The policies followed by the administrations of countries have not always resolved the aforementioned issues. Consequently, the pay-as-you-go systems were brought into a difficult position, especially as the employee contributions did not suffice to finance the increasing number of retirees, creating the need to finance pension schemes from other sources.
One potential route away from this difficult situation is the partial shift of pay-as-you-go to funded pension schemes. This approach has two benefits for the state; on one hand it allows for the reduction of state-provided financing, and on the other hand it fosters the investment of the funded contributions in the real economy, which in its turn has a clear contribution to the growth of the country. One country of interest exhibiting the characteristics discussed above is Greece.
We attempt to investigate the contribution of funded pension schemes to the growth of a country with the use of econometric models. Funded pension schemes involve long-term investors who can steer their investments to provide funding to enterprises, especially the small- and medium-sized ones. This can take place through vehicles such as exchange traded funds (ETFs) and venture capital (VC), which facilitate the flow of funds to the enterprises that need them, thus contributing further to the growth of the economy.
Key Words:Funded Pension Schemes, Growth, GDP, Exchange Traded Funds (ETFs), Venture Capital (VC).
JEL Classification: H55, H63, J32