The budgeting and economic consequences of ageing in the Netherlands

The Netherlands will be confronted with an almost doubling of the old-age dependency
ratio over the next forty years. The costs of the ageing population are primarily
reflected in larger expenditures on pensions and health care. This paper explores the
consequences of ageing in a baseline scenario simulated with a dynamic general
equilibrium model. The sensitivity of the results are discussed under alternative
scenarios for the interest rate and population projections. Finally, the effects of two
types of reform measures in the pay-as-you-go social security system are explored.