Protection mechanisms in the old-age pension systems of the CEE countries

Abstract

Since 1990s, substantial changes in the role of the state in the social security schemes can be observed in the countries of the Central and Eastern Europe (CEE). While the general framework of social benefits in the CEE countries is still defined by the state, more and more often the task of provision of social security is transferred to the private entities. Such privatization of social policy makes the need for protection mechanism and some state guarantees even stronger. It is still the state that is responsible for the final outcome of social security systems so that is why governments are directly providing or indirectly creating safety mechanisms built-in the private market mechanism used for social purposes. The paper surveys various types of the protection mechanisms in selected CEE countries that exist in the important and already most privatized element of the social security system -the pension system. While describing the safety measures and possible guarantees, special attention is paid to the new forms that have been built up recently. The paper covers both mandatory and voluntary pension markets and identifies present and possible threats in the existing frameworks that can harm the social security. The paper concludes with general assessment and policy recommendations.JEL CODES : H55, G23

Public–Private Partnerships in European Old‐Age Pension Provision: An Accountability Perspective

“…This has been evident especially in the CEE countries (Kawiński et al . ). But if governments are willing to maintain high administrative costs, then they are in effect redistributing taxpayer money to businesses without giving citizens the possibility to opt out.…”

“…Cost-containment may also lead to establishment of insufficient public guarantees, which subjects service users to risks of underdeveloped services. This has been evident especially in the CEE countries (Kawiński et al 2012). But if governments are willing to maintain high administrative costs, then they are in effect redistributing taxpayer money to businesses without giving citizens the possibility to opt out.…”

Pension systems as risk management: a case of the Baltic states

“…Pension legislators in the Baltic states have not provided any protection to funded-pillar participants by the way of setting minimum guaranteed rates of return, unlike other Central and Eastern European (CEE) countries, where partial privatisation of public pensions took place at the turn of the 21st century. In the rest of the region, the guaranteed minimum yield was set on the basis of industry's average (as it was in Bulgaria, Croatia, Poland and Romania), or in the form of absolute return guarantees of protection of a nominal rate of return ('at least zero' in the Czech Republic, Romania and the Slovak Republic) or a real rate of return ('at least real value of accumulated assets' in Hungary) (Kawinski, Stanko and Rutecka 2012).…”