Research Into Business Cycles Of Pension Dynamics

The long-term trend of the demographic aging of population and the non-linear character of the economic processes make it necessary to permanently correct the pension policy both in the long-term perspective, and in the context of changing economic conditions. The parameters of the cyclical dynamics of the functioning of the PAYG pension system have been analyzed. The cyclical indicators of fluctuations of the Pension Fund of Ukraine (PFU) deficit have been identified. The research is based on the following hypotheses: the dynamics of the pension system can be modeled and somehow predicted: the knowledge of the general laws and modern features of the dynamics of operation of the pension system and the factors that determine the dynamics, gives grounds for modeling and scientific forecasting of the general probable tendencies of its long-term development; the pension system as a subsystem of the social and economic system of the country is subject to the general laws of its development, in particular, the nonlinear (cyclical) nature of the economic processes determines the nonlinear dynamics of the processes of pension provision. The analysis is focused on the time series of indicators of three types: performance indicators (average pension, replacement rate) and financial sustainability (PFU deficit/surplus) of the PAYG pension system; macroeconomic indicators (GDP growth, compensation of employees, employment). To highlight the long-term trend and the cyclical component, Hodrick – Prescott filter was used in the matrix form. The estimation of volatility, persistence, synchronicity of time series changes has been made. The features of the cyclical fluctuations of the financial sustainability and performance of the PAYG pension system have been identified: the cycles of the average pension and the PFU deficit correspond the business cycles of J. Kitchin; pension indicators show high volatility, which logically increases during the global crisis; in relation to the business cycle, the average pension is a countercyclical indicator, the PFU deficit and replacement rate are acyclic indicators; the average pension is a leading indicator of the PFU deficit. The developed software makes it possible to carry out further research on the nonlinear dynamics of the pension provision, including the non-state one.