THE POSITION OF RETIREMENT PENSION SAVINGS IN THE PENSION SYSTEM OF THE SLOVAK REPUBLIC

In the reform of its pension system the Slovak Republic opted for a combined method of financing pensions, which caused high transformation costs, which considerably destabilize the pension system and deepen the public finance deficit and the financial sustainability of the pension system. Despite many government attempts to weaken private retirement pension savings and strengthen the public ongoing pension system, expected goals were not met, which was why the National Assembly of the Slovak Republic undertook to weaken retirement pension savings using a set of measures that include changes of the percentage rate of levy, as well as making the entry into the so-called second pillar voluntary. Since the introduction of voluntary entry into the second pillar, only 30% of those entering the labor market joined the second pillar. The low share of entrants increases current income of the pension system at the expense of future expenses. In the long run, this will cause increased deficits in the ongoing pension system, as well as lower future retirement pensions. If more people joined the second pillar, it would have meant a higher deficit of the first pillar in 2080 due to a larger income gap. The goal of this paper is to point out the position and role of retirement pension savings in the pension system of the Slovak Republic in the context of long-term sustainability of the pension system.