Financial Performance of Mandatory Private Pension Funds in Countries of Central and Eastern Europe. A Comparative Study Between Romania and Slovakia

Abstract

Decreased birth rate and aging population represent a treat to PAYG public pension systems implemented in countries of Central and Eastern Europe, due to the fact that the financing is direct dependent of the social contributions payed by the taxpayers active on labor market. As solution, World Bank promotes the diversification of funding sources for pension systems and a multi-pillar structure that includes privately managed pension funds. The purpose of this paper is to present how the multi-pillar structure was implemented in Romania and Slovakia, focusing on the evolution and performance of mandatory private pension funds. The main conclusion of this article highlights that in the current demographic context, privately managed pension funds can be a mean of providing the necessary resources to the elderly population during retirement.

Keywords

• privately managed pension funds
• reform of pension systems
• central and eastern europe