Pension Reform in Slovakia: Fiscal Debt and Pension Levels
This paper considers two aspects of a recent pension reform in Slovakia: the financial balance of the former pay-as-you-go system, and the level of retirement pensions in a newly introduced two-pillar system. Generally, there are three important steps to sustainable pension reform: a change of pension indexation, a raised retirement age, and the launch of a fully funded (second) pillar. With regard to fiscal debt, the two-pillar system is superior to the pay-as-you-go system in the long term. Having considered the risk of returns on savings in the funded pillar, the authors show that while pensions under the two-pillar system should be higher than under a one-pillar system, it is not a certainty.
Volume (Year): 54 (2004)
Issue (Month): 9-10 (September)
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