Direction of change in the pension systems in Eastern Europe

Pension costs are a considerable expenditure of every government and are not sustainable in their present form. The crisis has brought it to attention ? but arguably not to the degree it would necessitate. Structural changes to the pension systems are thus rare and hard to come by. Most countries have started minor changes in the system, adjusted their pension ages, indexed the pension age to life expectancy or pension payments to pension contribution (defined contribution plans ? for individuals or throughout the pension budget), others have started scrapping special pension benefits and revisited the issue of incapability benefits.
This paper is about the unorthodox measures adapted in the reform of the pension schemes ? most pronounced of which is the de facto nationalisation of the Hungarian mandatory private pension funds? assets to balance the 2011 budget. Most important in this light is the change on the proportion of public as opposed to private contribution and self-reliance in various pension systems.

Keywords? Eastern Europe; Pensions; Fiscal policy
JEL? H55; H6

Financial Research Working Papers, November 2011