From fiscal sustainability to financial security in old age: Evidence on pension reform in Albania

Ponari Elvis and Bozdo Anilda
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Ponari Elvis: European University of Tirana, Albania
Bozdo Anilda: European University of Tirana, Albania

Academic Journal of Business, Administration, Law and Social Sciences, 2025, vol. 11, issue 3, 73-80

Abstract: This paper analyses the social and economic impact of the three-pillar reform of the pension system in Albania, assessing its contribution to fiscal sustainability and the financial well-being of older persons. The study draws on national and international data (INSTAT, World Bank, IMF, ISSH) for the period 2015–2024 and combines empirical analysis of economic indicators with a review of public policies. The results show that the 2015 reform increased contributory coverage by about 3.5%, stabilized pension spending at 8.7% of GDP and gradually reduced poverty among those aged 65+ from 23.4% to 19.6%. However, structural challenges such as informality, low replacement ratio and lack of voluntary private funds remain prominent. The study concludes that Albania has advanced towards a more sustainable and equitable system, but additional reforms are required to strengthen the second and third pillars, expand formal participation, and guarantee an adequate level of income in old age.

Keywords: pension system; three-pillar reform; Albania; old age welfare; fiscal sustainability; social policy (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:ajbals:v:11:y:2025:i:3:p:73-80:n:1007

DOI: 10.2478/ajbals-2025-0029

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