Financial Sustainability and Reform Options for the Albanian Pension Fund
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Abstract
This paper studies the financial sustainability of the Albanian pension fund and assesses possible options for its reform. The paper concludes that the pension fund is not sustainable in its current form and proposes for the urban scheme a combination of parametric changes to the existing pay-as-you-go system that would be conducive to broadening the contribution base and strengthening the financial performance of the pension fund. In addition, it proposes the establishment of a voluntary funded pillar in the urban scheme. For the rural scheme, the paper concludes that it should either be merged with the scheme for the urban self-employed or be replaced by a mandatory and funded second pillar. The paper also proposes administrative reforms to strengthen revenue collections.Transition economies;pension, pension fund, benefits, retirement age, pensions, retirement, contribution rates, wage, early retirement, compensation, pension funds, salary, wages, pensioners, contribution base, salaries, old-age pensions, minimum wage, dependency ratio, average pensions, minimum pension, compensation payments, supplementary pensions, labor force, contribution period, pension system, state pension, revenue collection, pension schemes, wage earners, private pension, maternity benefits, multi-pillar system, pillar system, compensation benefits, retirement ages, mandatory scheme, public pension, multi-pillar reforms, gross wage, pension benefits, aging populations, worker, private pension funds, pension systems, average monthly pension, retirement benefits, public sector wage, wage levels, public pension schemes, pay-as-you-go system, average pension, pension rights, revenue collections, funded accounts, contribution rate, informal sector, health care, private pension fund, pension regimes, life expectancy, unemployment insurance, average benefit, wage level, additional pension, unfunded pension, defined contributions, pensioner, compensation schemes, pension liabilities, pension formula, pension spending, pension base, public sector wages, supervisory framework, unfunded pension liabilities