Effects of population ageing on the pension system in Belarus

Lisenkova, Katerina and Bornukova, Kateryna (2017) Effects of population ageing on the pension system in Belarus. Baltic Journal of Economics, 17 (2). pp. 103-118. ISSN 2334-4385

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    Abstract

    Belarus currently has a relatively generous pay-as-you-go pension system, but population aging coupled with recent problems with economic growth will soon make it unsustainable. We build a rich overlapping generation model of Belarusian economy, which shows that without reform the Pension Fund will run into persistent and growing deficit, which will reach 9% of GDP by 2055. We also compute the fiscal projections of several parametric pension reforms, including the reform which will start in 2017. To avoid a deficit without reform, pension benefits would have to be substantially reduced. The increase of retirement age to 65 for both genders has a strong positive effect on sustainability of the pension system and keeps the deficit below 2% of GDP.