Pension Reforms in Poland and Elsewhere: the View from Paris
AbstractRecently several countries, including Estonia, Latvia, Lithuania, Hungary, Poland, Romania and Slovakia, have at least partially reversed their earlier moves towards compulsory defined-contribution schemes. This paper concentrates on Poland, which just reduced contributions going to the mandatory second pillar from 7.3 to 2.3% of earnings with that amount diverted to the public pension regime (ZUS). Trying to solve the problem of public finance sustainability by radically shrinking the second tier of the pension system has obvious costs in terms of poverty among old-age pensioners. Their incomes will fall sharply relative to those of working-age population. Partially reversing pension reform will also cost Poland in terms of risk spreading and capital market development. It will also undermine the population’s trust in the system. There is no alternative for achieving public finance sustainability but to restrain current spending and/or raise taxes. The pensionable age should be raised further (probably to 70 by mid-century), even in the general scheme, to deal with the long-run demographic challenge and be equalized across the two sexes. The authorities should move to unify pension provision systems, in particular by phasing out the farmers’ regime (KRUS) and making pensions for miners and others with special regimes closer to actuarially neutral.
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Bibliographic InfoPaper provided by CASE-Center for Social and Economic Research in its series CASE Network Studies and Analyses with number 425.
Length: 32 Pages
Date of creation: Jun 2011
Date of revision:
pension system; pension reform; pension adequacy; pension funds; retirement age; replacement age; Poland;
Find related papers by JEL classification:
- G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
- H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
- J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
This paper has been announced in the following NEP Reports:
- NEP-AGE-2011-06-25 (Economics of Ageing)
- NEP-ALL-2011-06-25 (All new papers)
- NEP-TRA-2011-06-25 (Transition Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Barr, Nicholas & Diamond, Peter, 2009. "Reforming pensions: principles, analytical errors and policy directions," Open Access publications from London School of Economics and Political Science http://eprints.lse.ac.uk/, London School of Economics and Political Science.
- S. N. Smirnov, 2011. "The Pension System," Problems of Economic Transition, M.E. Sharpe, Inc., vol. 54(5), pages 20-30, September.
- Groot, Loek & Peeters, Marga, 2011. "A global view on demographic pressure and labour market participation," MPRA Paper 32057, University Library of Munich, Germany.
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