The Hungarian pension system in transition
AbstractAfter discussing the evolution of the policy dialogue in Hungary, this report broadly describes the reform of the pay-as-you-go public pension system and its partial privatization as legislated in July 1997. Through a combination of a debt and tax financed transition, the first partial pension privatization in Central Europe is shown to generate increased national savings while placing the pension systemon a more sustainable course. The potential positive impact on savings was diminished by politically-motivated compromises. Outstanding issues include problematic features of the"second pillar"and the reemergence of pay-as-you-go deficits in the long run. This suggests that further reforms, such as raising the retirement age beyond 62, will eventually be required.
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Bibliographic InfoPaper provided by The World Bank in its series Social Protection Discussion Papers with number 20048.
Date of creation: 30 Apr 1998
Date of revision:
Pensions&Retirement Systems; Environmental Economics&Policies; Banks&Banking Reform; Public Sector Economics; Economic Theory&Research;
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- Robert Holzmann, 1996. "Pension Reform, Financial Market Development, and Economic Growth," IMF Working Papers, International Monetary Fund 96/94, International Monetary Fund.
- Robert Holzmann, 1997. "Fiscal Alternatives of Moving from Unfunded to Funded Pensions," OECD Development Centre Working Papers, OECD Publishing 126, OECD Publishing.
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