Initiate Deficits to Strengthen Public Finances: The Role of Private Pensions

Posted: 20 Sep 2016 Last revised: 13 Aug 2020

See all articles by Ales S. Berk

Ales S. Berk

SEB LU / University of Ljubljana - School of Economics and Business

Dragan Jovanović

Independent

Joze Sambt

University of Ljubljana - Faculty of Economics

Date Written: September 19, 2016

Abstract

In this paper we use our comprehensive pension system model calibrated to the real demographic, employment and retirement data, measure transition costs of implementing mandatory private second-pillar into the pension landscape and consider fiscal sustainability of pension system. We report sensitivity to the most relevant parameters both within a second-pillar and a pay-as-you-go, and argue that fiscal sustainability and improved (higher) accrual rates are not incompatible policy goals if only pension reform is properly designed and implemented early enough. The introduction of a private pension pillar has to be implemented in times when public debt burden remains manageable and has to be accompanied by further parametric reform within the pay-as-you-go system that keeps the system fiscally stable, as well as that further improves net accrual rates.

Keywords: private pensions, penson reform, public finances, explicit pension debt

JEL Classification: H63, H68, H55

Suggested Citation

Berk, Ales S. and Jovanović, Dragan and Sambt, Joze, Initiate Deficits to Strengthen Public Finances: The Role of Private Pensions (September 19, 2016). Available at SSRN: https://ssrn.com/abstract=2840820

Ales S. Berk (Contact Author)

SEB LU / University of Ljubljana - School of Economics and Business ( email )

Kardeljeva ploscad 17
Ljubljana, 1000
Slovenia

Dragan Jovanović

Independent ( email )

Joze Sambt

University of Ljubljana - Faculty of Economics ( email )

Kardeljeva ploscad 17
Ljubljana, 1000
Slovenia

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