Demographic Trends and the Pension Problem in Poland

Fratczak, E. & Jozwiak, J. (1992). Demographic Trends and the Pension Problem in Poland. IIASA Working Paper. IIASA, Laxenburg, Austria: WP-92-023

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Abstract

Projections of expenditures for old age pensions, survivor pensions, and disability pensions were made for the period 1985-2050 on the basis of future developments in population structure by age, sex, and marital status. Five demographic scenarios were formulated: (i) a Benchmark scenario, with demographic rates kept constant at their 1980-84 level; (ii) a Fertility scenario, with a decline of the Total Fertility Rate (TFR) towards replacement level; (iii) a Mortality scenario, with reductions in mortality rates of 30 percent for females, and 45 percent for males; (iv) a Western scenario, which combines extreme demographic conditions of several West European countries: a TFR of 1.28, proportions never-marrying of one-third, one-third of all marriages ending in divorce, and male and female life expectancies of 74 and 81 years, respectively; and (v) a National scenario, with a TFR declining to 1.6. Under all scenarios, the share of the elderly will rise, and that of children will diminish, with the most significant developments under the Western and the National scenarios.

Due to uncertain economic conditions in Poland, results of the pension model should be interpreted with great care. Yet, assuming no changes in the current pension system, the calculations point to a considerable growth in expenditures, ranging from some 65 percent (Benchmark and National scenario) to about 120 percent (Mortality scenario and Western scenario) for the period 1985-2050. The increase is particularly steep during the years 2000-2015. The ratio between contributions and benefits deteriorates from its current level of 1.13 to a ratio between 0.90 (Benchmark scenario) and 0.44 (Western scenario) in the year 2050.

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