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about 57 for men, 53 for women. Given an average life expectancy at age 60 of 16 years for men and 19 years for women, these retirement ages leave an average post-retirement life of over 25 years!5 Since 1989, several countries have raised the retirement age or reduced the privileges for selected occupations. The fiscal cost of these low retirement ages will continue into the next century, however.

_High and grow7ng dependency ratios._ As a result of the nost-war demogr.-hic trends as well as the low retirement ages, syswtm dependency ratios are high in the European countries. Ihe r&io of pensioners to contributors mges from .33 in Kyrgyzstan (a demographicall **y** ounger country) to .87 in Bulgaria (Table 1). Note that these rates are 30 to 0 pcnt higher than the old-age dependency ratio primarily because of the early rlzmmgnLage . By comparison, in the OECD, system dependency is only 8 percent higher than demographic dependency. In most of the Cerrtal European systems, the combination of reduced numbers of contributors (caused by unemployment and evasion by the private sector) and demographic trends are expected to push this ratio to one by the end of the decade (barrLng major reforms).

_High ccpe.fr4 kyels and contnibuion rates._ Total social securitv system outlays as a share of GDP **are** high and have been rising over the last decade. (Graph 1). Pension expenditures are normally two-thirds to three-fourths of total social security system outlays. By 1992, many EECA countries were spending as much in percent of GDP as the OECD welfare states, where per capita incomes are at least five times higher. In OECD countries, labor's share in GDP is high, and therefore this level of expenditures has thus far been affordable, albeit requiring high payroll taxes. But in EECA countries, the share of labor income in GDP is more typial of middle income developing countries, (e.g. about one-half to one third that of OECD countries), so contribution rates had to be raised to exorbitant levels to support these benefits - a'-ost 50 percent of payroll for short and long term benefits. These rates are typicaUy levied on the payroll (not on the individual, except in Hungary and the former Yugoslavia) and paid entirely by the firm, obscuring the cost of these systems to the active generations.

_High stnatory replacement rates, few provisions for indexaton._ Statutory replacement rates tended to be about 80 percent of net wages, with actual replacement rates averaging slightly less. Pensions were based on the last three to five years' earnings, unadjusted for inflation. Usually pension payments were also not indexed, but subject to ad hb adjustments. During the period of administered prices, the average pension tended to be close to the statutory replacement rate and the lack of indexation was not a problem because infla';on was negligible. Those receiving full pensions (most pensioners) had a dependable income replacement stream. As prices have been freed during the transition, inflation has eroded the real value of pensions and compressed the distribution so that in many countries, the median penmon is the minimum pensiont. For example, in Russia, 50 percent of pensioners now receive the minimum pension, in Kyrgyzstan over 70 percent. In Romania, ' These life expectancy data are for Hungary, and were calculated for the author by the Statistical Institute.