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Contemporary Challenges of Public Pension Systems and Their Effects on Pension Reform Choices in European and Candidate countries

Turnovalieva, Rodna (2006)
Department of Business Administration
Abstract
The process of European Integration and creation of the single market revealed many questions and boundaries on the development and improvement of the European Social Policy. Pension’s sustainability has become the priority issue especially during the EU enlargement processes. Different policy instruments and institutions available to governments of Member States in realization of social objectives resulted in a growing diversity of pension polices which produced different combinations of public and private provisions - “private-public hybrids” , with the state exercising different degrees of influence in their development. The objective of this essay has been to explore contemporary challenges of the pension systems in the EU countries... (More)
The process of European Integration and creation of the single market revealed many questions and boundaries on the development and improvement of the European Social Policy. Pension’s sustainability has become the priority issue especially during the EU enlargement processes. Different policy instruments and institutions available to governments of Member States in realization of social objectives resulted in a growing diversity of pension polices which produced different combinations of public and private provisions - “private-public hybrids” , with the state exercising different degrees of influence in their development. The objective of this essay has been to explore contemporary challenges of the pension systems in the EU countries and to analyse how these affect Member States in the choice for reform option. The question investigated for that purpose was whether there is a paramount policy response to the current surroundings of national pension systems and how by current and future reforms the European Union will build up the confidence in European citizens in the European Social Model and welfare countries? The paper begins with an overview on the ageing of the population and demographic trends in the EU. This invoked the question: How should one relatively small group of employees to produce financial support for the rapidly increasing group of pensioners? Leading on from this, an analysis on the costs of retirement system was completed. Inability of national finances to cover the progressively increasing need of elderly, produced lack of confidence for European Citizens in pension systems and for Countries in Pension Funds. Numerous Pension Systems reforms initiated in Europe and some of them are already reassessing their primary policy options. In order to prevent countries from expensive and extensive further reforms, the Commission’s advise is to Modernise and create cross border pension systems. The Integrative and Method of Open Cooperation are elaborated as a proposal to Member States to use more quality indicators in projecting their pension system’s sustainability, and cooperate combining their policy choices into integrated reports. Creating cross border pensions funds explores the importance of harmonising tax laws across Member states and elimination obstacles in investment of pension contributions. Considering the importance of creating social peace in the process of European enlargement, in the last part the paper describes the example of the Macedonian pension’s system reform under EU recommendations and learning from practices of the newly accessed CEE countries Noting the relevance of policy formation, it can be said that progress in Harmonising and integrating national polices is visible. Cooperation among institutions governing reforms will provide: First, by obtaining quality data, system projections will improve and will make system characteristics transparent for beneficiaries (individuals can easily calculate their income/contributions at present and aggregate benefits for old age), which will secure European citizens from unpredictable government actions towards pension issues and strengthen their confidence in the national and European social policy. Second, by integrating national reports the European Union can easily determine patterns of reforms and evaluate best practices, which at the end will not provide one paramount policy option but will certainly facilitate future reform path in both member and candidate countries. (Less)
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author
Turnovalieva, Rodna
supervisor
organization
year
type
H1 - Master's Degree (One Year)
subject
keywords
Pension System, Public pension schemes, Ageing Population, Financial sustainability of pensions, Macedonian pension system reform, Management of enterprises, Företagsledning, management
language
Swedish
id
1344886
date added to LUP
2006-05-29
date last changed
2012-04-02 16:05:25
@misc{1344886,
  abstract     = {The process of European Integration and creation of the single market revealed many questions and boundaries on the development and improvement of the European Social Policy. Pension’s sustainability has become the priority issue especially during the EU enlargement processes. Different policy instruments and institutions available to governments of Member States in realization of social objectives resulted in a growing diversity of pension polices which produced different combinations of public and private provisions - “private-public hybrids” , with the state exercising different degrees of influence in their development. The objective of this essay has been to explore contemporary challenges of the pension systems in the EU countries and to analyse how these affect Member States in the choice for reform option. The question investigated for that purpose was whether there is a paramount policy response to the current surroundings of national pension systems and how by current and future reforms the European Union will build up the confidence in European citizens in the European Social Model and welfare countries? The paper begins with an overview on the ageing of the population and demographic trends in the EU. This invoked the question: How should one relatively small group of employees to produce financial support for the rapidly increasing group of pensioners? Leading on from this, an analysis on the costs of retirement system was completed. Inability of national finances to cover the progressively increasing need of elderly, produced lack of confidence for European Citizens in pension systems and for Countries in Pension Funds. Numerous Pension Systems reforms initiated in Europe and some of them are already reassessing their primary policy options. In order to prevent countries from expensive and extensive further reforms, the Commission’s advise is to Modernise and create cross border pension systems. The Integrative and Method of Open Cooperation are elaborated as a proposal to Member States to use more quality indicators in projecting their pension system’s sustainability, and cooperate combining their policy choices into integrated reports. Creating cross border pensions funds explores the importance of harmonising tax laws across Member states and elimination obstacles in investment of pension contributions. Considering the importance of creating social peace in the process of European enlargement, in the last part the paper describes the example of the Macedonian pension’s system reform under EU recommendations and learning from practices of the newly accessed CEE countries Noting the relevance of policy formation, it can be said that progress in Harmonising and integrating national polices is visible. Cooperation among institutions governing reforms will provide: First, by obtaining quality data, system projections will improve and will make system characteristics transparent for beneficiaries (individuals can easily calculate their income/contributions at present and aggregate benefits for old age), which will secure European citizens from unpredictable government actions towards pension issues and strengthen their confidence in the national and European social policy. Second, by integrating national reports the European Union can easily determine patterns of reforms and evaluate best practices, which at the end will not provide one paramount policy option but will certainly facilitate future reform path in both member and candidate countries.},
  author       = {Turnovalieva, Rodna},
  keyword      = {Pension System,Public pension schemes,Ageing Population,Financial sustainability of pensions,Macedonian pension system reform,Management of enterprises,Företagsledning, management},
  language     = {swe},
  note         = {Student Paper},
  title        = {Contemporary Challenges of Public Pension Systems and Their Effects on Pension Reform Choices in European and Candidate countries},
  year         = {2006},
}