Pension Reform in Central and Eastern Europe in times of crisis, austerity and beyond
A decade after major structural reforms, pension reform has again become a burning issue in Central and Eastern Europe. Indisputably, social security systems have played an important role in mitigating the adverse impact of the global economic crisis on the population. However, social security systems – notably pension systems – in Central and Eastern Europe are under pressure of short-term financial consolidation due to budget constraints resulting from the global economic crisis. In addition, ageing populations pose a structural challenge for their long-term financial sustainability.
This paper analyzes the circumstances that led to the reforms of the pension systems in Europe and the measures adopted, with a view to extracting some lessons that may be of use for Latin American countries. With this objective, reforms undertaken in Latin America are also described, specifically in Colombia and Peru, which are two cases where the capitalization and distribution systems continue to compete simultaneously. This paper also quantifies and compares the actuarial balance of these countries, which is related to their financial sustainability in the long term.
Facing these challenges both in the short and long term, countries in Central and Eastern Europe have undertaken pension reforms. These reforms aim to make the systems sustainable in the long run while fulfilling their essential function of providing adequate income protection in case of old age, invalidity or death of the breadwinner.
The ILO has actively promoted appropriate policies and provided its member States with technical assistance in improving and expanding the coverage of social security for all men and women. Recently,the ILO has intensified its efforts to achieve universal social security coverage with at least a minimum level of protection. At its 100th Session in June 2011, the International Labour Conference affirmed the need to adopt a possible Recommendation that would provide guidance in building Social Protection Floors within comprehensive social security systems.
This volume reflects the work and findings of the research project led by Mr Kenichi Hirose, Senior Specialist in Social Security of the ILO Decent Work Technical Support Team and Country Office for Central and Eastern Europe, with support from the Social Security Department of the ILO. The project analyzes the recent pension reform experiences of eight countries: Bulgaria, Croatia, the Czech Republic, Hungary, Poland, Romania, the Slovak Republic and Slovenia.