Pensions System in Lithuania: Dilemmas and Controversies
Keywords:pension funds, pay-as-you-go system, privately funded pension funds, mandatory pension funds, fiscal policy, capital market.
Lithuania faces difficult dilemmas in the field of old age security. Aging population, weak bonds
current wages, salaries and amount of (size of) future pensions causes certain dissatisfactions and
risks. They along- side with the pressure of certain interest groups which are interested in
possibility to enter financial flows and to take benefits from partial privatization of these flows
create certain gnoseological, political and ideological climate surrounding the issue of pension
reform. In these circumstances the use of neutral, scientific approach would be helpful. Together
with more open, comprehensive, democratic discourse it would add to the rationality, prudence of
the decisions concerning the issue.
Author of the article argues that the currently functioning pay-as-you-go (PAYG) system together
with some shortcomings have its advantages which should not be neglected in the discussion on the
pension reforms. On the other hand private pension system based on individual accumulation is not
so advantages and effective as its por- trayed by its proponents. It is connected with rather high
risk both for individuals and for state. The danger of loss of money in the financial markets in
case of downfall of the value of securities and the threat to budgetary stability of the country
are two major reasons to refrain from overly enthusiastic attitudes towards private, especially
manda- tory, pension funds.
The experience of Argentina, Hungary, Poland should caution us against impulsive, non-comprehensive
cision. West European and especially Scandinavian pattern could serve us a good service.