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Góra, Marek --- "The quest for modern pension system design" [2003] ELECD 114; in Tumpel-Gugerell, Gertrude; Mooslechner, Peter (eds), "Structural Challenges for Europe" (Edward Elgar Publishing, 2003)

Book Title: Structural Challenges for Europe

Editor(s): Tumpel-Gugerell, Gertrude; Mooslechner, Peter

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781843764748

Section: Chapter 14

Section Title: The quest for modern pension system design

Author(s): Góra, Marek

Number of pages: 14

Extract:

14. The quest for modern pension
system design
Marek Góra

1. INTRODUCTION

Population ageing is one of the most difficult challenges of our time. It
requires a number of serious adjustments in institutional structures serving
societies. Pension reform is at the top of the list since pension systems ­
especially their old-age parts ­ strongly depend on demographic structures.
Traditional pension system design has proved to be inefficient. The systems
in place have started running permanently growing deficits, thus creating
deficits much larger than the national GDP in many countries. This eco-
nomically and socially dangerous situation triggered the quest for modern
pension system design.
Traditional pension systems have been reformed in several countries.
Nonetheless, a large number of countries have either kept their pension
systems virtually unchanged or have implemented only partial reforms ­ I
prefer calling them rationalizations ­ insufficient to cope with the problem
of the systems' financial unsustainability. Due to the demographic changes
in the last quarter of the twentieth century, parametric reforms cannot
solve the problem; all they can do is postpone it.
Although the need for pension reform can be more or less commonly rec-
ognized, there is no commonly agreed way of reform. Both professional
and non-professional discussions on pension system design seem to be in a
deadlock between pay-as-you-go systems and funded pensions. In this
chapter I try to get beyond this deadlock.
Pension systems ­ especially if they are universal ones, covering the entire
working population ­ can create positive and ...