Second‐pillar pensions in Central and Eastern Europe: Payment constraints and exit options

During 1998–2007, a majority of Central and Eastern European (CEE) governments enacted laws obligating workers to save for retirement in privately managed individual accounts. The governments funded these accounts with a portion of public pension revenues, thus creating or increasing deficits in public systems. After the onset of the global financial and economic crisis (2008), most CEE governments reduced these funding diversions and scaled back the accounts. Now, a decade after the crisis, this article examines the benefits that the accounts are beginning to pay retiring workers. In general, these benefits are shown to be disadvantageous compared with public pensions. Some pay lump sums in lieu of regular monthly benefits, most fail to adjust pensions regularly for inflation, and some pay women less than men with equal account balances. In several countries, pensioners with individual accounts receive lower benefits than those without them. To enable retiring workers to avoid these disadvantages, several CEE governments have allowed them to refund their account balances and receive full public pensions. Yet while this strategy diffuses worker dissatisfaction, it also places strains on public pension finance. To assist second‐pillar account holders without weakening public pensions, governments should consider making private pension savings voluntary and financing these schemes independently of public pensions – i.e. by worker and employer contributions and, possibly, direct state support. Au cours de la période 1998‐2007, la majorité des pays d’Europe centrale et orientale ont adopté des lois obligeant les travailleurs à épargner en vue de leur retraite en souscrivant des comptes individuels gérés par le secteur privé. Les pouvoirs publics alimentaient ces comptes en leur affectant une partie des recettes des régimes de retraite publics, ce qui a créé ou augmenté les déficits de ces régimes. Dès le début de la crise financière et économique mondiale de 2008, la plupart de ces pays ont réduit ces transferts et, partant, le montant des comptes. Dix ans après la crise, cet article examine les prestations que les comptes individuels commencent à servir aux travailleurs qui prennent leur retraite. Il révèle que ces prestations sont dans l’ensemble moins avantageuses que les pensions publiques. Dans certains cas, elles sont versées sous la forme d’un capital et non de pensions mensuelles. Le plus souvent, elles ne sont pas indexées sur l’inflation. Enfin, il a