Pension system models and management tendencies in EU

Questions on the pension system reform in Lithuania are becoming more and more actual. The actuality of the pension system reform is conditioned by the social-economic situation in Lithuania. According to the data of EUROSTAT, expansions on pensions in Lithuania were only 63,2 GDP in 2004 compared to a total of EU-15. It is forecast that a number of elderly people will grow from 15 percent in 2004 to 26,7 percent in 2050. It means that expenses on pensions will increase because of growing number of pensioners; accordingly, the level of social insurance has to be raised. From 1995 to 2006 an average level of state social insurance pension in Lithuania more than trebled but the level of average pension is still less than minimum pension of EU – 15. Reformation of pension system of Lithuania is also stimulated by the European Union membership and participation in the social policy of the European Union.

The European Union institutions clearly define a task of the European social policy: to preserve and develop European social model by using effective measures . A valuable experience of the European Union pension systems models has to be accepted for the development of the pension system model in Lithuania due to the fact that no common Europian social model exist. The high economic and social development level is characteristic for some states (i.e., Sweden, Netherlands); consequently the analysis of the European Union (e.g. the United Kingdom, Sweden, Netherlands, France, Germany, Italy, Spain) and Lithuanian pension system models carried out in this work can help to evaluate a status of Lithuanian pension system and to determine reform tendencies.

Actuality of the topic is proved by the legal acts. The Lithuanian Convergence program 2006 states that though a number of pensioners will increase fast and due to a low birth rate and emigration numbers of active people will decrease in the third decade of this century, the financing of social security system must ensure sustainable social guarantees . The Lithuanian National Report on the adequate and sustainable pensions strategy 2005 points out that an average social insurance pension (having indispensable pension record) in 2005 was only 45,8 percent of a total average net salary. 2003 pension system reform was financed by the State social insurance fund; it means that the problem of social insurance pension replacement rate remains urgent .