THE IMPACT OF DEMOGRAPHY, INSTITUTIONAL SOLUTIONS AND FISCAL INCENTIVES ON THE LEVEL OF PARTICIPATION AND INVESTMENT EFFICIENCY OF OCCUPATIONAL PENSION SCHEMES IN CENTRAL AND EASTERN EUROPE
Published: 19 Oct 2017
Abstract: Investment efficiency of a pension system depends on economy, demography and capital market in a country. Those determinants were similar for Czechia, Hungary, Poland and Slovakia in the period 2009-2011. On the other hand, they differ in selected institutional factors and in the level of fiscal incentives. Hungary and Poland had systems arranged by employers, but Polish occupational pension schemes enjoyed the smallest fiscal stimulation. Czechia had an individual system, which was significantly financed by employers. Slovakia had a mixed, employer-individual system. Czech subsidies were among the highest in the world and Slovakian ones were very small. The objective is to estimate the influence of fiscal and institutional factors on investment efficiency and risk. The main result shows that the greater the subsidies, the lower the investment efficiency, but the higher the coverage rate. We argue for long term fiscal stimulation of employers that run voluntary occupational schemes. Occupational plans bear higher market risk than individual ones, but they invest in domestic enterprises and economy. Moreover, fiscal stimulation of individual plans redistributes income towards rich employees and financial institutions.
Keywords: occupational pension scheme (opp) and their systems, financial efficiency, risk measures, institutional, demographic and fiscal factors
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