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Volume 54, Issue 9 -10


Pension Reform in Slovakia: Fiscal Debt and Pension Levels

Melicherčík, Igor; Ungvarský, Cyril

Year: 2004   Volume: 54   Issue: 9 -10   Pages: 391-404

Abstract: IThis paper considers two aspects of a recent pension reform in Slovakia: the financial balance of the former pay-as-you-go system, and the level of retirement pensions in a newly introduced two-pillar system. Generally, there are three important steps to sustainable pension reform: a change of pension indexation, a raised retirement age, and the launch of a fully funded (second) pillar. With regard to fiscal debt, the two-pillar system is superior to the pay-as-you-go system in the long term. Having considered the risk of returns on savings in the funded pillar, the authors show that while pensions under the two-pillar system should be higher than under a one-pillar system, it is not a certainty.

JEL classification: C15, E27, G11, G23

Keywords: pension reform; Slovakia; fiscal debt; pension level; asset returns; risk


RePEc: n/a

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