What is meant by the so-called three-pillar model?
Pension systems are often described using a three-pillar model. Traditionally, the three pillars represent (I) state pay-as-you go pensions, (II) funded occupational pensions, and (III) individual savings. Today, there are various pension models in existence as the number of approaches to pension provision has grown. The model of the World Bank – intended as a blueprint for developing countries – consists of (I) state pay-as-you-go pensions, (II) mandatory, privately managed pensions, and (III) voluntary individual accounts. The traditional three-pillar model is a natural fit for the old EU member states, but not for the new member states from central and eastern Europe. These countries have introduced mandatory defined contribution schemes for their employees over the past decade. EFRP has proposed a new pension terminology model that takes into account the pension systems of all member states (click here for the publication).
