The Financial Crisis and Varieties of Pension Privatization Reversals in Eastern Europe

Abstract

Since the global financial crisis, those East European countries that had partly privatized their pension systems in the 1990s or early 2000s increasingly scaled back their mandatory private retirement accounts and restored the role of public provision. What explains this wave of reversals in pension privatization and variation in its outcomes? Proponents of pension privatization had argued that it would boost domestic capital markets and economic growth. By revealing how pension privatization helped increase sovereign debt and how large a part of pension funds' assets was invested in government bonds, the crisis strengthened the position of domestic opponents of mandatory private accounts. But these actors' capacity and determination to reverse pension privatization depended on the level of their country's public debt and on pension funds' portfolio structure. Empirically, the argument is supported with case studies of Hungarian, Polish, and Slovak pension reform.

Organizing for impact: International organizations and global pension policy

“…It also gave the state access to the accumulated pension funds that had built up during the funded period. This option was undertaken by Kazakhstan, Hungary, and to a lesser extent, Poland (Naczyk & Domonkos, 2016). Alongside the reform reversals in Central and Eastern Europe, Latin American countries such as Argentina and Bolivia renationalized their funded pension pillars (Naczyk & Domonkos, 2016).…”

“…However, in many countries, these reforms were short-lived. At the onset of the global economic crisis, most countries that had adopted pension privatization reforms either halted them, drastically reduced the private element, or completely abandoned them (Arza, 2012;Drahokoupil & Domonkos, 2012;Orenstein, 2013;Naczyk and Domonkos, 2016;Sokhey, 2017). These events signaled a retreat by the World Bank in its promotion of the partial privatization of public pension pillars and damaged its reputation in pensions expertise.…”

When finance captures labor's capital: Dominant personal pensions, resurgent occupational provision in Central and Eastern Europe

“…Employers' associations, the IGTE and even some high‐profile Solidarność officials unsuccessfully tried to prevent these reforms. However, contrary to Hungary's decision to fully nationalize its second pillar, Poland only seized the Polish sovereign bonds held by OFE because nationalizing their portfolio of equities would have excessively increased the state's stakes in firms listed on the WSE (Naczyk & Domonkos, ).…”

Analýza kvantitatívnych ukazovateľov II. piliera dôchodkového systému krajín V4

“…pilier a dobrovoľný III. pilier dôchodkového sporenia (Witkowska 2017, Naczyk 2016. Povinne odvádzané príspevky do dôchodkového systému boli rozdelené medzi jeho I. a II.…”