Increased benefits undermine the pension schemes’ sustainability
Social policy projects demonstrate the Gorko‘s propensity to spend generously.
Ignoring the demographic challenges the three parties have agreed on extended
pension benefits which unrealistically presuppose lasting dynamic economic
This is especially true for the stabilisation of the replacement rate at
present level of 48% (of the average wage and salary income per capita) until
2025. In fact, in a fine weather scenario the replacement rate will remain at this
level until 2024, anyway. Once the number of workers who have to pay the
pensions will decline, however, this measure’s costs will increase markedly, as
at present the replacement rate is inversely tied to the old-age dependency ratio
(pensioners/workers-ratio), among others.
Therefore, under the new regime, pension policy will be in for a shock in about 8 to 10 years when more and more
baby boomers will retire (and thus the ratio will probably rise dramatically).