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Reforming Social Security in a Transition Economy: The Case of Lithuania

Author

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  • Svend Jensen
  • Jukka Lassila

Abstract

This paper points out a number of problems associated with the existing pension system in Lithuania. Reforms are proposed, including (i) a substantial increase in the basic pension benefit rate, financed on a pay-as-you-go basis, provided universally, and regulated according to wage/price indexation; (ii) a significant cut in the tax contribution rate to the public pension system matched by a rise in the VAT; (iii) a rise in the retirement age to 65 for both men and women; and (iv) a gradual conversion to a private, funded, mandatory pension system to replace the earnings-related part of the current pension system.

Suggested Citation

  • Svend Jensen & Jukka Lassila, 2002. "Reforming Social Security in a Transition Economy: The Case of Lithuania," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 5(1), pages 17-36.
    • Handle: RePEc:taf:jpolrf:v:5:y:2002:i:1:p:17-36
    DOI: 10.1080/13841280212382
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    References listed on IDEAS

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    1. Mr. Carlo Cottarelli & Mr. Luis M. Cubeddu & Mr. M. Cangiano, 1998. "Pension Developments and Reforms in Transition Economies," IMF Working Papers 1998/151, International Monetary Fund.
    2. Prof. Dr. Robert Holzmann, 1994. "Funded and Private Pensions for Eastern European Countries in Transition?," Public Economics 9405004, University Library of Munich, Germany.
    3. Robert Palacios & Montserrat Pallarès-Miralles, 2000. "International Patterns of Pension Provision," World Bank Publications - Reports 22540, The World Bank Group.
    4. Mr. Richard Hemming, 1998. "Should Public Pensions be Funded?," IMF Working Papers 1998/035, International Monetary Fund.
    5. Georges de Menil, 2000. "A Comment on the Place of Funded Pensions in Transition Economies," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 7(4), pages 431-444, August.
    6. Hans Fehr & Laurence J. Kotlikoff & Willi Leibfritz, 1999. "Generational Accounting in General Equilibrium," NBER Chapters, in: Generational Accounting around the World, pages 43-72, National Bureau of Economic Research, Inc.
    7. repec:wbk:wbrwps:98252 is not listed on IDEAS
    8. Simon Johnson & Daniel Kaufman & Andrei Shleifer, 1997. "The Unofficial Economy in Transition," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 28(2), pages 159-240.
    9. Martin Feldstein, 1997. "Transition to a Fully Funded Pension System: Five Economic Issues," NBER Working Papers 6149, National Bureau of Economic Research, Inc.
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