A note on varying the parameters of the Slovenian pension system: an analysis of supplementary pension insurance

The article is an upgrade of the work presented in Verbic (2007a, Varying the parameters of the Slovenian pension system: an analysis with an overlapping-generations general equilibrium model. Post-communist economies, 19 (4), 449-470) with an analysis of supplementary pension insurance in Slovenia. It has been established that the volume of supplementary pension saving is insufficient at present in Slovenia to compensate for the deterioration of rights from the first pension pillar. Not only is the participation in the second pillar insufficient but the premia especially are too low. The macroeconomic consequences of introducing fully-funded mandatory pension insurance would not be unfavourable. Increased pension saving reduces current consumption and increases the labour supply of active generations, but also increases the volume of disposable savings, so the increased investment may increase capital stock and production, which leads to an increase in economic growth and potential future consumption. Increased labour supply of insured persons would also lead to a higher volume of contributions for mandatory pension insurance, which would reduce the state pension fund deficit.