The Feasibility of Introducing a Private Pension System in the Republic of Moldova

The study warns that adverse demographic developments, a forecast deepening of the demographic crisis, a falling employment rate and a shrinking share of the working-age population will fundamentally undermine the public pension fund's ability to meet its obligations to pensioners. Without consistent reform of the current pay-as-you-go (PAYG) system, its long-term sustainability is at risk. Such a reform cannot take place without restructuring the country's entire social protection system.

Given the population's insufficient familiarity with non-state pension funds, the embryonic state of the capital market and the imperative need to reform the PAYG system, the study concludes that a multi-pillar pension system should be introduced gradually. It proposes two major stages: first, developing voluntary private pensions (pillar III); second, implementing and developing mandatory private pensions (pillar II).