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Sustainability of Pension Systems in the Baltic States

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  • Olga Rajevska

    (University of Latvia)

Abstract

Objective: The objective of the paper is to identify how the concept of sustainability is understood and ensured in the pension systems of Estonia, Latvia and Lithuania; and what implications it brings to the performance of pension schemes. Research Design & Methods: Analysis of various conceptual and methodological approaches to the notion of sustainability of pension systems. Comparative analysis of present pension legislation, as well as preceding stage of pension reforms, accompanied by a number of numerical models. Findings: The understanding of sustainability is limited by narrow ‘fiscal’ meaning in Latvia, compared to more a multifaceted concept that includes the principle of social fairness and which can be traced in the logic of Estonian and Lithuanian legislators. Implications & Recommendations: In the long-term, pure financial appreciation of sustainability is misleading, low level of credibility may cripple a financially sound but socially unfair system; the perceived unfairness of redistribution can undermine the public support to, and, therefore, sustainability of pension systems. Contribution & Value Added: The originality of this work lies in studying how differences at policy formulation stage and in the very design of pension schemes influence pension system sustainability in countries with a very similar initial conditions and socio-economic environment.

Suggested Citation

  • Olga Rajevska, 2015. "Sustainability of Pension Systems in the Baltic States," Entrepreneurial Business and Economics Review, Centre for Strategic and International Entrepreneurship at the Cracow University of Economics., vol. 3(4), pages 139-153.
    • Handle: RePEc:krk:eberjl:v:3:y:2015:i:4:p:139-153
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    References listed on IDEAS

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    1. Grech, Aaron George, 2010. "Assessing the sustainability of pension reforms in Europe," MPRA Paper 27407, University Library of Munich, Germany.
    2. Robert Holzmann, 2013. "Global pension systems and their reform: Worldwide drivers, trends and challenges," International Social Security Review, John Wiley & Sons, vol. 66(2), pages 1-29, April.
    3. Lusardi, Annamaria & Mitchell, Olivia S., 2011. "Financial literacy around the world: an overview," Journal of Pension Economics and Finance, Cambridge University Press, vol. 10(4), pages 497-508, October.
    4. Holzmann, Robert & Paul, Richard Hinz & Dorfman, Mark, 2008. "Pension systems and reform conceptual framework," Social Protection Discussion Papers and Notes 46175, The World Bank.
    5. Chłoń-Domińczak, Agnieszka & Strzelecki, Paweł, 2013. "The minimum pension as an instrument of poverty protection in the defined contribution pension system – an example of Poland," Journal of Pension Economics and Finance, Cambridge University Press, vol. 12(3), pages 326-350, July.
    6. Robert Holzmann & Richard Hinz, 2005. "Old Age Income Support in the 21st century: An International Perspective on Pension Systems and Reform," World Bank Publications - Books, The World Bank Group, number 7336.
    7. Algirdas Bartkus, 2013. "On Future Pensions From The Second Pillar Pension Funds," Organizations and Markets in Emerging Economies, Faculty of Economics, Vilnius University, vol. 4(1).
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    Cited by:

    1. Audrius Kabašinskas & Francesca Maggioni & Kristina Šutienė & Eimutis Valakevičius, 2019. "A multistage risk-averse stochastic programming model for personal savings accrual: the evidence from Lithuania," Annals of Operations Research, Springer, vol. 279(1), pages 43-70, August.
    2. Dunajevas Eugenijus & Skučienė Daiva, 2016. "Mandatory Pension System and Redistribution: The Comparative Analysis of Institutions in Baltic States," Central European Journal of Public Policy, Sciendo, vol. 10(2), pages 16-29, December.

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    More about this item

    Keywords

    pension systems; sustainability; equity; policy formulation; Baltic States;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions

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