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Assessing the 2005 Czech Proposals for Pension Reform

Listed author(s):
  • Philip Hemmings
  • Edward R. Whitehouse

The Czech Republic faces one of the largest demographic challenges in the OECD area and making sure the public pension system is able to cope with rapid population ageing is important for long-term fiscal stability and social welfare. This paper assesses five proposals for pension reform made in late 2005 with a view to helping progress towards a final decision on reform. The proposals cover a wide range of options: only parametric change of the current pay-as-you-go (PAYG) system, systems combining a PAYG pension with a second-pillar (defined-contribution), a flat-rate pension and a system of notional accounts. The analysis uses OECD simulation models to compare the proposals in terms of fiscal sustainability, safety nets, early retirement incentives, diversification into private provision, simplicity and the pensions-earnings link. This Working Paper relates to the 2006 OECD Economic Survey of the Czech Republic ( Évaluation des propositions de la République tchèque de 2005 sur la réforme des retraites La République tchèque se trouvera confrontée à l'un des problèmes démographiques les plus aigus dans la zone de l'OCDE, et faire en sorte que le système public de retraite résiste à la forte augmentation des cohortes de personnes âgées est essentiel à long terme pour la stabilité budgétaire et la protection sociale. On examinera dans ce document cinq propositions de réforme des retraites formulées à la fin de 2005, le but étant de faciliter la prise de décision finale. Ces propositions couvrent un large éventail de formules : une modification uniquement paramétrique du système actuel de répartition, des solutions combinant la répartition et un deuxième pilier (à cotisations définies), une pension de retraite uniforme et un système de comptes virtuels. On s'appuiera sur les modèles de simulation de l'OCDE pour comparer ces propositions sous les aspects suivants : viabilité budgétaire, filet de sécurité, incitation à la retraite anticipée, diversification au profit d'une couverture privée, simplicité et lien entre pension de retraite et revenu d'activité. Ce Document de travail se rapporte à l'Étude économique de l'OCDE de la République tchèque 2006 (

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Paper provided by OECD Publishing in its series OECD Economics Department Working Papers with number 496.

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Date of creation: 17 Jul 2006
Handle: RePEc:oec:ecoaaa:496-en
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