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Privatization And Pension Reform In Transition Economies


  • Glenn Jenkins

    () (Queen's University, Kingston, On, Canada)


Given the beleaguered state of public social security systems in the former socialist countries of Eastern Europe, especially their massive and growing pension liabilities, some form of funded private pension scheme should be considered. Nominally high payroll taxes which cannot be collected under weak revenue systems jeopardize any publicly-funded safety net pensioners. On the other hand, if these taxes are collected, they may raise wage costs to a level which discourages the growth of the private sector. Some portion of the assets of state enterprises to be privatized should be used to partially offset state’ pension liabilities. Professionally-managed private pension plans, initially funded by newly privatized assets, could assist in the transition to market economies by contributing to the development of capital markets in these countries. Furthermore, linking the process of privatization with the creation and funding of private pension funds would create dispersed private ownership, and substantially alleviate the problem of selling or distributing hard-to-value-state assets.

Suggested Citation

  • Glenn Jenkins, 1991. "Privatization And Pension Reform In Transition Economies," Development Discussion Papers 1992-03, JDI Executive Programs.
  • Handle: RePEc:qed:dpaper:100

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    References listed on IDEAS

    1. Diwan, Ishac & Saldanha, Fernando, 1991. "Long term prospects in Eastern Europe : the role of external finance in an era of change," Policy Research Working Paper Series 695, The World Bank.
    2. G. A. Mackenzie, 1988. "Social Security Issues in Developing Countries: The Latin American Experience," IMF Staff Papers, Palgrave Macmillan, vol. 35(3), pages 496-522, September.
    3. Milanovic,Branko L., 1990. "Poverty in Poland, Hungary, and Yugoslavia in the years of crisis, 1978-87," Policy Research Working Paper Series 507, The World Bank.
    4. George Kopits, 1991. "Fiscal Reform in European Economies in Transition," IMF Working Papers 91/43, International Monetary Fund.
    5. Carroll, Chris & Summers, Lawrence H., 1987. "Why have private savings rates in the United States and Canada diverged?," Journal of Monetary Economics, Elsevier, vol. 20(2), pages 249-279, September.
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    Cited by:

    1. Prof. Dr. Robert Holzmann, 1994. "Funded and Private Pensions for Eastern European Countries in Transition?," Public Economics 9405004, EconWPA.
    2. Arrau, Patricio & Schmidt-Hebbel, Klaus, 1995. "Pensions systems and reform : country experiences and research issues," Policy Research Working Paper Series 1470, The World Bank.

    More about this item


    Pension Reform; Privatization; Transition Economies;

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions


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