Contribution rates to funded pension systems in the new member countries

The paper examines implications of real convergence for fully funded pension systems in the new member countries of the European Union. The process of convergence implies that contribution rates would have to be up to 70% higher in the new member countries in order to achieve the same replacement ratio as in a steady-state economy. This effect is partially due to higher growth rates during the process of real convergence and partially due to lower rates of return. The rates of return will be lower due to nominal convergence.