Pensions in Crisis : Europe and Central Asia Regional Policy Note
The financial crisis has significantly impacted pension systems in the Europe and Central Asia region (ECA) tempting governments to make policy changes in response to the increased pension deficits they are facing. The crisis exacerbates the existi...
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| Language: | English en_US |
| Published: |
Washington, DC
2014
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| Online Access: | http://documents.worldbank.org/curated/en/2009/11/13246000/pensions-crisis-europe-central-asia-regional-policy-note http://hdl.handle.net/10986/18728 |
| Summary: | The financial crisis has significantly
impacted pension systems in the Europe and Central Asia
region (ECA) tempting governments to make policy changes in
response to the increased pension deficits they are facing.
The crisis exacerbates the existing financial imbalance in
the public pension systems by reducing contribution revenues
sharply while leaving expenditures constant or even higher.
The crisis also resulted in a sharp drop in financial asset
values which affects pensions provided by funded pillars.
Consequently, no pension system, however structured, has
been immune to the crisis. Despite the severity of the
financial crisis, it pales in comparison to the demographic
crisis which the region will face. Therefore, countries are
urged not to make long-term policy changes to address
short-run fiscal concerns. Any short-run responses should be
consistent with strategies to address the long-run
challenges to the pension system. The long-run focus should
include: (i) protecting the purchasing power of pensioners
and fiscal sustainability of the system, both during the
crisis and beyond, by shifting to inflation indexation of
pensions, (ii) encouraging individuals to work more and
longer by raising retirement ages, equalizing retirement
ages between men and women, and curbing early retirement,
and (iii) enhancing public awareness of the increasingly
limited capacity of publicly provided pensions as
populations age. |
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