Pension system reform in Central and Eastern Europe

Marek Louzek

Post-Communist Economies, 2008, vol. 20, issue 1, 119-131

Abstract: At present, the debate about pension reform in Central Europe is dominated by approaches which may be politically in conflict but have one thing in common: they address the pension system by means of indebtedness. The Czech Republic is too lax concerning modifications to the parameters of the PAYG system, consequently plunging the system into deep deficit. Poland, Hungary and Slovakia put forward a radical reform, which, however, would also be financed by increasing state debt. This article shows that both solutions hide serious pitfalls. Real reform should be budget-neutral, i.e. it should not generate any new budget deficits - whether explicit or implicit. Privatisation of the pension system is a reasonable aim but it should not take place at the cost of indebting future or current generations.

Date: 2008
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DOI: 10.1080/14631370701865789

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