Article

 

Capital pension schemes in Bulgaria, Hungary and Slovakia under the impact of the ongoing financial crisis (p.71-88)

by

Jeko Milev, University of World and National Economy, Sofia, Bulgaria

Nikolay Nenovsky, University of Orleans, France

Keywords : Pension funds, New EU members states, Financial crisis

JEL classification : G01, G23, P34

Abstract

This article describes how the recent financial crisis has affected capital pension schemes in three EEC countries: Bulgaria, Hungary and Slovakia. These countries were not selected at random. The pension systems in each of them have been reformed in recent years by the introduction of defined contribution schemes. The primary difference between each case comes from the period in which a multi-fund system (the ability for the insured individual to choose the risk profile of the asset portfolio into which he or she will invest) has been or will be adopted. In Slovakia, such a system has been employed since 2005, several years before the occurrence of the crisis. In Hungary, a multi-fund system was initiated in 2008, at the beginning of the crisis period. In Bulgaria, the project is still under discussion and has not yet been implemented. We evaluate whether the structuring of portfolios with different risk profiles leads to a reduction in the effects of the crisis. The article is organized as follows: first, the basic characteristics of the current funded pension schemes in Bulgaria, Slovakia and Hungary are described; second, the structures of the investment portfolios and the results achieved by the pension companies are analyzed; third, reflex ions about the basic risks facing capital pension schemes are made.