Pension policy in the czech republic (lessons from a comparative study with hungary and poland)

Abstract

This article deals with pension policy in three most developed transition countries: the Czech Republic, Hungary and Poland. Unreformed public pension systems suffer under a number of deficiencies and it is likely that pension policy will be a part of negotiations in the EU accession process, mainly due to its fiscal and social impacts. The progress in pension reform made so far differs broadly among those three countries. Hungary has adopted a multi-pillar system in July 1998 with a significant role of mandatory, fully funded pillar. Poland has made important preparation steps in the same direction and the laws have recently been approved by the Parliament. In the Czech Republic the main importance is still attached to the public pay-as-you-go pillar which was in 1994 complemented by private capital pension funds. This article search for explanations of this different development and makes some minimum recommendations for the Czech pension policy. A warning for the Czech government should be that the most pension reforms have been implemented in countries where the old system stood before collapse or had already collapsed. The Czech Republic should not wait until this moment and should take immediate actions to avoid this danger.