The Financial Crisis and Varieties of Pension Privatization Reversals in Eastern Europe

Forthcoming in Governance: An International Journal of Policy, Administration, and Institutions

33 Pages Posted: 16 Jan 2015 Last revised: 3 Sep 2015

See all articles by Marek Naczyk

Marek Naczyk

Sciences Po Paris - Centre d’études européennes; Sciences Po Paris - LIEPP

Stefan Domonkos

University of Mannheim - Mannheim Centre for European Social Research (MZES)

Date Written: December 14, 2014

Abstract

Since the 2008 global financial crisis, those East European countries that had partly privatized their pension systems in the 1990s or early 2000s increasingly scaled back their mandatory private retirement accounts and restored the role of public provision. What explains this wave of reversals in pension privatization, but also variation in its outcomes? Proponents of pension privatization had argued that it would boost domestic capital markets and economic growth. By revealing how pension privatization helped increase sovereign debt and how large a part of pension funds’ assets was invested in government bonds, the crisis helped strengthen the position of domestic opponents of mandatory private retirement accounts. But these actors’ capacity and determination to reverse pension privatization strongly depended on the level of their country’s public debt and on pension funds’ portfolio structure. Empirically, the argument is supported with case studies of Hungarian, Polish and Slovak pension reform.

Keywords: pension funds, pension privatization, reversals, global financial crisis, welfare-finance nexus, financial services industry, World Bank, Eastern Europe, Hungary, Poland, Slovakia

JEL Classification: D70, D73, D78, D90, D92, E22, E44, E60, E61, E62, E65, G11, G18, G23, H55, H63, J18, J26, L33, P16

Suggested Citation

Naczyk, Marek and Domonkos, Stefan, The Financial Crisis and Varieties of Pension Privatization Reversals in Eastern Europe (December 14, 2014). Forthcoming in Governance: An International Journal of Policy, Administration, and Institutions , Available at SSRN: https://ssrn.com/abstract=2549715 or http://dx.doi.org/10.2139/ssrn.2549715

Marek Naczyk (Contact Author)

Sciences Po Paris - Centre d’études européennes ( email )

27 Rue St. Guilllaume
Paris, 75007
France

HOME PAGE: http://www.cee.sciences-po.fr/en/le-centre/associate-researchers/1066-marek-naczyk.html

Sciences Po Paris - LIEPP ( email )

27 rue Saint-Guillaume
Paris Cedex 07, 75337
France

HOME PAGE: http://mareknaczyk.wordpress.com

Stefan Domonkos

University of Mannheim - Mannheim Centre for European Social Research (MZES) ( email )

D-68131 Mannheim
Germany

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