On the Issues of Reforming Pension System in Emerging Economies: Case on the Republic of Kazakhstan

Abstract

The sustainable development of any modern society in many respects depends on conditions such as economic opportunities and welfare system. Lower expected economic growth, coupled with large public spending and obligations are bringing significant challenges for emerging and developed countries to manage their public finances, with latter stuck in the uncertain austerity trap. Commodity and export depended nature of the national account balances in developing countries, makes managing public finances even more difficult, as the demand for those mainly comes from developed countries, which are now facing anemic growth levels. Pension reforms and economic growth issues have inverse relationship and at the same time interdependent. When economic growth is sustainable and predictable, pension reforms do not pose immediate concern. But low prospects of economic growth increase the burden on business and state to look for the coffers to fill the contribution gap. Although many countries claim their pension systems to be fair and efficient it really takes several decades to see it. This paper which was based on the research sheds some light to the process, issues and the complexity of pension reform in the relatively young and upcoming emerging economy as Kazakhstan, and could be a good case for other countries to learn and make proper conclusions.