Transition and Growth in Post-Communist Countries
Show Less

Transition and Growth in Post-Communist Countries

The Ten-year Experience

Edited by Lucjan T. Orlowski

Transition and Growth in Post-Communist Countries documents the first ten years of economic transition in Central and Eastern Europe.
Buy Book in Print
Show Summary Details

Chapter 13: Restoring hope, rewarding work: pension reforms in post-communist economies

Michal Rutkowski

Extract

13. Restoring hope, rewarding work: pension reforms in post-communist economies Michal Rutkowski1 INTRODUCTION This chapter focuses on changes that are taking place in the retirement pension systems of post-communist economies. These changes are not replicas of earlier models. They entail serious and often unprecedented reforms in managing the allocation of people’s income during their lifetime. The common denominator of these reforms is the replacement of a vicious circle of low expected future pensions and declining contributions by a virtuous cycle of higher expectations and improved compliance that leads to higher savings, growth and, therefore, the actual value of future pensions. A key element of the change is an introduction of a close linkage between lifetime pension contributions and retirement benefits in a multipillar framework that comprises, inter alia, a mandatory funded pillar managed by the private sector. For current workers, pension reforms lead to an increase in the net present value (NPV) of future pensions (‘restoring hope’), and an increase in the pension levels of those who earn more and work longer (‘rewarding work’), while the minimum pension is preserved. ENTERING THE 1990s AND THE IMPACT OF TRANSITION Even though government intervention in the area of pensions in Europe has a 100-year history, the current systems were decisively shaped by changes introduced after the Second World War. The generation coming to retirement age in the next few decades had suffered during the war and was retiring in the midst of an economic and demographic boom. Many belonged to schemes that...

You are not authenticated to view the full text of this chapter or article.

Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.

Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.

Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.


Further information

or login to access all content.