A case for partial funding of pensions with an application to the EU Candidate Countries.
Author(s): Heikki Oksanen
A case for partial funding of pensions with an application to the EU Candidate Countries.(359 kB)
The paper examines the effects of ageing and makes a case for partial pre-funding of pensions. The argument is based on inter-generational fairness in a situation where pension expenditure as compared to wages increases due to low fertility and increasing longevity. We illustrate the approach by using data representing a typical EU Candidate Country of Central and Eastern Europe with a relatively high pension replacement rate. Pre-funding can take place within the public sector or in a privatised second pillar. We emphasise the need for a consistent framework to cover the many different institutional options available for pension financing.
(European Economy. Economic Papers 149. March 2001.
Brussels. 53pp. Tab. Bibliogr. free.)