Impact of changes in multi-pillar pension systems in CEE countries on individual pension wealth
- 5 December 2016
- journal article
- research article
- Published by Cambridge University Press (CUP) in Journal of Pension Economics and Finance
- Vol. 17 (1), 110-120
- https://doi.org/10.1017/s1474747216000238
Abstract
The paper shows the impact of changes in multi-pillar pension systems in six Central and Eastern European countries for individual pension wealth. It demonstrates that the post-crisis changes in pension system reduced pension wealth of workers in Poland and increased in Lithuania and Slovakia. The change did not have significant impact on pension wealth in Estonia and Romania. The magnitude of this effect is highest in those countries where the reduction of the fully-funded pension contribution was permanent. Loss or gain in pension wealth varies with age of participants – it is higher for younger people, who will accumulate their pension wealth to a larger extent after the change. The level of the change in pension wealth depends also on the wage level – higher earners lose more relative to the average wage level. The difference in pension wealth depends also on the difference between rates of return in fully funded and pay-as-you-go (PAYG) components of the pension system. The net outcome of post-crisis pension system modifications depends both on the magnitude of fully-funded contribution reduction, but also on the design of PAYG component and the way individual pension rights are accrued. These results indicate the rise in implicit liability of pension system in Slovakia to be higher than the reduction of the explicit liability caused by the pension system change and the lower rise of implicit liability in Poland and Latvia.Keywords
This publication has 10 references indexed in Scilit:
- Pensions at a Glance 2015OECD Pensions at a Glance, 2015
- The Inverting Pyramid: Pension Systems Facing Demographic Challenges in Europe and Central AsiaPublished by World Bank ,2014
- From pension funds to piggy banks: (Perverse) consequences of the Stability and Growth Pact since the crisisInternational Social Security Review, 2014
- Averting the funding-gap crisis: East European pension reforms since 2008Global Social Policy, 2012
- The retrenchment of second‐tier pensions in Hungary and Poland: A precautionary taleInternational Social Security Review, 2012
- Pension privatization in crisis: Death or rebirth of a global policy trend?International Social Security Review, 2011
- Pension Reforms in Poland and Elsewhere: The View from ParisSSRN Electronic Journal, 2011
- Why Has the Crisis Been Bad for Private Pensions, But Good for the Flat Tax? The Sustainability of ‘Neoliberal’ Reforms in the New EU Member StatesSSRN Electronic Journal, 2011
- Adequacy of Pension Systems in Europe: An Analysis Based on Comprehensive Replacement RatesSSRN Electronic Journal, 2009
- The sustainability of pension reforms in central, eastern and south-eastern EuropeSEER, 2008