Hostname: page-component-586b7cd67f-t8hqh Total loading time: 0 Render date: 2024-11-26T10:15:21.912Z Has data issue: false hasContentIssue false

Pension systems in south-eastern Europe: what worked and what did not

Published online by Cambridge University Press:  28 April 2022

Bernard H. Casey*
Affiliation:
SOCial EECONomic RESearch, London and Frankfurt, a. M.
*
CONTACT Bernard H. Casey Email: [email protected]

Abstract

Many south-east European states made the transition from socialist to market economies. All described here had to reform their pension systems to match the new context in which these operated. The experiences of 10 countries are reviewed – seven of which were once part of Yugoslavia. Some countries’ reforms were more radical than others. Five of them merely adapted the Bismarckian systems they had inherited; four others adopted the “three pillar” model that the World Bank had been propagating. One went further than that. The four who followed World Bank model were often forced to backtrack. Whatever the longer-term benefits, they generated their own shorter-term fiscal problems. Nonetheless, the most radical reformer gives some indications of possible ways forward. The south-eastern European states do not have financial markets that can support capitalised/funded pension systems. Nor do they have the resources to pay proportional pensions that, at the same time, keep retired people out of poverty. The article suggests that their governments should concentrate upon improving economic performance to satisfy longer term aspirations and on ensuring that pensioners are able to live properly if not luxuriously by using tax-financed transfer measures. Provision above this level can be secured through savings plans, but it must be accepted that the investments to secure those savings will have to be made abroad.

Type
Research Article
Copyright
© The Author(s), 2022. Published by Cambridge University Press in association with Social Policy Association

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Adascalitei, D. (2015). From austerity to austerity: The political economy of public pension reforms in Romania and Bulgaria. Social Policy and Administration, 51(3), 464487.CrossRefGoogle Scholar
Altiparmakov, N., & Nedeljković, M. (2021). 25 years of averting the old age crisis in Eastern Europe. Global Social Policy.Google Scholar
Barr, N., & Diamond, P. (2009). Pension reform: A short guide. Oxford: Oxford University Press.CrossRefGoogle Scholar
Bernstein, S., & Micco, A. (2002). Turnover and regulation: The Chilean pension fund industry. Santiago: Banco Central de Chile. (Working paper no. 180).Google Scholar
Better Finance. (2020). Pension savings: The real return (2020 edition). Brussels: The European Federation of Investors and Financial Services Users.Google Scholar
Bezovan, G. (2018). Croatia: Will the reform of the pension system contribute to improving the adequacy and sustainability of pensions? (ESPN Flash Report 2018/69). Brussels: European Social Policy Network.Google Scholar
Bornarova, S. (2011). Development of the social protection system in post-communist Macedonia: Social policy-making and political processes. In Stambolieva, M., & Dehnert, S. (Eds.), Welfare states in transition: 20 years after the Yugoslav welfare model (pp. 135164). Sofia: Friedrich Ebert Foundation Office Bulgaria.Google Scholar
Casey, B. (2009). Learning across borders: Labour market and social policies. International Social Security Review, 62(4), 2748.Google Scholar
Casey, B. (2014). From pension funds to piggy banks: (perverse) Consequences of the stability and growth pact since the crisis. International Social Security Review, 67(1), 220.CrossRefGoogle Scholar
EC. (2009). The Western Balkans in Transition. Brussels: European Economy, European Commission Directorate-General for Economic and Financial Affairs (Occasional paper no. 46).Google Scholar
EC. (2010). GREEN PAPER towards adequate, sustainable and safe European pension systems. European Commission Brussels, 7.7.2010 COM(2010)365 final.Google Scholar
Feldmann, M. (2014). Coalitions and corporatism: The slovenian political economy and the crisis. Government and Opposition, 49 ( 1), 7091.CrossRefGoogle Scholar
Fultz, E., & Hirose, K. (2018). Bulgaria, Croatia, Estonia, Latvia, Macedonia, Romania, Slovakia. In Ortiz, I., Durán-Valverde, F., Urban, S., & Wodsak, V. (Eds.), Reversing pension privatizations: Rebuilding public pension systems in Eastern Europe and Latin America. Geneva: International Labour Organization.Google Scholar
Hockerts, H.-J (1981). German post-war social policies against the background of the beveridge plan. Some observations preparatory to a comparative analysis. In Mommsen, W. J. & Mock, W. (Eds.), The emergence of the welfare state in Britain and Germany 1850–1950. London: Croom Helm, on behalf of The German Historical Institute.Google Scholar
Holzmann, R., & Hinz, R. (2005). Old-age income support in the 21st century an international perspective on pension systems and reform. Washington, DC: World Bank.CrossRefGoogle Scholar
Holzmann, R., Hinz, R., & Dorfman, M. (2008). Pension systems and reform conceptual framework. Washington, DC: World Bank (SP Discussion paper no. 0824).Google Scholar
IEG. (2006). Pension reform and the development of pension systems pension reform and the development of pension systems: An evaluation of World Bank Assistance. Washington, DC: World Bank (Independent Evaluation Group).Google Scholar
Jarvis, C. (2000). The rise and fall of Albania’s pyramid schemes. Finance & Development, 37, (1), 18.Google Scholar
KDI. (2018). KDI discuss for pension fund: Kosovo requests return of pensions from Serbia. Kosovo Democratic Institute. https://kdi-kosova.org/en/activities/kdi-diskuton-per-fondin-pensional-kosova-te-kerkoje-kthimin-e-pensioneve-nga-serbia/.Google Scholar
KDI. (2020). From KDI Discussion: Serbia’s financial obligations to Kosovo are hundreds of billion. Kosovo Democratic Institute. https://kdi-kosova.org/en/activities/from-kdi-discussion-serbias-financial-obligations-to-kosovo-are-hundreds-of-billion/.Google Scholar
Krzyzak, K. (2015). Croatia cancels highways monetisation scheme in favour of IPO. Investment & Pensions Europe, March 16, 2015.Google Scholar
KSI. (2016). Don’t fix what ain’t broke (policy brief: options for Kosovo, reform of pensions systems in transition countries). Kosovar Stability Initiative. https://iksweb.org/en/dont-fix-what-aint-broke-i-policy-brief-options-for-kosovo-reform-of-pensions-systems-in-transition-countries/.Google Scholar
Luković, S. (1998). Social protection in the Federal Republic of Yugoslavia. Journal for Labour and Social Affairs in Eastern Europe, 1(4), 8192.Google Scholar
Matković, G., & Stanić, K. (2020). The Serbian pension system in transition: A silent break with Bismarck. Economic Annals, LXV(225), 105133.Google Scholar
Morys, M. (Ed.) (2021). The economic history of Central, East and South-East Europe: 1800 to the present. Abingdon: Routledge.Google Scholar
Müller, K. (1999). The political economy of pension reform in Central–Eastern Europe. Cheltenham: Edward Elgar.Google Scholar
OECD. (2005). Pension-system typology, in pensions at a glance. Paris: Organisation for Economic Cooperation and Development.Google Scholar
OECD-EBRD. (2008). Corporate governance of banks in Eurasia: A policy brief. https://www.oecd.org/daf/ca/corporategovernanceprinciples/40804232.pdf.Google Scholar
Orenstein, M. (2008). Privatizing pensions: The transnational campaign for social security reform. Princeton: Princeton University Press.Google Scholar
Pejovich, S. (1979). Social security in Yugoslavia. Washington, DC: American Enterprise Institute for Public Policy Research.Google Scholar
Petkov, B. (2020). Реформата на българската пенсионна система и скритият пенсионен дълг (The reform of the Bulgarian pension system and the hidden pension debt). Икономически и социални алтернативи, 3, 520.Google Scholar
Reuters. (2013). EBRD ready to counter market risks in Poland pension overhaul. https://www.reuters.com/article/us-poland-ebrd-idUKBRE99F0OB20131016.Google Scholar
Reuters. (2021). Romanian private pension funds say need more IPOs to support growth. https://www.reuters.com/article/us-romania-pensions-idUKKBN2ET1FU.Google Scholar
Rokkan, S. (1974). Dimension of state formation and nation building. In Tilly, C. (Ed.), The formation of national states in Western Europe. Princeton: Princeton University Press.Google Scholar
Samodol, A. (2020). Mirovinske reforme kao trajno globalno pitanje I dizajniranje mirovinskog sustava – slučaj Hrvatske (Pension reforms as an ongoing global challenge issue – the case of Croatia). Međunarodne Studije, 20(1–2), 7395.CrossRefGoogle Scholar
Scherman, K.-G (2012). The Swedish public pension under financial stress. Global Social Policy, 12(3), 336339.CrossRefGoogle Scholar
Schmähl, W. (2004). Paradigm shift in German pension policy: Measures aiming at a new public-private mix and their effects. In Rein, M., & Schmähl, W. (Eds.), Rethinking the welfare state: The political economy of pension reform (pp. 153204). Cheltenham: Edward Elgar.Google Scholar
Schwartz, A. M., Arias, O. S., Zviniene, A., Rudolph, H. P., Eckardt, S., Koettl, J., Immervoll, H., & Abels, M. (2014). The inverting pyramid: Pension systems facing demographic challenges in Europe and Central Asia. Washington, DC: World Bank.CrossRefGoogle Scholar
Soto, M., Clements, B., & Eich, F. (2011). A fiscal indicator for assessing first and second pillar pension reforms. Washington, DC: International Monetary Fund (Staff discussion none SDN/11/09).CrossRefGoogle Scholar
WB. (1994). Averting the old age crisis: Policies to protect the old and promote growth. New York: Oxford University Press.Google Scholar
WB. (2005). Transition: Paying for a shift from pay-as-you-go financing to funded pensions, World Bank Pension Reform Primer Series. Washington, DC: World Bank. https://openknowledge.worldbank.org/bitstream/handle/10986/11242/333900rev0PRPNoteTransition.pdf?sequence=1&isAllowed=y.Google Scholar
Williams, C. (2010). Beyond the formal/informal jobs divide: Evaluating the prevalence of hybrid ‘under-declared’ employment in south-eastern Europe. The International Journal of Human Resource Management, 21(14), 25292546.CrossRefGoogle Scholar