Factors Affecting the Development of Voluntary Pension Schemes in CEE Countries: A Panel Data Analysis

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AbstractThe study provides some quantitative information on voluntary pension plans in 10 CEE countries obtained from various local sources. The comparative analysis shows that there is a considerable variation in this group in terms of participation and contributions to the voluntary pension plans. In addition, this study empirically examines several factors that can possibly affect the development of voluntary pensions: income per capita and poverty rate, income inequality, replacement rate from the pension system, education attainment, interest rate and demographic burden. It uses a panel regression framework for the period of 2006–2014. The results reveal that, in the case of participation in voluntary pension plans, only income level per capita is associated with a greater number of pension plan members. As far as contributions are concerned, education seems to be the most important determinant of additional pension savings. Other factors do not seem to explain well both of the studied variables reflecting the development of voluntary pension schemes. However, as individual fixed effects are proven to be significant in the estimated models, one could conclude that country-specific characteristics play a significant role in explaining the development of voluntary pension schemes. They can be referred to the design and parametric settings of the non-mandatory pension system.