Pension system reform in Central and Eastern Europe

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.

Social Risks as the Source of Threats and Concerns: The Survey in the Czech Republic

“…In the Czech Republic, this situation has long been criticized, and the conditions for obtaining and maintaining a trade are very complicated [34]. Pensioners and disabled pensioners feel at risk of losing their housing due to lack of funds or other reasons (e.g., landlord's termination of tenancy), which is related to the unfinished reform of the pension system [35,36]. Unemployment and loss of housing due to the lack of funds is also a strongly accentuated threat for the unemployed group due to the lack of jobs in many areas [37].…”

Pension reform in the Czech Republic after 2010

“…it should not create any new pension deficits-whether explicit or implicit (Loužek 2008). This is why the parameters of the pay-as-you-go system should be gradually adjusted.…”