Generational Subaccounts of Slovak Pension System

• Published in: Scientific Papers of the University of Pardubice. Series D, Faculty of Economics and Administration Faculty of Economics and Administration, 2020-01, Vol.28 (1)
• Main Authors: Danková, Daniela, Králik, Ivan, Šebo, Jan
• Format: Article
• Language: eng ; slo
• Subjects: Age; Distribution of retirement plan assets; Pension plans; Retirement
• ISSN: 1211-555X; 1804-8048

Implementation of the capping the retirement age in Slovakia will have negative impacts on the sustainability of the Slovak PAYG scheme. This has led us to the analyze whether the current generations will pass the financial burden onto next generations. Method of generational accounts allows us to estimate imbalance between various generations. We modified generational accounts into the generational pension subaccounts to analyse the imbalance between generations within the Slovak PAYG scheme. We also added education as a new parameter into generational pension subaccounts. Using this approach, we can estimate how much each ageeducational cohort pays into PAYG scheme and how much each age-educational cohort could receive in the form of pensions from PAYG scheme. Applying microsimulation model using stochastic moving block bootstrapping techniques and generational pension subaccounts, we estimate redistributional impacts of capping age at 64 years. We have shown, that capping the retirement age at 64 will leads to an increase in paid benefits from PAYG scheme, which will have negative impacts to the future generations.