The Resilience of Pension Systems in the CEE Countries to Financial and Economic Crisis: the Need for Higher Diversification

Filip Chybalski

During the present economic crisis, several CEE countries decided to reduce the pension contribution paid to the private 2nd pillar. It is an obvious retraction from the pension reforms initiated in the last decade. The aim of the article is to assess the resilience of pension systems in the CEE countries to financial and economic crisis. The thesis put forward in the article is that the CEE countries should increase the potential diversification in the mandatory pension systems in three dimensions: division of the contributions between the unfunded and funded pillars, between public and private management in the pension systems, and between allocation of pension assets in domestic and foreign financial markets. The paper includes a description of the structure of the pension systems in the CEE countries and the latest political decisions related to these systems in the context of their potential resilience to economic crisis, a review of the literature related to the impact of the crisis on the pension systems, an argument for multi-dimensional diversification in mandatory pension systems, and an assessment of this diversification in the CEE countries.