EuroEconomica, Vol 29, No 3 (2011)

Abstract

This paper focuses on the pensions system in Albania. The economic, political, and social changes that occurred in the nineties put the whole country’s economic development under pressure and especially the pension system. This paper analyzes how the challenges brought by both the demographic transition and the economic transition were faced. It discusses the different reforms undertaken up to now and their impact on the pension system sustainability, equity, and the fiscal burden to the state. The parametric reforms of 2002 had a positive effect on the financial situation of the pension scheme. Yet further reforming of the current scheme is necessary to address ongoing concerns. The high rate of unemployment and the informal labor market reduce the amount of contributions. The “aging” population, which increases the fiscal burden, continues to challenge the pension system.