Comparative Notes on Pension Developments and Reforms in the Czech Republic, Hungary, Poland and Romania

Abstract

Pension systems and pension expenditures show large variations among countries worldwide. This variation appears to reflect mainly demographic factors and differences in the level of insurance protection, the latter tending to increase with the level of development. The focus of this paper is pension developments and reforms in the four transition countries: the Czech Republic, Hungary, Poland and Romania during the 1990s. Our major factual finding is that Poland and Romania are clear outliers among the FOUR in terms of key pensions statistics. The paper concludes that the greater pension expenditures in Hungary and Poland are in part inherited (especially in Poland) and in part caused by the more radical restructuring reforms, and that these greater expenditures have in turn prompted these two countries to start replacing gradually their PAYG-DB system with a three-pillar mixed system, with private pension funds constituting a large component of the reformed system.