Albania: Preparing for a Comprehensive Pension Reform
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This paper adds to the existing literature on the pension system in Albania and the challenges it faces. It provides an overview of the Albanian pension system and preconditions to be met for pension reforms, especially in setting up a second pillar pension. The Albanian pension system is distinguished from the systems of other Central and Eastern European (CEE) countries due to an underdeveloped introduction to a multi-pillar pension system to replace the defined benefit (DB), pay-as-you-go (PAYG) system. The political consensus to reform the pension system has been difficult to achieve. In addition, for years the authorities have been rather reluctant to provide incentives to support the emergence of a private pension system. With the extreme difficulties faced by the first pension pillar, Albania is on the brink of making major decisions with regard to fostering the development of its pension system. This paper aims at assessing the preconditions to be met by the authorities in the country to be able to introduce and develop the private and voluntary pension funds, and the current level of fulfilling such preconditions.
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