Aon Ranks Pension Risk in EU Countries

January 8, 2006 ( - Pension risk in some European Union countries might sway companies' decisions on where to set up shop, according to a recent analysis by Aon Consulting.

Pensions are a big labor cost and the chance that the burden of paying for old age could rise faster in one nation than another could sway businesses’ choice of where to locate, Aon Consulting chief actuary Donald Duval said, according to Reuters. “If you have a fairly finely balanced decision about whether to go to country A or B, this might be a reason to go for one country rather than another.”

Aon tracked the demographics and the affordability of company pensions in 25 European Union nations and found that Belgium ranks at the top of the list of those countries with the highest pension risk and Denmark is the least risky.

Following Belgium, the countries with the highest risk of rising pension costs were Slovenia, Greece, France, Malta, Austria, Hungary, Italy, Slovakia and Finland. Following Denmark, the countries that fared the best in Aon’s analysis in terms of risk were Estonia, Ireland, Latvia, Netherlands, the UK, Sweden, Spain, Lithuania and the Czech Republic.

Poland , Germany and Luxembourg fell in the middle.

The countries which are in the best position are those where most people between 55 and 64 are working rather than drawing a pension. Another key factor is the extent to which pensions are provided by the private sector, Aon said, according to Reuters.

The Aon research drew from countries’ reports to the European Commission, mostly issued in 2005.