LESIJ NO. XIX, VOL. 2/2012
countries is pursued to ensure the compatibility of the pension system’s structure and the possibility
of benefiting from pension under various systems of public or private insurance, irrespective of the
fund’s type where the contribution was made and the location of the person at retirement age.
Economic development level, social model and pension system
The level of economic development and the social model represents main determinants of the
national pension systems evolution and performance. The main restrictions of the financial
sustainability were: economic dependency ratio, the employment rate and average level of incomes
of the contributors of the public and private pensions
An economic developed country can afford to build up public insurance systems for pensions
that would promote to a large extent the safety of old-age income, supporting at legal and
institutional level and by adopted policies the participation to the system and the development of
complementariness. Private pensions become attractive for supplementing incomes from the public
system and are used as additional safety system by persons with decent and/or comfortable incomes.
In the case of weak state insurance systems, where the pensions becomes insufficient and there is no
adequate (decent) ceiling of the minimum pension, or where the principle of the social minimum
pension is not applied, private pensions are attractive as alternative to public insurances in particular
for persons with incomes above average or high, in general non-wage employed population, for
whom in many countries, the public pension pillar is optional. The attempt has been made in the last
years to increase the contribution base by attracting within the system all types of active population,
yet the deterioration of the economic dependency ration leads to the option of aggregating sources for
incomes on retirement by broader participation, hence more risky to the private system of old-age
If the public pillar is mainly based on the PAYG system, the private one, in its constructive
variants has as ground principle capitalisation and preserving the purchasing power of the saved
amounts (contributions) by investment portfolio.
If, at the beginning, the private systems were predominantly optional, and represented an
individual, singular option of the beneficiary, in the last decades, as social relationships and social
accountability of the companies and of the state as market stakeholders developed, private pension
systems evolved supported by companies or by the state: a) occupational pensions related especially
to the activity of the social partners, and firstly of the trade unions and guilds/professional
associations, and b) compulsory private pensions supported under various forms by the state,
respectively by fiscal deductions, management support systems for the funds, by regulating
supervision and guaranteeing institutions, etc.
Also individual insurances remain, yet they develop and diversify, gravitating around the idea
of life insurance (pension insurances on the life insurance system), and represents a specific market
insurances for those with average and high incomes and a culture of managing incomes oriented on
the market mechanisms (as form of risk management and of active participation on the market for
generating positive yields of saved funds).
The multi-tiered system is present in several countries of the world, and at EU level was
promoted the coordination policy (EC, 2004)3 for insuring financial flows between national funds
and for rendering efficient systems.
Population ageing has developed specific systems of insuring elderly persons, based on
integrated adequate health services, social assistance centred on the particular needs, e tc. In the field
of pension insurances was pursued the development of individual insurance culture and of extending
the coordination of social security systems.