retirement

The European Union finds itself in a paradoxical situation. The population is ageing, the economy is stagnating, and at the same time, vast sums of citizens\' savings are lying idle in bank deposits. According to the European Commission, 31% of Europeans\' savings are unused in bank accounts. In contrast, Americans put their money to work much more efficiently, keeping three times less cash under the mattress.

The key elements of a stable and sustainable pension system are long-term sustainability and the shared responsibility between the citizens and the state for a dignified and well-funded old age. However, the political parties that entered the elections in Lithuania have little regard for the worsening demographic trends.

Governments have responded to the pandemic by printing money, thus disrupting the usual economic relationships. Financial capital, which was long been regarded as a most-demanded resource, has lost its position to raw materials which in turn have lost to labor force.

As life-expectancy has increased during the past decades, governments around the world are trying to figure out a sustainable retirement-income regime. These regimes vary significantly around the world.

The Slovak pension, education, and health systems and services should not depend on the government holding power at any given time. Instead, a fundamental political consensus is required. Better than calls from abroad for Slovakia to behave more rationally, the nation itself must come to its senses.

Prime Minister Jüri Ratas (Centre) has said that he does not have any red lines or issues on which it\'s not possible to compromise. The fact that it\'s possible to compromise on truly anything, including a lack of political responsibility, is confirmed by the actions of the current government on a weekly basis.

Slovakia has managed to muster a constitutional majority passing a bill that would have a detrimental effect on the stability of the Slovak public finances in the long run. The measure is the constitutional limit of the retirement age now set at 64 for men and 63 for women (with two kids).

Unfortunately, in 2016, the populist Law and Justice government decided to reverse the reform – the pseudo-economic rationale was the infamous lump of labor fallacy. They wrongly claimed that lowering the retirement age would be a perfect tool to fight youth unemployment – retiring seniors would (in their opinion) leave their jobs for young Poles.

As usual, the wording of this political declaration is vague and the purpose is unclear. Will it bring more flexibility to the EU economy and labor markets or will it make them more rigid? The whole text is permeated with the spirit of having your cake and eating it at the same time.