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Pension Reforms in Poland and Elsewhere: the View from Paris

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  • Peter Jarrett

Abstract

Recently several countries, including Estonia, Latvia, Lithuania, Hungary, Poland, Romania and Slovakia, have at least partially reversed their earlier moves towards compulsory defined-contribution schemes. This paper concentrates on Poland, which just reduced contributions going to the mandatory second pillar from 7.3 to 2.3% of earnings with that amount diverted to the public pension regime (ZUS). Trying to solve the problem of public finance sustainability by radically shrinking the second tier of the pension system has obvious costs in terms of poverty among old-age pensioners. Their incomes will fall sharply relative to those of working-age population. Partially reversing pension reform will also cost Poland in terms of risk spreading and capital market development. It will also undermine the population’s trust in the system. There is no alternative for achieving public finance sustainability but to restrain current spending and/or raise taxes. The pensionable age should be raised further (probably to 70 by mid-century), even in the general scheme, to deal with the long-run demographic challenge and be equalized across the two sexes. The authorities should move to unify pension provision systems, in particular by phasing out the farmers’ regime (KRUS) and making pensions for miners and others with special regimes closer to actuarially neutral.

Suggested Citation

  • Peter Jarrett, 2011. "Pension Reforms in Poland and Elsewhere: the View from Paris," CASE Network Studies and Analyses 425, CASE-Center for Social and Economic Research.
  • Handle: RePEc:sec:cnstan:0425
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    File URL: http://www.case-research.eu/upload/publikacja_plik/34194339_CNSA_2011_425.pdf
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    References listed on IDEAS

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    1. S. Smirnov, 2011. "The Pension System," Problems of Economic Transition, Taylor & Francis Journals, vol. 54(5), pages 20-30.
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    Cited by:

    1. Krzysztof Makarski & Joanna Tyrowicz, 2015. "Political (In)Stability of Social Security Reform," Working Papers 2015-21, Faculty of Economic Sciences, University of Warsaw.
    2. Marga Peeters & Loek Groot, 2012. "A Global View On Demographic Pressure And Labour Market Participation," Journal of Global Economy, Research Centre for Social Sciences,Mumbai, India, vol. 8(2), pages 165-194, June.
    3. Bielawska, Kamila & Chłoń-Domińczak, Agnieszka & Stańko, Dariusz, 2017. "Retreat from mandatory pension funds in countries of the Eastern and Central Europe in result of financial and fiscal crisis: Causes, effects and recommendations for fiscal rules," MPRA Paper 83345, University Library of Munich, Germany.

    More about this item

    Keywords

    pension system; pension reform; pension adequacy; pension funds; retirement age; replacement age; Poland;

    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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