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Pension Reform in the Baltic Countries

image of Pension Reform in the Baltic Countries

Reform of the pension regime is continually evolving in the Baltic countries.  This publication contains individual country reports, comparative analysis from a regional perspective and examines key policy issues in the private pension sector.  It includes perspectives on these issues debated during the Pension Conference organised by the OECD in co-operation with the EU in April 2003 in Tallinn, Estonia.  The analyses benefit from in-depth knowledge of OECD experience in these sectors, as well as from experience in other emerging market economies.

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Pension Funds and their Role in the Future of the Baltic States' Economies

Private pension funds systems have developed at different paces, and with differentstructures, in the three Baltic states. In Estonia and Latvia, a three-pillar pension system was established. Lithuania introduced a two-pillar system without mandatory pension saving. The pension funds systems in the Baltic states are in the early stage of development and vary because of differing financial system structures in each country. The Baltic financial sectors are still less developed than the financial sectors of EU countries. Financing in the Baltics is dominated by the banking sector, which is highly concentrated and owned by international financial conglomerates. The Baltic securities sector has been stagnant, even during the recent period of growth. The regulations of the pension funds portfolios in Estonia and Lithuania reflect the situation in the financial market. In Latvia, regulations on pension funds policy reflect a government wish to keep money at home. Banks in these countries are the main power behind the development of the pension funds system. The Baltic countries will become EU members on 1 May 2004. Their future economic, financial and pension funds system will be shaped by EU legislation and the EU integration process...

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