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The ageing population and the associated challenges of the Slovenian pension system

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  • Verbic, Miroslav

Abstract

The article presents an analysis of welfare effects in Slovenia, an analysis of supplementary pension insurance in Slovenia and an analysis of effects of the pension fund deficit on sustainability of Slovenian public finances. Stress was layed upon varying the parameters of the current Slovenian pension system and introducing mandatory supplementary pension insurance in Slovenia. It has been established that while young generations and new generations will lose from the pension reform, even complete implementation of the reform might not be sufficient to compensate unfavourable demographic developments. The volume of supplementary pension saving is insufficient at present in Slovenia to compensate the deterioration of rights from the first pension pillar. Not only is the participation in the (voluntary) second pillar insufficient, but especially the premia are too low. The level of expected deficit of the PAYG-financed state pension fund seems to be worrying, though higher activity level among the elderly would subsequently increase the volume of contributions to the first pension pillar, thus also reducing the state pension fund deficit.

Suggested Citation

  • Verbic, Miroslav, 2008. "The ageing population and the associated challenges of the Slovenian pension system," MPRA Paper 10347, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:10347
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    References listed on IDEAS

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    1. Modigliani, Franco, 1986. "Life Cycle, Individual Thrift, and the Wealth of Nations," American Economic Review, American Economic Association, vol. 76(3), pages 297-313, June.
    2. Miroslav Verbic, 2007. "Varying the Parameters of the Slovenian Pension System: an Analysis with an Overlapping-Generations General Equilibrium Model," Post-Communist Economies, Taylor & Francis Journals, vol. 19(4), pages 449-470.
    3. Rutherford, Thomas F., 1995. "Extension of GAMS for complementarity problems arising in applied economic analysis," Journal of Economic Dynamics and Control, Elsevier, vol. 19(8), pages 1299-1324, November.
    4. Milton Friedman, 1957. "A Theory of the Consumption Function," NBER Books, National Bureau of Economic Research, Inc, number frie57-1.
    5. Miroslav VerbiÄ & Boris Majcen & Renger Van Nieuwkoop, 2006. "Sustainability of the Slovenian Pension System: An Analysis with an Overlapping-Generations General Equilibrium Model," Eastern European Economics, Taylor & Francis Journals, vol. 44(4), pages 60-81, August.
    6. Milton Friedman, 1957. "Introduction to "A Theory of the Consumption Function"," NBER Chapters, in: A Theory of the Consumption Function, pages 1-6, National Bureau of Economic Research, Inc.
    7. Böhringer, Christoph & Rutherford, Thomas Fox & Wiegard, Wolfgang, 2003. "Computable general equilibrium analysis: Opening a black box," ZEW Discussion Papers 03-56, ZEW - Leibniz Centre for European Economic Research.
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    More about this item

    Keywords

    general equilibrium models; PAYG; pension system; supplementary pension saving; sustainability of public finances; Slovenia; welfare analysis;
    All these keywords.

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models

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