THEORETICAL ASPECTS OF THE PENSION SYSTEM AND EVALUATION OF LITHUANIAN OLD AGE PENSION

For every developed country, the system of old age pension is one of the most important subsystems of social insurance, the purpose of which is to redistribute the income and the costs of residents and to balance the unsynchronized ability to earn income with the desirable consumption throughout the entire life. However, increasing life expectancy of people and decrease in birth rates threaten the performance of the old age pension system. This article identifies the main parameters characterizing the system of old age pensions, analyses the classical model of the old age pension system and the formation of funding principles of old age funding system on the basis of the aforementioned models, namely the pay-as-you-go model and the fully funded model. Moreover, the article identifies and analyses the types of risks which influence the models of the old age pension system. The article introduces the forecast of the average old age pension in Lithuania for 2014-2017. Evaluating the amount of the estimated average old age pension in relation to the assumptions introduced in this article, it has been determined that the pension is increasing. However, it is doubtful whether the amount of the old age pension ensures dignifying old age for pensioners. Moreover, the evaluation of the old age pensions in the Middle and the Eastern Europe showed that the size of Lithuanian old age pension is one of the lowest.