Pension Developments and Reforms in Transition Economies

IMF Working Papers, October 1, 1998

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Reviews developments in pension systems in 11 transition economies during the 1990s.
Highlights the forces behind the rapid weakening of these pension systems.
Focuses on challenges these systems face, including those arising from demographic factors.
Discusses why most transition countries are considering shifting, or have already shifted, from traditional defined-benefit pay-as-you-go systems to defined-contribution fully funded systems.
Examines the main options in introducing fully funded components, including the relative mix between funding and pay-as-you-go and the speed of the transition toward the new system.

Rapid weakening of pension systems in the 11 transition economies studied during the 1990s.
Demographic factors are identified as important challenges for pension system sustainability.
Broad movement in transition countries from defined-benefit PAYG systems toward defined-contribution fully funded systems.
Important design choices when introducing funded components:
- The relative mix between funding and pay-as-you-go.
- The speed of the transition toward the new system.

Subject: Aging, Expenditure, Labor, Pension spending, Pensions, Population and demographics, Retirement, Wages
Keywords: Aging, Baltics, Central and Eastern Europe, Central Asia, early retirement, Eastern Europe, labor force, PAYG system, Pension reforms, Pension spending, pension system, Pensions, rate of return, Retirement, retirement age, Social Protection, system dependency ratio, Transition Economies, transition economy, wage bill, Wages, Western Europe, WP

Pension Developments and Reforms in Transition Economies WP/98/151
- Pension Developments and Reforms in Transition Economies WP/98/151 (Markdown version)
- Pension Developments and Reforms in Transition Economies WP/98/151 (PDF)