Abstract
In countries like Greece where long-term fiscal imbalances and bailouts are to a large extent attributed to particularly high pension expenditures as a share of Gross Domestic Product (GDP), (e.g., 15.5% of GDP in 2017) (pre)funded pension schemes are expected to play an important role. This is the first study that analyzes the technical efficiency of occupational pension schemes in Greece by applying the methodology of Data Envelopment Analysis on a sample of sixteen decision-making units for the period 2017–2020. The study also provides up-to-date information on the spread of occupational pension schemes in Greece. The results indicate that one out of two Greek occupational pension funds operated fairly efficiently and that the sector displayed a considerable variation and a systematic upward trend. Total equity and debt are the main determinants of occupational pension funds’ efficiency, followed by total assets and operating expenses. Furthermore, scale acts as a restriction on the efficient performance of small occupational pension funds. These findings imply a need for resource reallocation (e.g., reduction of the level of inputs used) and for favoring economies of scale (e.g., through the operation of ‘open’ pension funds).
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Source: Pissarides et al. (2020)
Source: OECD (2022)
Source: Authors’ calculations from EIOPA (2021a)
Source: Hellenic Union of Institutions for Occupational Retirement Provision (HUIORP)
Source: Authors’ calculations from EIOPA (2021a)
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21 February 2024
A Correction to this paper has been published: https://doi.org/10.1007/s12351-024-00821-0
Notes
Occupational schemes (pillar II) and statutory public schemes (pillar I) aimed at avoiding old age poverty should ensure pension adequacy (that is prevention of poverty in old age, inter-generational solidarity, and the maintenance of living standards in old-age), leaving personal saving schemes (pillar III), mandatory or voluntary, as a tool for individuals to enhance their replacement rates (European Parliament 2014).
Considering Greece's financial difficulties, these three programs provided loans to Greece conditional on the implementation of policy measures.
This was the result of the consolidation of all PAYG pension funds into EFKA achieving administrative and operational unification (Law 4387/2016).
The introduction of funded schemes was only on paper. Auxiliary funds of the pillar I (PAYG) have not been gradually transformed into funded occupational schemes managed by social partners and the size of the very few schemes established is too limited (Romanias 2007).
IORP II aims to establish a better system for governing occupational pension funds, to increase information transparency for pension savers, and to clarify the procedures for carrying out cross-border transfers and activities.
FEIR (2022) analyzes the institution’s prospects and challenges and draws important conclusions regarding the positive macroeconomic effect that the development of the second pillar may have on the Greek economy.
There are considerable differences relating to the size, the institutional and operational framework of the national occupational pension fund sectors within the EEA (OECD 2021, for the OECD countries; European Parliament 2014; Curos et al. 2020, for the EU member states). Consequently, a comparative analysis should be made with caution.
It is noteworthy that during the covid19 four new non-compulsory Occupational Insurance Funds have been established.
The replacement rate expresses the average new pension as a share of the average gross wage at retirement.
Their analysis is beyond the scope of the present analysis.
Scale efficiency is described as a company's capability to operate very near to its most productive scale size.
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The authors wish to thank Nikos Mylonidis, Christos Giannakoulas, and Michael Yates for helpful comments and suggestions.
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Chrysanthopoulou, X., Mavrommati, A. & Migdalas, A. Assessing the efficiency of occupational pension funds in Greece. Oper Res Int J 23, 66 (2023). https://doi.org/10.1007/s12351-023-00807-4
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DOI: https://doi.org/10.1007/s12351-023-00807-4