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The Public Debt and the Problem of Population Ageing in Lithuania
Macroeconomics and Forecasting Division, Bank of Lithuania
This study is aimed at attempting to evaluate the risk of sustainability of fiscal policy in the long and medium term in tackling the issues of options relevant to the pension system reformation. The action plan for the pension system reform in Lithuania was approved in 2002. As of 2004, this system will allow people to switch a part of their pension contribution into private pension funds. Upon the rejection of obligatory participation in the new system, the reform was less radical than it was previously planned and by itself it does not ensure the sustainability of public finances (only a small part is allowed to be switched to private funds and this system is not mandatory) over the longer term as the population continues to age.
This study is aimed at attempting to evaluate the risk of sustainability of fiscal policy in the long and medium term in tackling the issues of options relevant to the pension system reformation. The action plan for the pension system reform in Lithuania was approved in 2002. As of 2004, this system will allow people to switch a part of their pension contribution into private pension funds. Upon the rejection of obligatory participation in the new system, the reform was less radical than it was previously planned and by itself it does not ensure the sustainability of public finances (only a small part is allowed to be switched to private funds and this system is not mandatory) over the longer term as the population continues to age.