Application of the Lifecycle Theory in Slovak Pension System Cover Image

Application of the Lifecycle Theory in Slovak Pension System
Application of the Lifecycle Theory in Slovak Pension System

Author(s): Matej Balco, Ján Šebo, Michal Mešťan, Lubica Sebova
Subject(s): Public Finances, Fiscal Politics / Budgeting
Published by: Ekonomický ústav SAV a Prognostický ústav SAV
Keywords: pension system; life cycle theory; retirement; individual welfare;

Summary/Abstract: In the wake of population ageing and increasing public pension liabilities, many countries have reformed their pension systems, moving away (at least partially) from defined benefit (DB) pension schemes and towards defined contribution (DC) pension schemes. Slovakia’s reformed its pension system into two main pillars – I. pillar PAYG scheme and II. pillar DC scheme. Slovak pension reform brings up a lot of questions regarding the optimality of two main pillars pension system set up. In this paper, we seek to investigate the effects of different Slovak pension system set up alternatives and their implications on lifecycle savings and individual welfare using own stochastic life cycle model of partial equilibrium. Results could serve as a basis for further discussion on improving the legislature on parameters’ set-up of both pension pillars in Slovakia as well as abroad.

  • Issue Year: 66/2018
  • Issue No: 01
  • Page Range: 64-80
  • Page Count: 17
  • Language: English