 35,938 11,379 58,462 31.7 31.0 62.7 102.1 2010 11,384 36,624 12,216 60,224 33.4 31.1 64.4 107.3 2015 11,389 36,492 13,256 61,138 36.3 31.2 67.5 116.4 2020 11,364 36,212 14,058 61,634 38.8 31.4 70.2 123.7 2025 11,187 35,733 15,018 61,938 42.0 31.3 73.3 134.2 2030 10,942 34,746 16,441 62,129 47.3 31.5 78.8 150.3 2035 10,753 33,428 18,054 62,236 54.0 32.2 86.2 167.9 2040 10,696 32,090 19,454 62,240 60.6 33.3 94.0 181.9 2045 10,701 31,148 20,241 62,090 65.0 34.4 99.3 189.2 2050 10,688 30,674 20,355 61,717 66.4 34.8 101.2 190.4 2055 10,612 30,439 20,062 61,113 65.9 34.9 100.8 189.0 2060 10,481 30,273 19,603 60,358 64.8 34.6 99.4 187.0

C.5.b.2 - Macroeconomic assumptions

2005 GDP in real terms (billions 2000)) GDP per capita ( 2000) GDP per worker ( 2000) Participation rate [15-64] Unemployment rate Employment rate [15-64] 1,245 21,292 55,170 62.4% 7.7% 57.5% 2010 1,228 20,384 53,326 62.5% 8.4% 57.2% 2015 1,360 22,239 55,979 65.3% 7.1% 60.6% 2020 1,495 24,263 59,650 66.6% 6.2% 62.4% 2025 1,628 26,288 64,339 67.0% 5.4% 63.3% 2030 1,752 28,205 70,064 67.4% 4.9% 64.0% 2035 1,868 30,021 76,550 67.8% 4.6% 64.6% 2040 1,977 31,770 83,738 68.0% 4.5% 64.9% 2045 2,097 33,767 91,304 68.1% 4.5% 65.0% 2050 2,245 36,382 2055 2,404 39,342 2060 2,582 42,784

98,925 107,259 116,135 68.4% 4.5% 65.3% 68.1% 4.5% 64.9% 68.0% 4.5% 64.9%

C.5.b.3 - Pubblic pension expenditure

2005 Total pension expenditure/GDP Average pension/GDP per worker Number of pensions/numbers of workers Total pension expenditure (billions 2000) Average pension ( 2000 ) Total number of pensioners (thousands) - of which of 65+ 13.9% 16.6% 83.9% 178.3 9,421 15,594 11,530 2010 15.2% 18.1% 84.3% 195.3 10,059 15,812 12,085 2015 15.0% 18.1% 82.8% 212.4 10,563 16,179 13,025 2020 15.0% 17.9% 83.9% 234.4 11,141 16,852 13,719 2025 15.1% 17.2% 88.0% 257.7 11,573 17,922 14,653 2030 15.6% 16.4% 2035 15.8% 15.5% 2040 16.0% 14.5% 2045 15.7% 13.8% 2050 14.8% 13.0% 2055 14.1% 12.5% 2060 13.6% 12.2%

94.9% 102.4% 109.7% 113.9% 113.3% 113.2% 111.5% 285.1 12,006 19,380 16,122 308.9 12,360 20,626 17,663 329.7 12,724 21,514 18,964 343.2 13,118 21,776 19,574 346.9 13,488 21,433 19,517 355.2 13,992 21,255 19,077 365.9 14,756 20,866 18,685

C.5.b.4 - Pubblic expenditure for health care and Long Term Care

2005 Health care expenditure - of which acute care Social component of LTC LTC expenditure Health care and LTC expenditure 6.7% 5.9% 0.8% 1.6% 7.5% 2010 7.4% 6.4% 1.0% 1.9% 8.3% 2015 7.4% 6.4% 1.0% 2.0% 8.4% 2020 7.6% 6.6% 1.0% 2.0% 8.6% 2025 7.8% 6.8% 1.0% 2.1% 8.9% 2030 8.1% 7.0% 1.1% 2.2% 9.2% 2035 8.3% 7.2% 1.2% 2.3% 9.5% 2040 8.6% 7.3% 1.3% 2.5% 9.9% 2045 8.8% 7.5% 1.4% 2.7% 10.2% 2050 8.9% 7.5% 1.5% 2.9% 10.4% 2055 9.0% 7.5% 1.6% 3.1% 10.6% 2060 8.9% 7.4% 1.7% 3.2% 10.6%

(a) pop.[65+]/pop.[20-64]. (b) pop.[0-19]/pop.[20-64]. (c) (pop.[0-19]+pop.[65+])/pop.[20-64]. (d) pop.[65+]/pop.[0-19].

41

MID LONG TERM TRENDS FOR THE PENSION, HEALTH AND LONG TERM CARE SYSTEMS ­ 2009 UPDATED

C.6.a - Productivity: +0.25% per year

C.6.a.1 - Population by sex and age bracket (1st January - thousands)

2005 Population [0-19] Population [20-64] Population [65+] Population - Total Elderly dependency ratio (a) Youth dependency ratio (b) Total dependency ratio (c) Ageing index (d) 11,145 35,938 11,379 58,462 31.7 31.0 62.7 102.1 2010 11,384 36,624 12,216 60,224 33.4 31.1 64.4 107.3 2015 11,389 36,492 13,256 61,138 36.3 31.2 67.5 116.4 2020 11,364 36,212 14,058 61,634 38.8 31.4 70.2 123.7 2025 11,187 35,733 15,018 61,938 42.0 31.3 73.3 134.2 2030 10,942 34,746 16,441 62,129 47.3 31.5 78.8 150.3 2035 10,753 33,428 18,054 62,236 54.0 32.2 86.2 167.9 2040 10,696 32,090 19,454 62,240 60.6 33.3 94.0 181.9 2045 10,701 31,148 20,241 62,090 65.0 34.4 99.3 189.2 2050 10,688 30,674 20,355 61,717 66.4 34.8 101.2 190.4 2055 10,612 30,439 20,062 61,113 65.9 34.9 100.8 189.0 2060 10,481 30,273 19,603 60,358 64.8 34.6 99.4 187.0

C.6.a.2 - Macroeconomic assumptions

2005 GDP in real terms (billions 2000)) GDP per capita ( 2000) GDP per worker ( 2000) Participation rate [15-64] Unemployment rate Employment rate [15-64] 1,245 21,292 55,170 62.4% 7.7% 57.5% 2010 1,228 20,384 53,325 62.5% 8.4% 57.2% 2015 1,365 22,331 56,179 65.3% 7.1% 60.6% 2020 1,518 24,626 60,428 66.7% 6.2% 62.5% 2025 1,676 27,055 65,930 67.3% 5.4% 63.6% 2030 1,830 29,457 72,604 67.9% 4.9% 64.5% 2035 1,981 31,833 80,210 68.6% 4.6% 65.4% 2040 2,129 34,213 88,721 69.2% 4.5% 66.0% 2045 2,293 36,935 2050 2,494 40,413 2055 2,711 44,361 2060 2,954 48,936

97,836 107,243 117,681 129,015 69.6% 4.5% 66.4% 70.2% 4.5% 66.9% 70.0% 4.5% 66.8% 70.1% 4.5% 66.9%

C.6.a.3 - Pubblic pension expenditure

2005 Total pension expenditure/GDP Average pension/GDP per worker Number of pensions/numbers of workers Total pension expenditure (billions 2000) Average pension ( 2000 ) Total number of pensioners (thousands) - of which of 65+ 13.9% 16.6% 83.9% 178.3 9,421 15,594 11,530 2010 15.2% 18.1% 84.3% 195.3 10,059 15,812 12,085 2015 14.9% 18.0% 82.7% 212.5 10,566 16,179 13,025 2020 14.8% 17.7% 83.7% 234.9 11,167 16,851 13,719 2025 14.8% 16.9% 87.6% 259.3 11,645 17,922 14,653 2030 15.1% 16.0% 2035 15.2% 15.1% 2040 15.3% 14.2% 2045 14.9% 13.4% 2050 14.0% 12.7% 2055 13.4% 12.2% 2060 12.9% 11.9%

94.2% 101.2% 108.0% 111.6% 110.7% 110.4% 108.7% 288.7 12,158 19,379 16,122 315.4 12,620 20,624 17,663 340.0 13,122 21,512 18,964 357.8 13,676 21,780 19,574 366.1 14,224 21,452 19,522 380.4 14,955 21,300 19,096 398.3 15,999 20,949 18,730

C.6.a.4 - Pubblic expenditure for health care and Long Term Care

2005 Health care expenditure - of which acute care Social component of LTC LTC expenditure Health care and LTC expenditure 6.7% 5.9% 0.8% 1.6% 7.5% 2010 7.4% 6.4% 1.0% 1.9% 8.3% 2015 7.4% 6.4% 1.0% 2.0% 8.4% 2020 7.6% 6.6% 1.0% 2.0% 8.6% 2025 7.8% 6.8% 1.0% 2.1% 8.9% 2030 8.1% 7.0% 1.1% 2.2% 9.2% 2035 8.3% 7.2% 1.2% 2.3% 9.5% 2040 8.6% 7.4% 1.3% 2.5% 9.9% 2045 8.8% 7.5% 1.4% 2.7% 10.2% 2050 8.9% 7.5% 1.5% 2.9% 10.4% 2055 9.0% 7.5% 1.6% 3.0% 10.6% 2060 8.9% 7.5% 1.7% 3.1% 10.6%

(a) pop.[65+]/pop.[20-64]. (b) pop.[0-19]/pop.[20-64]. (c) (pop.[0-19]+pop.[65+])/pop.[20-64]. (d) pop.[65+]/pop.[0-19].

42

MID LONG TERM TRENDS FOR THE PENSION, HEALTH AND LONG TERM CARE SYSTEMS ­ 2009 UPDATED

C.6.b - Productivity: -0.25% per year

C.6.b.1 - Population by sex and age bracket (1st January - thousands)

2005 Population [0-19] Population [20-64] Population [65+] Population - Total Elderly dependency ratio (a) Youth dependency ratio (b) Total dependency ratio (c) Ageing index (d) 11,145 35,938 11,379 58,462 31.7 31.0 62.7 102.1 2010 11,384 36,624 12,216 60,224 33.4 31.1 64.4 107.3 2015 11,389 36,492 13,256 61,138 36.3 31.2 67.5 116.4 2020 11,364 36,212 14,058 61,634 38.8 31.4 70.2 123.7 2025 11,187 35,733 15,018 61,938 42.0 31.3 73.3 134.2 2030 10,942 34,746 16,441 62,129 47.3 31.5 78.8 150.3 2035 10,753 33,428 18,054 62,236 54.0 32.2 86.2 167.9 2040 10,696 32,090 19,454 62,240 60.6 33.3 94.0 181.9 2045 10,701 31,148 20,241 62,090 65.0 34.4 99.3 189.2 2050 10,688 30,674 20,355 61,717 66.4 34.8 101.2 190.4 2055 10,612 30,439 20,062 61,113 65.9 34.9 100.8 189.0 2060 10,481 30,273 19,603 60,358 64.8 34.6 99.4 187.0

C.6.b.2 - Macroeconomic assumptions

2005 GDP in real terms (billions 2000)) GDP per capita ( 2000) GDP per worker ( 2000) Participation rate [15-64] Unemployment rate Employment rate [15-64] 1,245 21,292 55,170 62.4% 7.7% 57.5% 2010 1,228 20,384 53,325 62.5% 8.4% 57.2% 2015 1,355 22,166 55,764 65.3% 7.1% 60.6% 2020 1,477 23,966 58,809 66.7% 6.2% 62.5% 2025 1,591 25,689 62,603 67.3% 5.4% 63.6% 2030 1,696 27,290 67,266 67.9% 4.9% 64.5% 2035 1,791 28,775 72,509 68.6% 4.6% 65.4% 2040 1,878 30,176 78,258 69.2% 4.5% 66.0% 2045 1,974 31,787 84,203 69.6% 4.5% 66.4% 2050 2,094 33,935 90,055 70.2% 4.5% 66.9% 2055 2,221 36,345 2060 2,361 39,119

96,419 103,136 70.0% 4.5% 66.8% 70.1% 4.5% 66.9%

C.6.b.3 - Pubblic pension expenditure

2005 Total pension expenditure/GDP Average pension/GDP per worker Number of pensions/numbers of workers Total pension expenditure (billions 2000) Average pension ( 2000 ) Total number of pensioners (thousands) - of which of 65+ 13.9% 16.6% 83.9% 178.3 9,421 15,594 11,530 2010 15.2% 18.1% 84.3% 195.3 10,059 15,812 12,085 2015 15.0% 18.1% 82.7% 212.4 10,560 16,179 13,025 2020 15.2% 18.1% 83.8% 233.9 11,119 16,852 13,719 2025 15.4% 17.6% 87.6% 256.2 11,508 17,923 14,653 2030 15.9% 16.9% 2035 16.2% 16.0% 2040 16.4% 15.2% 2045 16.1% 14.4% 2050 15.2% 13.7% 2055 14.5% 13.1% 2060 13.9% 12.8%

94.2% 101.2% 108.0% 111.6% 110.7% 110.4% 108.7% 282.0 11,874 19,381 16,122 303.4 12,140 20,626 17,663 321.2 12,395 21,514 18,964 331.3 12,663 21,781 19,574 331.9 12,896 21,453 19,522 336.5 13,229 21,301 19,096 343.2 13,786 20,949 18,730

C.6.b.4 - Pubblic expenditure for health care and Long Term Care

2005 Health care expenditure - of which acute care Social component of LTC LTC expenditure Health care and LTC expenditure 6.7% 5.9% 0.8% 1.6% 7.5% 2010 7.4% 6.4% 1.0% 1.9% 8.3% 2015 7.4% 6.4% 1.0% 2.0% 8.4% 2020 7.6% 6.6% 1.0% 2.0% 8.6% 2025 7.8% 6.8% 1.0% 2.1% 8.8% 2030 8.0% 7.0% 1.1% 2.2% 9.1% 2035 8.3% 7.2% 1.2% 2.3% 9.5% 2040 8.5% 7.3% 1.3% 2.5% 9.8% 2045 8.7% 7.4% 1.4% 2.7% 10.1% 2050 8.9% 7.5% 1.5% 2.9% 10.3% 2055 8.9% 7.4% 1.6% 3.0% 10.5% 2060 8.8% 7.4% 1.6% 3.1% 10.5%

(a) pop.[65+]/pop.[20-64]. (b) pop.[0-19]/pop.[20-64]. (c) (pop.[0-19]+pop.[65+])/pop.[20-64]. (d) pop.[65+]/pop.[0-19].

43

MID LONG TERM TRENDS FOR THE PENSION, HEALTH AND LONG TERM CARE SYSTEMS ­ 2009 UPDATED

C.7.a - Unemployment rate: +1.6 percentage points in 2060

C.7.a.1 - Population by sex and age bracket (1st January - thousands)

2005 Population [0-19] Population [20-64] Population [65+] Population - Total Elderly dependency ratio (a) Youth dependency ratio (b) Total dependency ratio (c) Ageing index (d) 11,145 35,938 11,379 58,462 31.7 31.0 62.7 102.1 2010 11,384 36,624 12,216 60,224 33.4 31.1 64.4 107.3 2015 11,389 36,492 13,256 61,138 36.3 31.2 67.5 116.4 2020 11,364 36,212 14,058 61,634 38.8 31.4 70.2 123.7 2025 11,187 35,733 15,018 61,938 42.0 31.3 73.3 134.2 2030 10,942 34,746 16,441 62,129 47.3 31.5 78.8 150.3 2035 10,753 33,428 18,054 62,236 54.0 32.2 86.2 167.9 2040 10,696 32,090 19,454 62,240 60.6 33.3 94.0 181.9 2045 10,701 31,148 20,241 62,090 65.0 34.4 99.3 189.2 2050 10,688 30,674 20,355 61,717 66.4 34.8 101.2 190.4 2055 10,612 30,439 20,062 61,113 65.9 34.9 100.8 189.0 2060 10,481 30,273 19,603 60,358 64.8 34.6 99.4 187.0

C.7.a.2 - Macroeconomic assumptions

2005 GDP in real terms (billions 2000)) GDP per capita ( 2000) GDP per worker ( 2000) Participation rate [15-64] Unemployment rate Employment rate [15-64] 1,245 21,292 55,170 62.4% 7.7% 57.5% 2010 1,228 20,384 53,325 62.5% 8.4% 57.2% 2015 1,362 22,273 55,939 65.3% 6.9% 60.7% 2020 1,498 24,307 59,612 66.7% 6.1% 62.5% 2025 1,625 26,236 64,406 67.3% 6.1% 63.1% 2030 1,746 28,095 70,150 67.9% 6.1% 63.7% 2035 1,861 29,900 76,579 68.6% 6.1% 64.3% 2040 1,973 31,693 83,640 69.2% 6.1% 64.8% 2045 2,097 33,768 91,057 69.6% 6.1% 65.2% 2050 2,251 36,467 2055 2,415 39,518 2060 2,599 43,053

98,549 106,775 115,573 70.1% 6.1% 65.7% 70.0% 6.1% 65.6% 70.1% 6.1% 65.7%

C.7.a.3 - Pubblic pension expenditure

2005 Total pension expenditure/GDP Average pension/GDP per worker Number of pensions/numbers of workers Total pension expenditure (billions 2000) Average pension ( 2000 ) Total number of pensioners (thousands) - of which of 65+ 13.9% 16.6% 83.9% 178.3 9,421 15,594 11,530 2010 15.2% 18.1% 84.3% 195.3 10,059 15,812 12,085 2015 14.9% 18.1% 82.6% 212.4 10,564 16,179 13,025 2020 15.0% 17.9% 83.7% 234.4 11,143 16,852 13,719 2025 15.2% 17.2% 88.3% 257.7 11,572 17,923 14,653 2030 15.6% 16.4% 2035 15.9% 15.4% 2040 16.0% 14.5% 2045 15.6% 13.8% 2050 14.7% 13.1% 2055 14.1% 12.5% 2060 13.5% 12.2%

95.4% 102.9% 109.9% 113.6% 112.6% 112.3% 110.4% 285.0 12,000 19,381 16,122 308.6 12,347 20,627 17,663 329.3 12,707 21,517 18,967 342.8 13,103 21,776 19,573 346.7 13,479 21,438 19,511 355.4 13,992 21,271 19,073 366.6 14,764 20,898 18,697

C.7.a.4 - Pubblic expenditure for health care and Long Term Care

2005 Health care expenditure - of which acute care Social component of LTC LTC expenditure Health care and LTC expenditure 6.7% 5.9% 0.8% 1.6% 7.5% 2010 7.4% 6.4% 1.0% 1.9% 8.3% 2015 7.4% 6.4% 1.0% 2.0% 8.4% 2020 7.6% 6.6% 1.0% 2.0% 8.6% 2025 7.8% 6.8% 1.1% 2.1% 8.9% 2030 8.1% 7.0% 1.1% 2.2% 9.2% 2035 8.3% 7.2% 1.2% 2.4% 9.5% 2040 8.6% 7.3% 1.3% 2.5% 9.9% 2045 8.8% 7.5% 1.4% 2.8% 10.2% 2050 8.9% 7.5% 1.5% 2.9% 10.5% 2055 8.9% 7.5% 1.6% 3.1% 10.6% 2060 8.9% 7.4% 1.7% 3.2% 10.6%

(a) pop.[65+]/pop.[20-64]. (b) pop.[0-19]/pop.[20-64]. (c) (pop.[0-19]+pop.[65+])/pop.[20-64]. (d) pop.[65+]/pop.[0-19].

44

MID LONG TERM TRENDS FOR THE PENSION, HEALTH AND LONG TERM CARE SYSTEMS ­ 2009 UPDATED

Annex 5: replacement rates ­ Tables

D.1.1.1 - Gross replacement rates of the public pension system under the national baseline scenario: base case. D.1.1.2 - Gross replacement rates of the public pension system under the national baseline scenario: base case with career growth reduced by 0.5%. D.1.1.3 - Gross replacement rates of the public pension system under the national baseline scenario: base case with career growth increased by 0.5%. D.1.2.1 - Net replacement rates of the public pension system under the national baseline scenario: base case. D.1.2.2 - Net replacement rates of the public pension system under the national baseline scenario: base case with career growth reduced by 0.5%. D.1.2.3 - Net replacement rates of the public pension system under the national baseline scenario: base case with career growth increased by 0.5%. D.2.1.1 - Gross replacement rates of the public and private pension systems under the national baseline scenario: base case. D.2.2.1 - Net replacement rates of the public and private pension systems under the national baseline scenario: base case. E.1.1.1 - Gross replacement rates of the public pension system under the EPC-WGA baseline scenario: base case. E.1.1.2 - Gross replacement rates of the public pension system under the EPC-WGA baseline scenario: base case with career growth reduced by 0.5%. E.1.1.3 - Gross replacement rates of the public pension system under the EPC-WGA baseline scenario: base case with career growth increased by 0.5%. E.1.2.1 - Net replacement rates of the public pension system under the EPC-WGA baseline scenario: base case. E.1.2.2 - Net replacement rates of the public pension system under the EPC-WGA baseline scenario: base case with career growth reduced by 0.5%. E.1.2.3 - Net replacement rates of the public pension system under the EPC-WGA baseline scenario: base case with career growth increased by 0.5%. E.2.1.1 - Gross replacement rates of the public and private pension systems under the EPC-WGA baseline scenario: base case. E.2.2.1 - Net replacement rates of the public and private pension systems under the EPCWGA baseline scenario: base case.

45

MID LONG TERM TRENDS FOR THE PENSION, HEALTH AND LONG TERM CARE SYSTEMS ­ 2009 UPDATED

D.1.1.1 - Gross replacement rates of the public pension system under the national baseline (1) scenario : base case

Nominal GDP growth Inflation rate Career growth Final income

D.1.1.1.a - Private employee - Without dependent spouse

2005 age 58 60 63 65 58 60 63 65 58 60 63 65 59.6 59.6 59.6 69.5 69.5 69.5 69.5 79.3 79.3 79.3 79.3 2010 55.4 57.6 59.4 70.2 70.2 70.2 80.2 80.2 80.2 80.2 2015 50.2 52.9 55.0 59.9 62.6 64.7 78.5 78.5 78.5 78.5 2020 47.2 50.4 52.9 56.9 60.1 62.6 64.8 66.6 69.8 72.3 2025 2030 2035 2040 2045 41.6 45.0 47.7 48.3 52.3 55.4 52.3 54.9 59.5 63.0 2050 41.1 44.4 47.0 47.9 51.8 54.8 52.0 54.5 58.9 62.4 2055 40.6 43.9 46.4 47.3 51.1 54.1 51.6 54.1 58.4 61.8 2060 40.4 43.6 46.1 47.1 50.8 53.7 51.3 53.8 58.1 61.4 contribution period: 30 years(4) 44.0 42.8 42.1 41.7 47.7 46.5 45.6 45.2 50.6 49.4 48.5 47.9 53.6 57.3 60.2 61.2 63.3 67.0 69.9 contribution period: 35 years(5) 50.8 49.1 48.3 55.0 53.2 52.4 58.4 56.5 55.5 contribution period: 40 years 57.8 54.3 60.3 56.9 64.5 61.6 67.8 65.3 52.6 55.2 59.8 63.4

3.53% from 2010 (2) 2.00% from 2010 (2) GDP per worker from 2010 (2) 100% of reference wage (3)

D.1.1.1.b - Self-employed(6) - Without dependent spouse

2005 age 58 60 63 65 58 60 63 65 58.9 58.9 58.9 68.5 68.5 68.5 68.5 2010 45.4 46.8 47.9 69.4 69.4 69.4 2015 38.5 40.1 41.4 48.0 49.6 50.8 2020 33.0 34.9 36.4 42.3 44.2 45.7 2025 2030 2035 2040 2045 25.2 27.3 29.0 29.3 31.8 33.7 2050 24.9 27.0 28.5 29.1 31.4 33.3 2055 24.6 26.6 28.2 28.7 31.0 32.9 2060 24.5 26.5 28.0 28.6 30.9 32.6 contribution period: 30 years(4) 27.5 25.9 25.5 25.3 29.7 28.2 27.7 27.4 31.4 30.0 29.4 29.1 contribution period: 35 years(5) 36.8 31.5 29.8 29.3 39.1 34.1 32.3 31.8 40.8 36.1 34.3 33.7

contribution period: 40 years 58 78.2 79.1 77.7 50.5 44.8 39.3 33.6 31.9 31.7 31.5 31.3 31.1 60 78.2 79.1 77.7 51.6 46.1 40.8 35.3 33.5 33.3 33.1 32.8 32.6 63 78.2 79.1 77.7 53.5 48.3 43.4 38.1 36.3 36.1 35.8 35.5 35.2 65 78.2 79.1 77.7 55.0 50.1 45.4 40.3 38.5 38.2 37.9 37.5 37.3 (1) It has been taken that workers retire on the 1 st January of the year. (2) Historical data for the dynamics of individual wages/earnings are set equal to the growth rate of average gross wage per dependent worker (national accounts data). For the forecasting period, starting from 2010, the growth rate of nominal GDP per worker is 3.55%. For 2009, GDP, GDP per worker and inflation values have been taken from the macroeconomic scenario set out for the 2009 update of the Stability Programme. (3) Average gross wage per dependent worker based on national accounts figures. In 2005, the value is 24,452 euro. The 2009 value is estimated on the basis of the indications of the macroeconomic scenario set out for the 2009 update of the Stability Programme. (4) With 30 years of contributions, the minimum retirement age is 60 for female and 65 for male. (5) Retirement at the age of 60, with 35 years of contributions, is only allowed to female employees, starting from 1st January 2011 and to the female selfemployed starting from 1st July 2009 (Law 247/2007). (6) The contribution rate utilised is that foreseen for artisans in the reference year, as laid down by the 2007 budget law (law 296/2006).

46

MID LONG TERM TRENDS FOR THE PENSION, HEALTH AND LONG TERM CARE SYSTEMS ­ 2009 UPDATED

D.1.1.2 - Gross replacement rates of the public pension system under the national baseline scenario(1): base case with career growth reduced by 0.5%

Nominal GDP growth Inflation rate Career growth Final income

D.1.1.2.a - Private employee - Without dependent spouse

2005 age 58 60 63 65 58 60 63 65 58 60 63 65 59.6 59.6 59.6 69.5 69.5 69.5 69.5 79.3 79.3 79.3 79.3 2010 55.4 57.6 59.4 70.2 70.2 70.2 80.2 80.2 80.2 80.2 2015 51.0 53.7 55.8 60.8 63.5 65.6 79.4 79.4 79.4 79.4 2020 48.7 52.0 54.6 58.5 61.8 64.4 66.4 68.3 71.6 74.2 2025 2030 2035 2040 2045 44.6 48.3 51.2 52.5 56.8 60.2 57.4 60.3 65.3 69.2 2050 44.1 47.7 50.5 52.0 56.3 59.6 57.2 60.0 64.9 68.7 2055 43.6 47.1 49.8 51.4 55.6 58.8 56.8 59.5 64.3 68.0 2060 43.3 46.8 49.5 51.2 55.2 58.4 56.4 59.2 63.9 67.6 contribution period: 30 years(4) 46.3 45.5 45.0 44.8 50.2 49.4 48.9 48.5 53.2 52.5 51.9 51.4 56.1 60.0 63.1 63.7 65.9 69.8 72.9 contribution period: 35 years(5) 54.2 52.9 52.4 58.7 57.4 56.8 62.3 60.9 60.2 contribution period: 40 years 61.4 58.8 64.0 61.7 68.6 66.7 72.1 70.7 57.4 60.3 65.4 69.3

3.53% from 2010 (2) 2.00% from 2010 (2) GDP per worker -0.5% from 2010 (2) 100% of reference wage (3)

D.1.1.2.b - Self-employed(6) - Without dependent spouse

2005 age 58 60 63 65 58 60 63 65 58.9 58.9 58.9 68.5 68.5 68.5 68.5 2010 45.4 46.8 47.9 69.4 69.4 69.4 2015 39.1 40.8 42.1 48.7 50.4 51.6 2020 34.1 36.1 37.6 43.5 45.6 47.1 2025 2030 2035 2040 2045 27.1 29.4 31.1 31.9 34.5 36.6 2050 26.8 28.9 30.6 31.6 34.2 36.2 2055 26.5 28.6 30.2 31.2 33.7 35.7 2060 26.3 28.4 30.0 31.1 33.5 35.5 contribution period: 30 years(4) 28.9 27.6 27.3 27.2 31.2 30.0 29.6 29.4 33.1 31.8 31.5 31.2 contribution period: 35 years(5) 38.6 33.7 32.1 31.8 40.9 36.4 34.8 34.5 42.8 38.6 37.0 36.5

contribution period: 40 years 58 78.2 79.1 78.9 51.9 46.7 41.8 36.4 34.9 34.8 34.7 34.5 34.3 60 78.2 79.1 78.9 53.1 48.1 43.3 38.2 36.6 36.6 36.4 36.1 35.9 63 78.2 79.1 78.9 55.1 50.4 46.1 41.3 39.7 39.6 39.4 39.0 38.8 65 78.2 79.1 78.9 56.6 52.3 48.2 43.7 42.0 42.0 41.7 41.3 41.0 (1) It has been taken that workers retire on the 1 st January of the year. (2) Historical data for the dynamics of individual wages/earnings are set equal to the growth rate of average gross wage per dependent worker (national accounts data). For the forecasting period, starting from 2010, the growth rate of nominal GDP per worker is 3.55%. For 2009, GDP, GDP per worker and inflation values have been taken from the macroeconomic scenario set out for the 2009 update of the Stability Programme. (3) Average gross wage per dependent worker based on national accounts figures. In 2005, the value is 24,452 euro. The 2009 value is estimated on the basis of the indications of the macroeconomic scenario set out for the 2009 update of the Stability Programme. (4) With 30 years of contributions, the minimum retirement age is 60 for female and 65 for male. (5) Retirement at the age of 60, with 35 years of contributions, is only allowed to female employees, starting from 1st January 2011 and to the female selfemployed starting from 1st July 2009 (Law 247/2007). (6) The contribution rate utilised is that foreseen for artisans in the reference year, as laid down by the 2007 budget law (law 296/2006).

47

MID LONG TERM TRENDS FOR THE PENSION, HEALTH AND LONG TERM CARE SYSTEMS ­ 2009 UPDATED

D.1.1.3 - Gross replacement rates of the public pension system under the national baseline (1) scenario : base case with career growth increased by 0.5%

Nominal GDP growth Inflation rate Career growth Final income

D.1.1.3.a - Private employee - Without dependent spouse

2005 age 58 60 63 65 58 60 63 65 58 60 63 65 59.6 59.6 59.6 69.5 69.5 69.5 69.5 79.3 79.3 79.3 79.3 2010 55.4 57.6 59.4 70.2 70.2 70.2 80.2 80.2 80.2 80.2 2015 49.5 52.1 54.2 59.1 61.7 63.8 77.5 77.5 77.5 77.5 2020 45.7 48.8 51.2 55.3 58.4 60.8 63.2 64.9 68.0 70.4 2025 2030 2035 2040 2045 38.8 42.0 44.5 44.6 48.3 51.2 47.8 50.2 54.3 57.6 2050 38.3 41.4 43.9 44.2 47.8 50.6 47.4 49.7 53.8 56.9 2055 37.9 40.9 43.3 43.7 47.2 49.9 47.0 49.3 53.3 56.4 2060 37.7 40.7 43.0 43.4 46.9 49.6 46.8 49.0 52.9 56.0 contribution period: 30 years(4) 41.9 40.3 39.4 38.9 45.4 43.8 42.7 42.2 48.2 46.5 45.4 44.7 51.2 54.7 57.5 58.8 60.8 64.3 67.1 contribution period: 35 years(5) 47.6 45.6 44.7 51.6 49.5 48.4 54.7 52.5 51.4 contribution period: 40 years 54.6 50.2 56.8 52.7 60.8 57.0 63.9 60.4 48.3 50.7 54.9 58.2

3.53% from 2010 (2) 2.00% from 2010 (2) GDP per worker +0.5% from 2010 (2) 100% of reference wage (3)

D.1.1.3.b - Self-employed(6) - Without dependent spouse

2005 age 58 60 63 65 58 60 63 65 58.9 58.9 58.9 68.5 68.5 68.5 68.5 2010 45.4 46.8 47.9 69.4 69.4 69.4 2015 37.9 39.5 40.7 47.2 48.8 50.1 2020 31.9 33.8 35.3 41.0 42.9 44.3 2025 2030 2035 2040 2045 23.6 25.5 27.0 27.1 29.3 31.1 2050 23.3 25.2 26.6 26.8 29.0 30.7 2055 23.0 24.9 26.3 26.5 28.6 30.3 2060 22.9 24.7 26.1 26.4 28.5 30.1 contribution period: 30 years(4) 26.1 24.4 23.9 23.6 28.3 26.6 25.9 25.6 29.9 28.2 27.5 27.1 35.2 37.3 39.0 contribution period: 35 years(5) 29.6 27.7 27.1 32.0 30.0 29.4 33.9 31.9 31.2

contribution period: 40 years 58 78.2 79.1 76.5 49.1 43.0 37.1 31.1 29.3 29.0 28.8 28.6 28.4 60 78.2 79.1 76.5 50.1 44.3 38.5 32.6 30.8 30.5 30.2 29.9 29.8 63 78.2 79.1 76.5 52.0 46.4 40.9 35.3 33.3 33.0 32.6 32.3 32.1 65 78.2 79.1 76.5 53.5 48.1 42.8 37.3 35.3 35.0 34.6 34.2 34.0 (1) It has been taken that workers retire on the 1 st January of the year. (2) Historical data for the dynamics of individual wages/earnings are set equal to the growth rate of average gross wage per dependent worker (national accounts data). For the forecasting period, starting from 2010, the growth rate of nominal GDP per worker is 3.55%. For 2009, GDP, GDP per worker and inflation values have been taken from the macroeconomic scenario set out for the 2009 update of the Stability Programme. (3) Average gross wage per dependent worker based on national accounts figures. In 2005, the value is 24,452 euro. The 2009 value is estimated on the basis of the indications of the macroeconomic scenario set out for the 2009 update of the Stability Programme. (4) With 30 years of contributions, the minimum retirement age is 60 for female and 65 for male. (5) Retirement at the age of 60, with 35 years of contributions, is only allowed to female employees, starting from 1st January 2011 and to the female selfemployed starting from 1st July 2009 (Law 247/2007). (6) The contribution rate utilised is that foreseen for artisans in the reference year, as laid down by the 2007 budget law (law 296/2006).

48

MID LONG TERM TRENDS FOR THE PENSION, HEALTH AND LONG TERM CARE SYSTEMS ­ 2009 UPDATED

D.1.2.1 - Net replacement rates of the public pension system under the national baseline scenario(1): base case

Nominal GDP growth Inflation rate Career growth Final income

D.1.2.1.a - Private employee - Without dependent spouse

2005 age 58 60 63 65 58 60 63 65 58 60 63 65 69.1 69.1 69.1 78.7 78.7 78.7 78.7 88.2 88.2 88.2 88.2 2010 65.4 67.5 69.2 79.6 79.6 79.6 89.2 89.2 89.2 89.2 2015 60.4 63.0 65.0 69.8 72.4 74.4 87.7 87.7 87.7 87.7 2020 57.4 60.5 63.0 66.9 69.9 72.3 74.5 76.2 79.3 81.7 2025 54.4 58.0 60.8 63.7 67.3 70.1 71.0 73.0 76.6 79.4 2030 2035 2040

(4)

3.53% from 2010 (2) 2.00% from 2010 (2) GDP per worker from 2010 (2) 100% of reference wage (3)

2045 52.0 55.3 58.0 58.5 62.4 65.5 62.4 65.0 69.3 72.8

2050 51.4 54.7 57.3 58.1 61.9 64.9 62.1 64.6 68.9 72.2

2055 51.0 54.2 56.7 57.6 61.3 64.2 61.7 64.1 68.3 71.6

2060 50.8 53.9 56.4 57.3 61.0 63.8 61.4 63.8 68.0 71.2

contribution period: 30 years 53.1 52.4 52.1 56.7 55.9 55.5 59.6 58.7 58.1 contribution period: 35 years(5) 60.9 59.3 58.6 65.1 63.3 62.5 68.3 66.5 65.6 contribution period: 40 years 67.8 64.3 70.1 66.9 74.2 71.4 77.4 75.0 62.7 65.3 69.7 73.2

D.1.2.1.b - Self-employed(6) - Without dependent spouse

2005 age 58 60 63 65 58 60 63 65 76.6 76.6 76.6 87.0 87.0 87.0 87.0 2010 63.7 65.2 66.4 90.1 90.1 90.1 2015 56.0 57.8 59.2 66.6 68.4 69.8 2020 49.8 52.0 53.7 60.2 62.3 64.0 2025 2030 2035 2040 2045 40.6 44.0 45.4 45.8 48.5 50.6 2050 40.1 43.4 44.9 45.5 48.1 50.2 2055 39.7 42.8 44.5 45.1 47.7 49.7 2060 39.4 42.6 44.3 44.9 47.5 49.4 contribution period: 30 years(4) 44.2 41.8 41.1 40.7 46.2 44.5 43.9 44.1 48.1 46.5 45.8 45.5 54.1 56.6 58.6 contribution period: 35 years(5) 48.2 46.3 45.8 51.1 49.1 48.5 53.3 51.3 50.6

contribution period: 40 years 58 97.4 100.9 99.4 69.3 63.0 56.9 50.6 48.6 48.5 48.2 48.0 47.8 60 97.4 100.9 99.4 70.6 64.5 58.6 52.4 50.4 50.2 50.0 49.7 49.5 63 97.4 100.9 99.4 72.7 67.0 61.5 55.6 53.6 53.3 53.0 52.6 52.4 65 97.4 100.9 99.4 74.4 68.9 63.7 58.0 56.0 55.7 55.3 54.9 54.6 (1) It has been taken that workers retire on the 1st January of the year. The fiscal legal framework is that currently in force, as emended by the 2007 budget law (Law 296/2006). (2) Historical data for the dynamics of individual wages/earnings are set equal to the growth rate of average gross wage per dependent worker (national accounts data). For the forecasting period, starting from 2010, the growth rate of nominal GDP per worker is 3.55%. For 2009, GDP, GDP per worker and inflation values have been taken from the macroeconomic scenario set out for the 2009 update of the Stability Programme. (3) Average gross wage per dependent worker based on national accounts figures. In 2005, the value is 24,452 euro. The 2009 value is estimated on the basis of the indications of the macroeconomic scenario set out for the 2009 update of the Stability Programme. (4) With 30 years of contributions, the minimum retirement age is 60 for female and 65 for male. (5) Retirement at the age of 60, with 35 years of contributions, is only allowed to female employees, starting from 1st January 2011 and to the female selfemployed starting from 1st July 2009 (Law 247/2007). (6) The contribution rate utilised is that foreseen for artisans in the reference year, as laid down by the 2007 budget law (law 296/2006).

49

MID LONG TERM TRENDS FOR THE PENSION, HEALTH AND LONG TERM CARE SYSTEMS ­ 2009 UPDATED

D.1.2.2 - Net replacement rates of the public pension system under the national baseline (1) scenario : base case with career growth reduced by 0.5%

Nominal GDP growth Inflation rate Career growth Final income

D.1.2.2.a - Private employee - Without dependent spouse

2005 age 58 60 63 65 58 60 63 65 58 60 63 65 69.1 69.1 69.1 78.7 78.7 78.7 78.7 88.2 88.2 88.2 88.2 2010 66.0 68.1 69.8 80.2 80.2 80.2 89.6 89.6 89.6 89.6 2015 61.8 64.4 66.4 71.3 73.9 75.9 89.0 89.0 89.0 89.0 2020 59.6 62.8 65.3 69.1 72.3 74.7 76.7 78.5 81.6 84.0 2025 57.4 61.1 64.0 2030 2035 2040

(4)

3.53% from 2010 (2) 2.00% from 2010 (2) GDP per worker -0.5% from 2010 (2) 100% of reference wage (3)

2045 55.8 59.3 62.1 63.4 67.5 70.8 68.2 70.9 75.6 79.3

2050 55.2 58.7 61.3 62.9 67.0 70.2 67.9 70.6 75.2 78.8

2055 54.7 58.1 60.7 62.4 66.3 69.4 67.5 70.1 74.7 78.3

2060 54.5 57.8 60.4 62.1 66.0 69.0 67.2 69.8 74.3 77.8

contribution period: 30 years 56.5 56.1 55.9 60.3 59.8 59.4 63.3 62.7 62.2

contribution period: 35 years(5) 66.9 65.0 63.8 63.3 70.6 69.3 68.0 67.5 73.5 72.7 71.4 70.7 74.1 76.3 79.9 82.8 contribution period: 40 years 72.0 69.4 74.4 72.2 78.7 77.0 82.1 80.8 68.2 70.9 75.7 79.4

D.1.2.2.b - Self-employed(6) - Without dependent spouse

2005 age 58 60 63 65 58 60 63 65 76.6 76.6 76.6 87.0 87.0 87.0 87.0 2010 64.7 66.1 67.3 90.9 90.9 90.9 2015 57.8 59.6 61.0 68.5 70.3 71.7 2020 52.2 54.4 56.2 62.8 65.0 66.7 2025 2030 2035 2040 2045 42.9 46.4 49.2 50.3 52.9 55.2 2050 42.3 45.8 48.5 49.8 52.6 54.8 2055 41.8 45.2 47.8 49.3 52.1 54.3 2060 41.6 44.9 47.5 49.0 51.9 54.0 contribution period: 30 years(4) 45.7 43.6 43.2 43.0 49.4 47.4 46.9 46.6 51.2 50.4 49.8 49.4 57.4 60.0 62.0 contribution period: 35 years(5) 52.0 50.6 50.2 55.0 53.3 52.9 57.4 55.6 55.2

contribution period: 40 years 58 97.4 101.5 101.3 72.1 66.5 61.1 55.2 53.5 53.5 53.4 53.1 52.9 60 97.4 101.5 101.3 73.4 67.9 62.8 57.2 55.4 55.4 55.2 54.9 54.7 63 97.4 101.5 101.3 75.6 70.5 65.8 60.5 58.8 58.7 58.5 58.1 57.8 65 97.4 101.5 101.3 77.3 72.5 68.1 63.2 61.4 61.3 61.0 60.6 60.3 (1) It has been taken that workers retire on the 1st January of the year. The fiscal legal framework is that currently in force, as emended by the 2007 budget law (Law 296/2006). (2) Historical data for the dynamics of individual wages/earnings are set equal to the growth rate of average gross wage per dependent worker (national accounts data). For the forecasting period, starting from 2010, the growth rate of nominal GDP per worker is 3.55%. For 2009, GDP, GDP per worker and inflation values have been taken from the macroeconomic scenario set out for the 2009 update of the Stability Programme. (3) Average gross wage per dependent worker based on national accounts figures. In 2005, the value is 24,452 euro. The 2009 value is estimated on the basis of the indications of the macroeconomic scenario set out for the 2009 update of the Stability Programme. (4) With 30 years of contributions, the minimum retirement age is 60 for female and 65 for male. (5) Retirement at the age of 60, with 35 years of contributions, is only allowed to female employees, starting from 1st January 2011 and to the female selfemployed starting from 1st July 2009 (Law 247/2007). (6) The contribution rate utilised is that foreseen for artisans in the reference year, as laid down by the 2007 budget law (law 296/2006).

50

MID LONG TERM TRENDS FOR THE PENSION, HEALTH AND LONG TERM CARE SYSTEMS ­ 2009 UPDATED

D.1.2.3 - Net replacement rates of the public pension system under the national baseline (1) scenario : base case with career growth increased by 0.5%

Nominal GDP growth Inflation rate Career growth Final income

D.1.2.3.a - Private employee - Without dependent spouse

2005 age 58 60 63 65 58 60 63 65 58 60 63 65 69.1 69.1 69.1 78.7 78.7 78.7 78.7 88.2 88.2 88.2 88.2 2010 65.1 67.4 69.1 80.0 80.0 80.0 90.2 90.2 90.2 90.2 2015 59.4 62.0 64.0 69.1 71.6 73.7 87.6 87.6 87.6 87.6 2020 55.7 58.7 61.1 65.3 68.3 70.7 73.3 75.0 78.1 80.5 2025 51.8 55.4 58.1 2030 2035 2040

(4)

3.53% from 2010 (2) 2.00% from 2010 (2) GDP per worker +0.5% from 2010 (2) 100% of reference wage (3)

2045 48.8 52.0 54.5 54.6 58.3 61.2 57.9 60.3 64.5 67.7

2050 48.3 51.4 53.8 54.2 57.8 60.6 57.5 59.8 63.9 67.0

2055 47.8 50.9 53.3 53.7 57.2 59.9 57.2 59.4 63.4 66.5

2060 47.6 50.6 53.0 53.4 56.9 59.6 56.9 59.1 63.1 66.1

contribution period: 30 years 50.2 49.3 48.9 53.7 52.7 52.1 56.4 55.3 54.7

contribution period: 35 years(5) 61.2 57.7 55.7 54.8 64.7 61.6 59.5 58.5 67.4 64.7 62.5 61.4 68.9 70.9 74.4 77.2 contribution period: 40 years 64.7 60.3 66.9 62.8 70.9 67.1 74.0 70.5 58.4 60.8 65.0 68.3

D.1.2.3.b - Self-employed(6) - Without dependent spouse

2005 age 58 60 63 65 58 60 63 65 76.6 76.6 76.6 87.0 87.0 87.0 87.0 2010 62.8 64.3 65.6 89.5 89.5 89.5 2015 54.3 56.1 57.5 64.8 66.5 67.9 2020 47.5 49.7 51.3 57.7 59.8 61.5 2025 2030 2035 2040 2045 38.5 40.3 42.0 41.9 44.4 46.4 2050 38.0 39.9 41.6 41.6 44.1 46.0 2055 37.6 39.5 41.2 41.2 43.7 45.6 2060 37.4 39.4 41.0 41.1 43.5 45.3 contribution period: 30 years(4) 41.0 39.1 38.5 38.6 43.4 41.5 40.8 40.4 45.3 43.3 42.6 42.1 51.1 53.5 55.4 contribution period: 35 years(5) 44.7 42.6 42.0 47.5 45.2 44.5 49.6 47.3 46.5

contribution period: 40 years 58 97.4 100.3 97.5 66.7 59.9 53.1 46.3 44.2 43.9 43.6 43.4 43.2 60 97.4 100.3 97.5 67.9 61.3 54.7 48.0 45.9 45.6 45.2 45.0 44.8 63 97.4 100.3 97.5 70.0 63.7 57.5 51.0 48.8 48.4 48.0 47.7 47.5 65 97.4 100.3 97.5 71.6 65.5 59.6 53.4 51.1 50.7 50.2 49.8 49.6 (1) It has been taken that workers retire on the 1st January of the year. The fiscal legal framework is that currently in force, as emended by the 2007 budget law (Law 296/2006). (2) Historical data for the dynamics of individual wages/earnings are set equal to the growth rate of average gross wage per dependent worker (national accounts data). For the forecasting period, starting from 2010, the growth rate of nominal GDP per worker is 3.55%. For 2009, GDP, GDP per worker and inflation values have been taken from the macroeconomic scenario set out for the 2009 update of the Stability Programme. (3) Average gross wage per dependent worker based on national accounts figures. In 2005, the value is 24,452 euro. The 2009 value is estimated on the basis of the indications of the macroeconomic scenario set out for the 2009 update of the Stability Programme. (4) With 30 years of contributions, the minimum retirement age is 60 for female and 65 for male. (5) Retirement at the age of 60, with 35 years of contributions, is only allowed to female employees, starting from 1st January 2011 and to the female selfemployed starting from 1st July 2009 (Law 247/2007). (6) The contribution rate utilised is that foreseen for artisans in the reference year, as laid down by the 2007 budget law (law 296/2006).

51

MID LONG TERM TRENDS FOR THE PENSION, HEALTH AND LONG TERM CARE SYSTEMS ­ 2009 UPDATED

D.2.1.1 - Gross replacement rates of the public and private pension systems under the national baseline scenario(1): base case

Nominal GDP growth Inflation rate Career growth Final income Contribution rate to the private pension system(4) Real return rate from the private pension system gross of administrative costs and tax(5)

D.2.1.1.a - Private employee - Without dependent spouse

2005 age 58 60 63 65 58 60 63 65 58 60 63 65 59.6 59.6 59.6 69.5 69.5 69.5 69.5 79.3 79.3 79.3 79.3 2010 55.4 57.6 59.4 70.2 70.2 70.2 80.2 80.2 80.2 80.2 2015 52.4 55.2 57.4 62.1 64.9 67.2 80.5 80.6 80.8 81.0 2020 50.9 54.4 57.1 60.6 64.1 66.8 68.3 70.3 73.8 76.5 2025 2030 2035 2040 2045 50.7 54.9 58.1 59.1 63.9 67.7 63.3 66.4 71.8 76.0 2050 50.1 54.2 57.3 58.6 63.3 67.0 63.8 66.9 72.3 76.5 2055 49.6 53.6 56.6 58.0 62.6 66.2 63.4 66.4 71.7 75.8 2060 49.4 53.3 56.3 57.7 62.2 65.8 63.1 66.1 71.2 75.3 contribution period: 30 years(6) 49.3 49.5 50.4 50.9 53.4 53.8 54.6 55.1 56.6 57.1 57.9 58.4 contribution period: 35 years(7) 58.8 57.6 57.4 58.2 63.0 62.3 62.2 63.0 66.2 66.1 66.0 66.8 66.2 68.5 72.6 75.9 contribution period: 40 years 64.3 62.2 67.0 65.3 71.8 70.6 75.6 74.8 62.0 65.1 70.5 74.7

3.53% from 2010 (2) 2.00% from 2010 (2) GDP per worker from 2010 (2) 100% of reference wage (3) 6.91% 3.00%

D.2.1.1.b - Self-employed(8) - Without dependent spouse

2005 age 58 60 63 65 58 60 63 65 58.9 58.9 58.9 68.5 68.5 68.5 68.5 2010 45.4 46.8 47.9 69.4 69.4 69.4 2015 40.7 42.5 43.9 50.1 51.9 53.3 2020 36.7 38.9 40.7 45.9 48.2 49.9 2025 32.7 35.3 37.4 42.0 44.7 46.8 2030 2035 2040

(6)

2045 34.4 37.2 39.4 40.1 43.4 45.9

2050 34.0 36.7 38.8 39.8 43.0 45.4

2055 33.7 36.3 38.4 39.4 42.5 44.9

2060 33.5 36.1 38.2 39.2 42.3 44.6

contribution period: 30 years 32.7 33.8 34.5 35.5 36.7 37.4 37.7 38.9 39.6 contribution period: 35 years(7) 38.3 38.1 39.2 41.4 41.3 42.4 43.9 43.8 45.0

contribution period: 40 years 58 78.2 79.1 79.7 54.0 49.8 45.8 41.6 41.4 42.7 43.4 43.1 42.9 60 78.2 79.1 79.8 55.3 51.3 47.6 43.6 43.4 44.8 45.5 45.2 44.9 63 78.2 79.1 80.0 57.5 54.0 50.7 47.1 47.0 48.4 49.1 48.7 48.4 65 78.2 79.1 80.1 59.3 56.1 53.1 49.8 49.7 51.3 51.9 51.5 51.2 (1) It has been taken that workers retire on the 1st January of the year. (2) Historical data for the dynamics of individual wages/earnings are set equal to the growth rate of average gross wage per dependent worker (national accounts data). For the forecasting period, starting from 2010, the growth rate of nominal GDP per worker is 3.55%. For 2009, GDP, GDP per worker and inflation values have been taken from the macroeconomic scenario set out for the 2009 update of the Stability Programme. (3) Average gross wage per dependent worker based on national accounts figures. In 2005, the value is 24,452 euro. The 2009 value is estimated on the basis of the indications of the macroeconomic scenario set out for the 2009 update of the Stability Programme. (4) For the self-employed, contributions to the private pension system are entirely deductible from pre-tax income. For employees, however, the contribution rate of 6.91% refers to the severance pay (Trattamento di fine rapporto - TFR) contribution, not included in the gross wage. (5) Administrative spending has been set at 0.5 percentage points of the interest rate. The interest rate, net of administrative spending and tax, therefore comes out at 1.9%. (6) With 30 years of contributions, the minimum retirement age is 60 for female and 65 for male. (7) Retirement at the age of 60, with 35 years of contributions, is only allowed to female employees, starting from 1st January 2011 and to the female selfemployed starting from 1st July 2009 (Law 247/2007). (8) The contribution rate utilised is that foreseen for artisans in the reference year, as laid down by the 2007 budget law (law 296/2006).

52

MID LONG TERM TRENDS FOR THE PENSION, HEALTH AND LONG TERM CARE SYSTEMS ­ 2009 UPDATED

D.2.2.1 - Net replacement rates of the public and private pension systems under the national (1) baseline scenario : base case

Nominal GDP growth Inflation rate Career growth Final income Contribution rate to the private pension system(4) Real return rate from the private pension system gross of administrative costs and tax(5)

D.2.2.1.a - Private employee - Without dependent spouse

2005 age 58 60 63 65 58 60 63 65 58 60 63 65 69.1 69.1 69.1 78.7 78.7 78.7 78.7 88.2 88.2 88.2 88.2 2010 65.4 67.5 69.2 79.6 79.6 79.6 89.2 89.2 89.2 89.2 2015 63.1 65.9 68.1 72.5 75.3 77.5 90.2 90.3 90.6 90.8 2020 62.1 65.6 68.4 71.6 75.0 77.7 78.9 80.9 84.4 87.1 2025 2030 2035 2040 2045 64.0 68.3 71.7 73.0 78.0 81.9 77.1 80.3 85.9 90.2 2050 63.4 67.6 70.9 72.5 77.3 81.1 78.0 81.2 86.8 91.1 2055 62.9 67.0 70.2 71.9 76.6 80.4 77.6 80.7 86.1 90.4 2060 62.7 66.7 69.8 71.5 76.2 79.9 77.2 80.4 85.7 89.9 contribution period: 30 years(6) 61.1 61.9 63.4 64.2 65.3 66.3 67.7 68.6 68.5 69.7 71.1 72.0 70.5 74.6 77.8 77.5 79.8 84.0 87.2 contribution period: 35 years(7) 69.9 70.3 71.8 74.7 75.3 76.7 78.5 79.1 80.6 contribution period: 40 years 76.3 74.9 79.1 78.0 83.9 83.4 87.6 87.6 75.3 78.5 83.9 88.2

3.53% from 2010 (2) 2.00% from 2010 (2) GDP per worker from 2010 (2) 100% of reference wage (3) 6.91% 3.00%

D.2.2.1.b - Self-employed(8) - Without dependent spouse

2005 age 58 60 63 65 58 60 63 65 76.6 76.6 76.6 87.0 87.0 87.0 87.0 2010 63.7 65.2 66.4 90.1 90.1 90.1 2015 64.0 66.3 68.0 75.5 77.7 79.4 2020 59.8 62.6 64.8 71.0 73.9 76.1 2025 2030 2035 2040 2045 59.0 63.8 66.2 67.5 71.8 75.2 2050 58.3 63.0 65.5 67.1 71.3 74.5 2055 57.8 62.3 64.9 66.6 70.7 73.9 2060 57.5 62.0 64.6 66.3 70.4 73.5 contribution period: 30 years(6) 56.3 56.2 58.1 59.2 59.1 60.1 62.2 64.1 61.8 62.9 65.1 66.4 67.1 70.5 73.1 contribution period: 35 years(7) 63.3 63.8 66.0 67.3 68.0 70.2 70.5 71.2 73.5

contribution period: 40 years 58 97.4 100.9 110.9 80.7 76.4 72.3 67.9 68.3 70.8 72.0 71.7 71.4 60 97.4 100.9 111.0 82.3 78.3 74.6 70.5 71.0 73.5 74.8 74.4 74.1 63 97.4 100.9 111.3 85.1 81.7 78.6 75.0 75.6 78.3 79.6 79.1 78.7 65 97.4 100.9 111.5 87.3 84.3 81.7 78.5 79.3 82.0 83.3 82.8 82.3 (1) It has been taken that workers retire on the 1st January of the year. The fiscal legal framework is that currently in force, as emended by the 2007 budget law (Law 296/2006). (2) Historical data for the dynamics of individual wages/earnings are set equal to the growth rate of average gross wage per dependent worker (national accounts data). For the forecasting period, starting from 2010, the growth rate of nominal GDP per worker is 3.55%. For 2009, GDP, GDP per worker and inflation values have been taken from the macroeconomic scenario set out for the 2009 update of the Stability Programme. (3) Average gross wage per dependent worker based on national accounts figures. In 2005, the value is 24,452 euro. The 2009 value is estimated on the basis of the indications of the macroeconomic scenario set out for the 2009 update of the Stability Programme. (4) For the self-employed, contributions to the private pension system are entirely deductible from pre-tax income. For employees, however, the contribution rate of 6.91% refers to the severance pay (Trattamento di fine rapporto - TFR) contribution, not included in the gross wage. (5) Administrative spending has been set at 0.5 percentage points of the interest rate. The interest rate, net of administrative spending and tax, therefore comes out at 1.9%. (6) With 30 years of contributions, the minimum retirement age is 60 for female and 65 for male. (7) Retirement at the age of 60, with 35 years of contributions, is only allowed to female employees, starting from 1st January 2011 and to the female selfemployed starting from 1st July 2009 (Law 247/2007). (8) The contribution rate utilised is that foreseen for artisans in the reference year, as laid down by the 2007 budget law (law 296/2006).

53

MID LONG TERM TRENDS FOR THE PENSION, HEALTH AND LONG TERM CARE SYSTEMS ­ 2009 UPDATED

E.1.1.1 - Gross replacement rates of the public pension system under the EPC-WGA baseline scenario(1): base case

Nominal GDP growth Inflation rate Career growth Final income

E.1.1.1.a - Private employee - Without dependent spouse

2005 age 58 60 63 65 58 60 63 65 58 60 63 65 59.6 59.6 59.6 69.5 69.5 69.5 69.5 79.3 79.3 79.3 79.3 2010 55.4 57.6 59.4 70.2 70.2 70.2 80.2 80.2 80.2 80.2 2015 50.6 53.3 55.5 60.3 63.0 65.2 78.4 78.4 78.4 78.4 2020 47.7 51.0 53.6 57.4 60.7 63.3 65.2 67.1 70.4 73.0 2025 2030 2035 2040 2045 42.1 45.8 48.6 48.9 53.0 56.3 52.7 55.4 60.2 63.9 2050 41.5 45.0 47.8 48.3 52.4 55.6 52.3 54.9 59.5 63.1 2055 41.0 44.3 47.0 47.7 51.6 54.7 51.8 54.3 58.8 62.3 2060 40.7 44.0 46.6 47.4 51.2 54.3 51.4 54.0 58.4 61.9 contribution period: 30 years(4) 44.7 43.4 42.7 42.3 48.5 47.2 46.4 45.9 51.5 50.3 49.3 48.8 54.2 58.1 61.1 61.7 63.9 67.7 70.8 contribution period: 35 years(5) 51.4 49.7 48.9 55.9 54.1 53.2 59.3 57.5 56.5 contribution period: 40 years 58.4 54.8 60.9 57.6 65.3 62.5 68.8 66.3 53.1 55.8 60.7 64.4

3.48% from 2010 (2) 2.00% from 2010 (2) GDP per worker from 2010 (2) 100% of reference wage (3)

E.1.1.1.b - Self-employed(6) - Without dependent spouse

2005 age 58 60 63 65 58 60 63 65 58.9 58.9 58.9 68.5 68.5 68.5 68.5 2010 45.4 46.8 47.9 69.4 69.4 69.4 2015 38.7 40.4 41.7 48.2 49.8 51.1 2020 33.3 35.3 36.9 42.5 44.5 46.1 2025 2030 2035 2040 2045 25.6 27.8 29.5 29.7 32.2 34.2 2050 25.2 27.3 29.0 29.3 31.8 33.7 2055 24.9 26.9 28.5 28.9 31.3 33.2 2060 24.7 26.7 28.3 28.7 31.1 32.9 contribution period: 30 years(4) 27.8 26.3 25.9 25.7 30.2 28.7 28.2 27.9 32.0 30.5 29.9 29.6 37.2 39.5 41.3 contribution period: 35 years(5) 31.9 30.2 29.7 34.6 32.8 32.3 36.7 34.9 34.3

contribution period: 40 years 58 78.2 79.1 77.6 50.7 45.1 39.6 34.0 32.2 32.0 31.7 31.4 31.2 60 78.2 79.1 77.6 51.8 46.4 41.2 35.7 33.9 33.6 33.3 33.0 32.8 63 78.2 79.1 77.6 53.8 48.8 43.9 38.6 36.8 36.5 36.1 35.7 35.5 65 78.2 79.1 77.6 55.4 50.6 46.0 41.0 39.1 38.8 38.3 37.8 37.6 (1) It has been taken that workers retire on the 1 st January of the year. (2) Historical data for the dynamics of individual wages/earnings are set equal to the growth rate of average gross wage per dependent worker (national accounts data). For the forecasting period, starting from 2010, the growth rate of nominal GDP per worker is 3.59%. For 2009, GDP, GDP per worker and inflation values have been taken from the macroeconomic scenario set out for the 2009 update of the Stability Programme. (3) Average gross wage per dependent worker based on national accounts figures. In 2005, the value is 24,452 euro. The 2009 value is estimated on the basis of the indications of the macroeconomic scenario set out for the 2009 update of the Stability Programme. (4) With 30 years of contributions, the minimum retirement age is 60 for female and 65 for male. (5) Retirement at the age of 60, with 35 years of contributions, is only allowed to female employees, starting from 1st January 2011 and to the female selfemployed starting from 1st July 2009 (Law 247/2007). (6) The contribution rate utilised is that foreseen for artisans in the reference year, as laid down by the 2007 budget law (law 296/2006).

54

MID LONG TERM TRENDS FOR THE PENSION, HEALTH AND LONG TERM CARE SYSTEMS ­ 2009 UPDATED

E.1.1.2 - Gross replacement rates of the public pension system under the EPC-WGA baseline scenario(1): base case with career growth reduced by 0.5%

Nominal GDP growth Inflation rate Career growth Final income

E.1.1.2.a - Private employee - Without dependent spouse

2005 age 58 60 63 65 58 60 63 65 58 60 63 65 59.6 59.6 59.6 69.5 69.5 69.5 69.5 79.3 79.3 79.3 79.3 2010 55.4 57.6 59.4 70.2 70.2 70.2 80.2 80.2 80.2 80.2 2015 51.4 54.1 56.3 61.2 63.9 66.1 79.4 79.4 79.4 79.4 2020 49.2 52.7 55.4 59.0 62.4 65.1 66.9 68.8 72.2 74.9 2025 47.0 51.0 54.2 56.8 60.8 64.0 64.3 66.5 70.6 73.8 2030 2035 2040

(4)

3.48% from 2010 (2) 2.00% from 2010 (2) GDP per worker -0.5% from 2010 (2) 100% of reference wage (3)

2045 45.2 49.1 52.1 53.1 57.6 61.2 57.9 60.8 66.0 70.1

2050 44.6 48.3 51.2 52.5 56.9 60.4 57.5 60.4 65.4 69.4

2055 44.0 47.6 50.4 51.8 56.1 59.4 56.9 59.8 64.7 68.6

2060 43.7 47.3 50.1 51.4 55.7 59.0 56.6 59.4 64.2 68.0

contribution period: 30 years 46.1 45.6 45.4 50.2 49.6 49.3 53.4 52.8 52.3 contribution period: 35 years(5) 54.9 53.6 53.0 59.6 58.3 57.6 63.3 61.9 61.2 contribution period: 40 years 62.0 59.3 64.7 62.4 69.4 67.7 73.1 71.8 58.0 61.0 66.2 70.3

E.1.1.2.b - Self-employed(6) - Without dependent spouse

2005 age 58 60 63 65 58 60 63 65 58.9 58.9 58.9 68.5 68.5 68.5 68.5 2010 45.4 46.8 47.9 69.4 69.4 69.4 2015 39.4 41.0 42.4 48.9 50.6 52.0 2020 34.4 36.4 38.1 43.8 45.9 47.6 2025 2030 2035 2040 2045 27.5 29.8 31.6 32.2 35.0 37.1 2050 27.1 29.3 31.1 31.9 34.6 36.7 2055 26.7 28.9 30.6 31.4 34.0 36.1 2060 26.5 28.7 30.4 31.2 33.8 35.8 contribution period: 30 years(4) 29.3 28.0 27.7 27.5 31.7 30.5 30.1 29.9 33.6 32.4 32.0 31.8 38.9 41.4 43.3 contribution period: 35 years(5) 34.1 32.5 32.2 36.9 35.3 35.0 39.2 37.6 37.1

contribution period: 40 years 58 78.2 79.1 78.8 52.2 47.0 42.1 36.8 35.2 35.1 34.9 34.6 34.4 60 78.2 79.1 78.8 53.3 48.4 43.7 38.6 37.0 36.9 36.7 36.3 36.0 63 78.2 79.1 78.8 55.4 50.9 46.6 41.8 40.2 40.1 39.7 39.3 39.0 65 78.2 79.1 78.8 57.1 52.8 48.8 44.3 42.7 42.5 42.1 41.6 41.3 (1) It has been taken that workers retire on the 1 st January of the year. (2) Historical data for the dynamics of individual wages/earnings are set equal to the growth rate of average gross wage per dependent worker (national accounts data). For the forecasting period, starting from 2010, the growth rate of nominal GDP per worker is 3.59%. For 2009, GDP, GDP per worker and inflation values have been taken from the macroeconomic scenario set out for the 2009 update of the Stability Programme. (3) Average gross wage per dependent worker based on national accounts figures. In 2005, the value is 24,452 euro. The 2009 value is estimated on the basis of the indications of the macroeconomic scenario set out for the 2009 update of the Stability Programme. (4) With 30 years of contributions, the minimum retirement age is 60 for female and 65 for male. (5) Retirement at the age of 60, with 35 years of contributions, is only allowed to female employees, starting from 1st January 2011 and to the female selfemployed starting from 1st July 2009 (Law 247/2007). (6) The contribution rate utilised is that foreseen for artisans in the reference year, as laid down by the 2007 budget law (law 296/2006).

55

MID LONG TERM TRENDS FOR THE PENSION, HEALTH AND LONG TERM CARE SYSTEMS ­ 2009 UPDATED

E.1.1.3 - Gross replacement rates of the public pension system under the EPC-WGA baseline (1) scenario : base case with career growth increased by 0.5%

Nominal GDP growth Inflation rate Career growth Final income

E.1.1.3.a - Private employee - Without dependent spouse

2005 age 58 60 63 65 58 60 63 65 58 60 63 65 59.6 59.6 59.6 69.5 69.5 69.5 69.5 79.3 79.3 79.3 79.3 2010 55.4 57.6 59.4 70.2 70.2 70.2 80.2 80.2 80.2 80.2 2015 49.9 52.6 54.7 59.5 62.2 64.3 77.4 77.4 77.4 77.4 2020 46.2 49.4 51.9 55.8 59.0 61.5 63.6 65.4 68.6 71.1 2025 2030 2035 2040 2045 39.4 42.7 45.3 45.1 49.0 52.0 48.2 50.7 55.0 58.4 2050 38.8 42.0 44.6 44.6 48.3 51.3 47.7 50.1 54.3 57.6 2055 38.2 41.4 43.9 44.0 47.6 50.5 47.2 49.6 53.7 56.9 2060 38.0 41.1 43.5 43.7 47.3 50.1 46.9 49.2 53.3 56.4 contribution period: 30 years(4) 42.5 40.8 39.9 39.5 46.2 44.5 43.4 42.9 49.0 47.3 46.2 45.6 51.8 55.5 58.3 59.3 61.4 65.0 67.9 contribution period: 35 years(5) 48.3 46.2 45.3 52.4 50.3 49.2 55.7 53.4 52.2 contribution period: 40 years 55.1 50.8 57.4 53.3 61.6 57.9 64.8 61.4 48.8 51.3 55.7 59.2

3.47% from 2010 (2) 2.00% from 2010 (2) GDP per worker +0.5% from 2010 (2) 100% of reference wage (3)

E.1.1.3.b - Self-employed(6) - Without dependent spouse

2005 age 58 60 63 65 58 60 63 65 58.9 58.9 58.9 68.5 68.5 68.5 68.5 2010 45.4 46.8 47.9 69.4 69.4 69.4 2015 38.1 39.8 41.0 47.4 49.1 50.3 2020 32.2 34.2 35.7 41.3 43.2 44.8 2025 2030 2035 2040 2045 23.9 25.9 27.5 27.4 29.7 31.6 2050 23.5 25.5 27.1 27.1 29.4 31.1 2055 23.2 25.1 26.6 26.7 28.9 30.6 2060 23.1 25.0 26.4 26.5 28.7 30.4 contribution period: 30 years(4) 26.5 24.8 24.2 24.0 28.7 27.0 26.4 26.0 30.4 28.7 28.0 27.7 contribution period: 35 years(5) 35.5 30.0 28.0 27.5 37.7 32.5 30.5 29.9 39.5 34.4 32.4 31.7

contribution period: 40 years 58 78.2 79.1 76.4 49.3 43.3 37.4 31.4 29.6 29.3 29.0 28.7 28.5 60 78.2 79.1 76.4 50.4 44.6 38.8 33.0 31.1 30.8 30.4 30.1 29.9 63 78.2 79.1 76.4 52.3 46.8 41.4 35.8 33.8 33.4 33.0 32.6 32.3 65 78.2 79.1 76.4 53.9 48.5 43.3 37.9 35.9 35.5 35.0 34.5 34.3 (1) It has been taken that workers retire on the 1 st January of the year. (2) Historical data for the dynamics of individual wages/earnings are set equal to the growth rate of average gross wage per dependent worker (national accounts data). For the forecasting period, starting from 2010, the growth rate of nominal GDP per worker is 3.59%. For 2009, GDP, GDP per worker and inflation values have been taken from the macroeconomic scenario set out for the 2009 update of the Stability Programme. (3) Average gross wage per dependent worker based on national accounts figures. In 2005, the value is 24,452 euro. The 2009 value is estimated on the basis of the indications of the macroeconomic scenario set out for the 2009 update of the Stability Programme. (4) With 30 years of contributions, the minimum retirement age is 60 for female and 65 for male. (5) Retirement at the age of 60, with 35 years of contributions, is only allowed to female employees, starting from 1st January 2011 and to the female selfemployed starting from 1st July 2009 (Law 247/2007). (6) The contribution rate utilised is that foreseen for artisans in the reference year, as laid down by the 2007 budget law (law 296/2006).

56

MID LONG TERM TRENDS FOR THE PENSION, HEALTH AND LONG TERM CARE SYSTEMS ­ 2009 UPDATED

E.1.2.1 - Net replacement rates of the public pension system under the EPC-WGA baseline (1) scenario : base case

Nominal GDP growth Inflation rate Career growth Final income

E.1.2.1.a - Private employee - Without dependent spouse

2005 age 58 60 63 65 58 60 63 65 58 60 63 65 69.1 69.1 69.1 78.7 78.7 78.7 78.7 88.2 88.2 88.2 88.2 2010 65.4 67.5 69.2 79.6 79.6 79.6 89.2 89.2 89.2 89.2 2015 60.8 63.4 65.5 70.2 72.8 74.9 87.6 87.6 87.6 87.6 2020 57.9 61.2 63.7 67.3 70.5 73.0 74.9 76.7 79.9 82.4 2025 2030 2035 2040 2045 52.5 56.0 58.8 59.1 63.1 66.3 62.9 65.5 70.0 73.6 2050 51.9 55.3 58.0 58.5 62.5 65.6 62.4 65.0 69.4 72.9 2055 51.4 54.7 57.2 57.9 61.7 64.7 61.9 64.4 68.7 72.1 2060 51.1 54.3 56.9 57.6 61.4 64.3 61.6 64.1 68.3 71.7 contribution period: 30 years(4) 55.0 53.7 53.0 52.6 58.7 57.5 56.7 56.2 61.7 60.4 59.5 59.0 64.3 68.0 70.9 71.5 73.6 77.3 80.2 contribution period: 35 years(5) 61.6 59.9 59.1 65.9 64.1 63.3 69.2 67.4 66.5 contribution period: 40 years 68.3 64.9 70.7 67.6 75.0 72.3 78.3 76.0 63.2 65.9 70.5 74.1

3.48% from 2010 (2) 2.00% from 2010 (2) GDP per worker from 2010 (2) 100% of reference wage (3)

E.1.2.1.b - Self-employed(6) - Without dependent spouse

2005 age 58 60 63 65 58 60 63 65 76.6 76.6 76.6 87.0 87.0 87.0 87.0 2010 63.7 65.2 66.4 90.1 90.1 90.1 2015 56.3 58.1 59.6 66.8 68.6 70.1 2020 50.2 52.4 54.2 60.5 62.7 64.5 2025 2030 2035 2040 2045 41.2 44.0 45.9 46.1 49.0 51.2 2050 40.6 44.0 45.4 45.8 48.5 50.7 2055 40.0 43.3 44.9 45.3 48.0 50.1 2060 39.8 43.0 44.6 45.1 47.7 49.8 contribution period: 30 years(4) 44.1 42.3 41.7 41.3 46.7 45.0 44.5 44.1 48.7 47.1 46.4 46.1 54.5 57.1 59.2 contribution period: 35 years(5) 48.7 46.7 46.2 51.7 49.6 49.0 54.0 52.0 51.3

contribution period: 40 years 58 97.4 100.9 99.3 69.6 63.4 57.3 50.9 49.0 48.8 48.4 48.1 47.9 60 97.4 100.9 99.3 70.9 64.8 59.0 52.8 50.8 50.6 50.2 49.8 49.6 63 97.4 100.9 99.3 73.1 67.5 62.0 56.1 54.1 53.8 53.4 52.9 52.6 65 97.4 100.9 99.3 74.9 69.5 64.3 58.7 56.7 56.3 55.8 55.3 54.9 (1) It has been taken that workers retire on the 1st January of the year. The fiscal legal framework is that currently in force, as emended by the 2007 budget law (Law 296/2006). (2) Historical data for the dynamics of individual wages/earnings are set equal to the growth rate of average gross wage per dependent worker (national accounts data). For the forecasting period, starting from 2010, the growth rate of nominal GDP per worker is 3.59%. For 2009, GDP, GDP per worker and inflation values have been taken from the macroeconomic scenario set out for the 2009 update of the Stability Programme. (3) Average gross wage per dependent worker based on national accounts figures. In 2005, the value is 24,452 euro. The 2009 value is estimated on the basis of the indications of the macroeconomic scenario set out for the 2009 update of the Stability Programme. (4) With 30 years of contributions, the minimum retirement age is 60 for female and 65 for male. (5) Retirement at the age of 60, with 35 years of contributions, is only allowed to female employees, starting from 1st January 2011 and to the female selfemployed starting from 1st July 2009 (Law 247/2007). (6) The contribution rate utilised is that foreseen for artisans in the reference year, as laid down by the 2007 budget law (law 296/2006).

57

MID LONG TERM TRENDS FOR THE PENSION, HEALTH AND LONG TERM CARE SYSTEMS ­ 2009 UPDATED

E.1.2.2 - Net replacement rates of the public pension system under the EPC-WGA baseline (1) scenario : base case with career growth reduced by 0.5%

Nominal GDP growth Inflation rate Career growth Final income

E.1.2.2.a - Private employee - Without dependent spouse

2005 age 58 60 63 65 58 60 63 65 58 60 63 65 69.1 69.1 69.1 78.7 78.7 78.7 78.7 88.2 88.2 88.2 88.2 2010 66.0 68.1 69.8 80.2 80.2 80.2 89.6 89.6 89.6 89.6 2015 62.2 64.9 67.0 71.7 74.3 76.4 88.9 88.9 88.9 88.9 2020 60.2 63.4 66.0 69.6 72.9 75.4 77.1 79.0 82.2 84.7 2025 2030 2035 2040 2045 56.3 60.0 62.9 63.9 68.3 71.6 68.6 71.4 76.3 80.2 2050 55.7 59.3 62.1 63.4 67.6 70.9 68.2 71.0 75.8 79.6 2055 55.1 58.6 61.3 62.7 66.8 70.0 67.7 70.4 75.1 78.7 2060 54.8 58.3 60.9 62.4 66.4 69.6 67.4 70.0 74.6 78.3 contribution period: 30 years(4) 58.0 57.2 56.7 56.5 61.9 61.1 60.6 60.2 64.9 64.2 63.6 63.1 67.5 71.3 74.4 74.7 76.8 80.7 83.6 contribution period: 35 years(5) 65.7 64.4 63.9 70.2 68.9 68.3 73.7 72.4 71.7 contribution period: 40 years 72.5 70.0 75.1 72.9 79.5 77.9 83.0 81.8 68.7 71.5 76.5 80.4

3.48% from 2010 (2) 2.00% from 2010 (2) GDP per worker -0.5% from 2010 (2) 100% of reference wage (3)

E.1.2.2.b - Self-employed(6) - Without dependent spouse

2005 age 58 60 63 65 58 60 63 65 76.6 76.6 76.6 87.0 87.0 87.0 87.0 2010 64.7 66.1 67.3 90.9 90.9 90.9 2015 58.1 59.9 61.4 68.7 70.6 72.0 2020 52.6 54.9 56.6 63.1 65.4 67.2 2025 2030 2035 2040 2045 43.4 47.2 50.1 50.8 53.5 55.8 2050 42.8 46.4 49.2 50.3 53.0 55.3 2055 42.2 45.7 48.4 49.6 52.4 54.6 2060 41.9 45.4 48.1 49.3 52.2 54.4 contribution period: 30 years(4) 46.3 44.2 43.8 43.6 50.2 48.2 47.7 47.3 51.8 50.4 50.7 50.3 57.8 60.5 62.6 contribution period: 35 years(5) 52.5 51.3 50.8 55.6 53.9 53.4 58.1 56.3 55.8

contribution period: 40 years 58 97.4 101.5 101.2 72.4 66.8 61.4 55.6 53.9 53.8 53.6 53.2 53.0 60 97.4 101.5 101.2 73.7 68.3 63.2 57.6 55.9 55.8 55.5 55.1 54.8 63 97.4 101.5 101.2 75.9 71.0 66.3 61.1 59.3 59.2 58.8 58.4 58.1 65 97.4 101.5 101.2 77.7 73.1 68.8 63.9 62.1 61.9 61.5 60.9 60.6 (1) It has been taken that workers retire on the 1st January of the year. The fiscal legal framework is that currently in force, as emended by the 2007 budget law (Law 296/2006). (2) Historical data for the dynamics of individual wages/earnings are set equal to the growth rate of average gross wage per dependent worker (national accounts data). For the forecasting period, starting from 2010, the growth rate of nominal GDP per worker is 3.59%. For 2009, GDP, GDP per worker and inflation values have been taken from the macroeconomic scenario set out for the 2009 update of the Stability Programme. (3) Average gross wage per dependent worker based on national accounts figures. In 2005, the value is 24,452 euro. The 2009 value is estimated on the basis of the indications of the macroeconomic scenario set out for the 2009 update of the Stability Programme. (4) With 30 years of contributions, the minimum retirement age is 60 for female and 65 for male. (5) Retirement at the age of 60, with 35 years of contributions, is only allowed to female employees, starting from 1st January 2011 and to the female selfemployed starting from 1st July 2009 (Law 247/2007). (6) The contribution rate utilised is that foreseen for artisans in the reference year, as laid down by the 2007 budget law (law 296/2006).

58

MID LONG TERM TRENDS FOR THE PENSION, HEALTH AND LONG TERM CARE SYSTEMS ­ 2009 UPDATED

E.1.2.3 - Net replacement rates of the public pension system under the EPC-WGA baseline (1) scenario : base case with career growth increased by 0.5%

Nominal GDP growth Inflation rate Career growth Final income

E.1.2.3.a - Private employee - Without dependent spouse

2005 age 58 60 63 65 58 60 63 65 58 60 63 65 69.1 69.1 69.1 78.7 78.7 78.7 78.7 88.2 88.2 88.2 88.2 2010 65.1 67.4 69.1 80.0 80.0 80.0 90.2 90.2 90.2 90.2 2015 59.8 62.4 64.5 69.4 72.1 74.2 87.5 87.5 87.5 87.5 2020 56.2 59.3 61.8 65.8 69.0 71.4 73.7 75.5 78.7 81.2 2025 2030 2035 2040 2045 49.3 52.7 55.3 55.1 59.0 62.0 58.4 60.8 65.1 68.5 2050 48.7 52.0 54.5 54.6 58.4 61.3 57.8 60.2 64.4 67.7 2055 48.2 51.4 53.8 54.0 57.7 60.5 57.4 59.7 63.8 67.0 2060 48.0 51.1 53.5 53.7 57.3 60.1 57.1 59.4 63.4 66.5 contribution period: 30 years(4) 52.4 50.8 49.9 49.4 56.1 54.4 53.4 52.8 59.0 57.3 56.1 55.5 61.8 65.4 68.3 69.4 71.5 75.1 78.0 contribution period: 35 years(5) 58.3 56.3 55.3 62.4 60.3 59.2 65.6 63.4 62.2 contribution period: 40 years 65.2 60.9 67.5 63.4 71.7 68.0 74.9 71.5 58.9 61.4 65.8 69.3

3.48% from 2010 (2) 2.00% from 2010 (2) GDP per worker +0.5% from 2010 (2) 100% of reference wage (3)

E.1.2.3.b - Self-employed(6) - Without dependent spouse

2005 age 58 60 63 65 58 60 63 65 76.6 76.6 76.6 87.0 87.0 87.0 87.0 2010 62.8 64.3 65.6 89.5 89.5 89.5 2015 54.6 56.4 57.9 65.0 66.8 68.2 2020 47.9 50.1 51.8 58.0 60.2 62.0 2025 2030 2035 2040 2045 38.5 40.8 42.6 42.2 44.9 47.0 2050 38.5 40.3 42.1 41.9 44.5 46.5 2055 37.9 39.9 41.6 41.5 44.0 45.9 2060 37.7 39.7 41.3 41.3 43.7 45.7 contribution period: 30 years(4) 41.4 39.5 38.9 38.6 43.9 42.0 41.3 40.9 45.9 43.9 43.2 42.7 contribution period: 35 years(5) 51.5 45.2 43.0 42.3 54.0 48.0 45.8 45.0 56.0 50.3 48.0 47.1

contribution period: 40 years 58 97.4 100.3 97.4 66.9 60.2 53.5 46.7 44.6 44.2 43.9 43.5 43.3 60 97.4 100.3 97.4 68.2 61.6 55.1 48.5 46.3 45.9 45.5 45.1 44.9 63 97.4 100.3 97.4 70.3 64.1 58.0 51.6 49.4 48.9 48.4 48.0 47.7 65 97.4 100.3 97.4 72.1 66.1 60.2 54.0 51.7 51.2 50.7 50.2 49.9 (1) It has been taken that workers retire on the 1st January of the year. The fiscal legal framework is that currently in force, as emended by the 2007 budget law (Law 296/2006). (2) Historical data for the dynamics of individual wages/earnings are set equal to the growth rate of average gross wage per dependent worker (national accounts data). For the forecasting period, starting from 2010, the growth rate of nominal GDP per worker is 3.59%. For 2009, GDP, GDP per worker and inflation values have been taken from the macroeconomic scenario set out for the 2009 update of the Stability Programme. (3) Average gross wage per dependent worker based on national accounts figures. In 2005, the value is 24,452 euro. The 2009 value is estimated on the basis of the indications of the macroeconomic scenario set out for the 2009 update of the Stability Programme. (4) With 30 years of contributions, the minimum retirement age is 60 for female and 65 for male. (5) Retirement at the age of 60, with 35 years of contributions, is only allowed to female employees, starting from 1st January 2011 and to the female selfemployed starting from 1st July 2009 (Law 247/2007). (6) The contribution rate utilised is that foreseen for artisans in the reference year, as laid down by the 2007 budget law (law 296/2006).

59

MID LONG TERM TRENDS FOR THE PENSION, HEALTH AND LONG TERM CARE SYSTEMS ­ 2009 UPDATED

E.2.1.1 - Gross replacement rates of the public and private pension systems under the EPC-WGA (1) baseline scenario : base case

Nominal GDP growth Inflation rate Career growth Final income Contribution rate to the private pension system(4) Real return rate from the private pension system gross of administrative costs and tax(5)

E.2.1.1.a - Private employee - Without dependent spouse

2005 age 58 60 63 65 58 60 63 65 58 60 63 65 59.6 59.6 59.6 69.5 69.5 69.5 69.5 79.3 79.3 79.3 79.3 2010 55.4 57.6 59.4 70.2 70.2 70.2 80.2 80.2 80.2 80.2 2015 52.8 55.7 58.0 62.5 65.4 67.7 80.5 80.6 80.8 80.9 2020 51.4 55.1 57.9 61.1 64.7 67.6 68.8 70.8 74.4 77.3 2025 2030 2035 2040 2045 51.3 55.6 59.0 59.7 64.7 68.6 63.7 66.9 72.5 77.0 2050 50.6 54.8 58.1 59.0 63.9 67.7 64.1 67.3 72.8 77.2 2055 50.0 54.0 57.2 58.3 63.0 66.7 63.5 66.6 72.0 76.3 2060 49.7 53.7 56.8 57.9 62.6 66.2 63.1 66.2 71.5 75.7 contribution period: 30 years(6) 49.9 50.2 51.0 51.5 54.2 54.6 55.4 55.9 57.6 58.1 58.9 59.3 contribution period: 35 years(7) 59.5 58.3 58.1 58.9 63.8 63.2 63.1 63.9 67.1 67.1 67.0 67.8 66.7 69.2 73.4 76.8 contribution period: 40 years 64.9 62.8 67.7 66.0 72.7 71.5 76.6 75.9 62.6 65.8 71.4 75.7

3.48% from 2010 (2) 2.00% from 2010 (2) GDP per worker from 2010 (2) 100% of reference wage (3) 6.91% 3.00%

E.2.1.1.b - Self-employed(8) - Without dependent spouse

2005 age 58 60 63 65 58 60 63 65 58.9 58.9 58.9 68.5 68.5 68.5 68.5 2010 45.4 46.8 47.9 69.4 69.4 69.4 2015 40.9 42.8 44.2 50.4 52.2 53.7 2020 37.0 39.3 41.1 46.3 48.6 50.4 2025 33.1 35.9 38.1 42.4 45.2 47.4 2030 2035 2040

(6)

2045 34.8 37.7 39.9 40.5 43.8 46.5

2050 34.3 37.1 39.3 40.1 43.3 45.9

2055 33.9 36.6 38.8 39.6 42.8 45.3

2060 33.7 36.4 38.5 39.3 42.5 44.9

contribution period: 30 years 33.1 34.3 34.9 36.0 37.2 37.9 38.3 39.5 40.2 contribution period: 35 years(7) 38.8 38.5 39.6 42.0 41.8 43.0 44.5 44.4 45.6

contribution period: 40 years 58 78.2 79.1 79.6 54.2 50.1 46.2 42.0 41.7 43.0 43.6 43.2 42.9 60 78.2 79.1 79.8 55.6 51.7 48.0 44.0 43.8 45.1 45.7 45.3 45.0 63 78.2 79.1 79.9 57.9 54.5 51.2 47.7 47.5 48.9 49.4 48.9 48.6 65 78.2 79.1 80.1 59.7 56.7 53.8 50.5 50.4 51.8 52.4 51.8 51.4 (1) It has been taken that workers retire on the 1 st January of the year. (2) Historical data for the dynamics of individual wages/earnings are set equal to the growth rate of average gross wage per dependent worker (national accounts data). For the forecasting period, starting from 2010, the growth rate of nominal GDP per worker is 3.59%. For 2009, GDP, GDP per worker and inflation values have been taken from the macroeconomic scenario set out for the 2009 update of the Stability Programme. (3) Average gross wage per dependent worker based on national accounts figures. In 2005, the value is 24,452 euro. The 2009 value is estimated on the basis of the indications of the macroeconomic scenario set out for the 2009 update of the Stability Programme. (4) For the self-employed, contributions to the private pension system are entirely deductible from pre-tax income. For employees, however, the contribution rate of 6.91% refers to the severance pay (Trattamento di fine rapporto - TFR) contribution, not included in the gross wage. (5) Administrative spending has been set at 0.5 percentage points of the interest rate. The interest rate, net of administrative spending and tax, therefore comes out at 1.9%. (6) With 30 years of contributions, the minimum retirement age is 60 for female and 65 for male. (7) Retirement at the age of 60, with 35 years of contributions, is only allowed to female employees, starting from 1st January 2011 and to the female selfemployed starting from 1st July 2009 (Law 247/2007). (8) The contribution rate utilised is that foreseen for artisans in the reference year, as laid down by the 2007 budget law (law 296/2006).

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MID LONG TERM TRENDS FOR THE PENSION, HEALTH AND LONG TERM CARE SYSTEMS ­ 2009 UPDATED

E.2.2.1 - Net replacement rates of the public and private pension systems under the EPC-WGA baseline scenario(1): base case

Nominal GDP growth Inflation rate Career growth Final income Contribution rate to the private pension system(4) Real return rate from the private pension system gross of administrative costs and tax(5)

E.2.2.1.a - Private employee - Without dependent spouse

2005 age 58 60 63 65 58 60 63 65 58 60 63 65 69.1 69.1 69.1 78.7 78.7 78.7 78.7 88.2 88.2 88.2 88.2 2010 65.4 67.5 69.2 79.6 79.6 79.6 89.2 89.2 89.2 89.2 2015 63.5 66.4 68.7 72.9 75.8 78.0 90.2 90.3 90.5 90.7 2020 62.7 66.3 69.2 72.1 75.7 78.5 79.4 81.4 85.0 87.9 2025 2030 2035 2040 2045 64.6 69.1 72.5 73.5 78.7 82.8 77.6 80.9 86.6 91.1 2050 63.9 68.2 71.6 72.9 77.9 81.9 78.3 81.6 87.3 91.8 2055 63.3 67.5 70.7 72.1 77.0 80.9 77.7 80.9 86.5 90.8 2060 62.9 67.1 70.3 71.7 76.6 80.3 77.3 80.4 85.9 90.2 contribution period: 30 years(6) 61.8 62.6 64.0 64.8 66.1 67.1 68.6 69.4 69.5 70.6 72.1 72.9 contribution period: 35 years(7) 71.1 70.6 71.0 72.4 75.4 75.6 76.1 77.5 78.8 79.6 80.2 81.6 78.1 80.5 84.8 88.1 contribution period: 40 years 76.9 75.5 79.8 78.7 84.7 84.3 88.7 88.7 75.8 79.1 84.8 89.2

3.48% from 2010 (2) 2.00% from 2010 (2) GDP per worker from 2010 (2) 100% of reference wage (3) 6.91% 3.00%

E.2.2.1.b - Self-employed(8) - Without dependent spouse

2005 age 58 60 63 65 58 60 63 65 76.6 76.6 76.6 87.0 87.0 87.0 87.0 2010 63.7 65.2 66.4 90.1 90.1 90.1 2015 64.3 66.6 68.4 75.8 78.0 79.8 2020 60.2 63.2 65.5 71.5 74.4 76.7 2025 56.3 59.8 62.6 67.6 71.1 73.9 2030 2035 2040

(6)

2045 59.6 63.9 66.8 67.9 72.4 75.8

2050 58.8 63.7 66.1 67.4 71.7 75.1

2055 58.1 62.8 65.4 66.8 71.0 74.3

2060 57.8 62.4 65.0 66.4 70.6 73.8

contribution period: 30 years 56.9 58.8 59.9 60.7 62.9 64.2 63.7 65.9 67.2 contribution period: 35 years(7) 63.9 64.4 66.5 68.1 68.7 70.8 71.3 72.0 74.3

contribution period: 40 years 58 97.4 100.9 110.8 81.0 76.8 72.7 68.4 68.8 71.1 72.2 71.7 71.4 60 97.4 100.9 110.9 82.7 78.8 75.1 71.0 71.5 73.9 75.0 74.5 74.1 63 97.4 100.9 111.2 85.6 82.3 79.2 75.7 76.3 78.8 80.0 79.3 78.8 65 97.4 100.9 111.5 87.9 85.1 82.5 79.4 80.1 82.7 83.9 83.1 82.5 (1) It has been taken that workers retire on the 1 st January of the year. (2) Historical data for the dynamics of individual wages/earnings are set equal to the growth rate of average gross wage per dependent worker (national accounts data). For the forecasting period, starting from 2010, the growth rate of nominal GDP per worker is 3.59%. For 2009, GDP, GDP per worker and inflation values have been taken from the macroeconomic scenario set out for the 2009 update of the Stability Programme. (3) Average gross wage per dependent worker based on national accounts figures. In 2005, the value is 24,452 euro. The 2009 value is estimated on the basis of the indications of the macroeconomic scenario set out for the 2009 update of the Stability Programme. (4) For the self-employed, contributions to the private pension system are entirely deductible from pre-tax income. For employees, however, the contribution rate of 6.91% refers to the severance pay (Trattamento di fine rapporto - TFR) contribution, not included in the gross wage. (5) Administrative spending has been set at 0.5 percentage points of the interest rate. The interest rate, net of administrative spending and tax, therefore comes out at 1.9%. (6) With 30 years of contributions, the minimum retirement age is 60 for female and 65 for male. (7) Retirement at the age of 60, with 35 years of contributions, is only allowed to female employees, starting from 1st January 2011 and to the female selfemployed starting from 1st July 2009 (Law 247/2007). (8) The contribution rate utilised is that foreseen for artisans in the reference year, as laid down by the 2007 budget law (law 296/2006).

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MID LONG TERM TRENDS FOR THE PENSION, HEALTH AND LONG TERM CARE SYSTEMS ­ 2009 UPDATED

For further information: Francesco Massicci ­ Chief General Inspector of Social Expenditure ­ [email protected] Rocco Aprile ­ Director, Office III, Gen. Inspectorate of Social Expenditure ­ [email protected]

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MID LONG TERM TRENDS FOR THE PENSION, HEALTH AND LONG TERM CARE SYSTEMS ­ 2009 UPDATED

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MID LONG TERM TRENDS FOR THE PENSION, HEALTH AND LONG TERM CARE SYSTEMS ­ 2009 UPDATED

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