Pension systems in the first years of post-communist transition : the development of public pension schemes from 1989 to 1997 in the countries of CEE and the NIS/FSU

Abstract

The study seeks to answer what factors played a major role in development of public pension systems in the economies of Central and Eastern Europe (CEE) and the Newly Independent States of the Former Soviet Union (NIS/FSU). Our analysis, based on data from 1989 to 1997 in 23 transition economies, investigates five main components of public pension system and identifies three groups of countries with different patterns of development. The existing explanations assume that economic performance, demographic ageing, domestic political constellations, external influence and the path dependency are responsible for the variation in pension system development patterns. Multivariate regressions have been used to test these explanations. We found that economic decline explains changes in the qualifying conditions for full pension benefits, the political variables influence patterns of employees’ and employers’ contributions, while the share of government’s revenues in GDP is the best explanation for the variation in pension expenditure. The limitations of the study suggest that longer time periods and a small number of countries should be investigated.