THE FUTURE OF THE PENSION SYSTEM IN THE C R

Very few global issues have been discussed as extensively as pension s ystem reforms. The Czech pension system is as susceptible to a future meltdown as pension systems in other countries with aging population. The journal had invited six authors to discuss the following problems: demographic developments (Z. Papes), pension system changes after 199 0 (J. Klimentova), shift from a pay-as-you-go system to a fully funded system (V. Kreidl a O. Schneider), and the possibilities of preservat ion of a pay-as-you-go system (J. Vostatek). Finally, the translation of a paper by D. Vittas discussing World Bank experience with pension reforms is included. The individual authors agree that the long-term p rojections of the dependency ratio in the Czech population warrant muc h deeper changes in the pension system than those implemented in a ser ies of partial reforms after 1990. This paper formulates the basic fra mework for comparing different pension schemes, namely the so-called A aron condition. In addition, it reiterates three issues usually overlo oked by the advocates of the fully funded pension schemes: the possibi lity of deflation of the asset-price bubble under the fully funded sch eme, weak macroeconomic foundations of the assumed saving-investment b oost under the fully funded scheme, and the critique of the alleged in flexibility of pay-as-you-go schemes.