(c) 2013, Bloomberg News.

(c) 2013, Bloomberg News.

HELSINKI, Finland Finland's biggest bankers group says the stable AAA-rated nation has failed to prepare for the ballooning costs generated by Europe's fastest aging population.

"No increase of tax rates or reform of services will be enough to ensure this can be paid for by public funds," Piia- Noora Kauppi, managing director of the Federation of Finnish Financial Services, said in an interview this week. "We've made no preparations, we have no national funds to tap for future costs of elderly care."

The financial lobby group says the government must now calculate and commit to how much of the burden it will share. Finland's population is aging at the fastest pace in the European Union as people born after World War II retire. Two recessions in four years have pushed up job losses and depleted government coffers, resulting in five years of consecutive budget deficits.

Though the government has estimates for its pension burden, it hasn't calculated the cost of covering its health-care obligations. The amount is at least 720 billion euros ($970 billion), a figure that dwarfs Finland's $260 billion gross domestic product, according to Kauppi.

Accurately estimating the amount requires the government to say what it will pay for and what people will have to pay for themselves, Kauppi said. The Finance Ministry estimates age- related spending will grow to about 30.2 percent of GDP by 2030 from 24.6 percent in 2008.

Such an estimate is like an "income statement," said Kauppi, who represents 418 banks and financial services firms in Finland. "We also need a balance sheet. Calculating the amount of health-care obligations would make it clearer for people that public finances alone aren't enough to tackle this challenge."

Finland's pension obligations amount to about 500 billion euros this year, of which about 155 billion euros will be covered by pension funds and 360 billion euros are financed with a pay-as-you-go system, according to the federation. Care obligations are at least double the pay-as-you-go pensions, it said.

The government in August announced a plan to close a sustainability gap of 4.7 percent of GDP by 2017 and is due to hammer out a detailed list of about 9 billion euros in measures by Nov. 29. The gap measures the difference between available funds and the amount needed to pay for future public spending.

"I strongly believe we'll pull through this demographic challenge and the pressure it has on spending," Finance Minister Jutta Urpilainen said in an interview on Nov. 21. "It's not easy and that's why we need to push on with these structural reforms."

Expectations for elderly care include medical services, providing help to get around and taxi coupons, meals and home help as well as housing for those no longer able to live at home. Municipalities are the main providers of primary health care, primary education and social services and their spending accounts for about 40 percent of all public expenditure, according to Statistics Finland.

"We're making these structural reforms now to ensure municipalities are able to manage this responsibility," Urpilainen said. "We will genuinely reduce municipal tasks in a way that benefits public finances as a whole."

Kauppi said that no government solution will be enough to deal with the magnitude of the imbalances.

"Using public funds alone would require raising taxes so much that it would become self-defeating," she said.

By 2015, three working Finns will be supporting every pensioner, down from about four in 2012, according to the EU's statistics office. That would be the fastest shift in worker-to- retiree dependency in the EU.

That means the working-age population will contract by about 100,000 by 2030, while those over the age of 64 will increase by about 500,000, the Finance Ministry forecasts. Only two Finns of working age would support one pensioner by then.

"As long as we don't know what the publicly provided services are, it's very hard to start supplementing them" with private means such as reverse mortgages and longevity insurance, Kauppi said. "It needs to be made clear what's public responsibility and what's private."