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Pension system reform is in the interest of citizens
Belgrade,
15 September 2005
Serbian Minister of Labour, Employment and Social Policy Slobodan Lalovic said today that the reform of the pension system in Serbia is in the interest of all citizens, the first effect of which will be regular payouts of pension cheques for the preceding month.
Slobodan Lalovic
Explaining a set of laws on the pension system at the Serbian parliament, Lalovic pointed out two fundamental aims of the reform – to redistribute domestic product in favour of investments and to establish a sustainable pension fund.
Lalovic stressed that the reform of the pension system, which will continue for about the next ten years, is indispensable, because at the moment there is one pensioner for each employee in Serbia, and that is why the existing funding system can no longer remain in force.
For the same reason, the amendments to the Law on Pension Insurance envisage different dynamics of pension indexation, meaning that the indexation will be performed once a year, starting from April 1, 2006, unlike the current practice of quarterly indexation, Lalovic explained.
The current indexation dynamics will gradually shift in the course of the next four years, though pensions will also be indexed if retail prices increase by more than five percent.
According to the minister, the law envisages that as of 2006, the mandatory retirement age be raised to 60 years for women and 65 for men. However, this will be done gradually at the rate of six months per year, and should be completed by 2009.
The law retains the option that redundant workers and those who lost their jobs because of bankrupt or dissolved companies, retire after a mandatory two-year period, namely at the age of 63 for men and 58 for women.
Lalovic said that the Law on Voluntary Pension Insurance will be the third insurance pillar to provide citizens with a sort of savings programme for old age. By means of establishing investment funds, this pillar should supplement the existing state pension insurance, he explained.
Lalovic said that the bill on the payment of contributions, namely on consolidating years of service, is one of the government’s social policy measures that aims to deal with holes in the years of service of those employees who had not had their contributions paid by their employers.
All employees will be able to apply for the consolidation of their years of service for certain periods, while the state will retain the right to retroactively collect debt from employers who had intentionally dodged payments on their employees’ wages.
However, Lalovic said that the greatest problem occurred as a result of the sanctions in the 1990s, which hit hundreds of thousands workers - mostly in the textile and construction industries.
The laws on the assumption of debts of pension and disability insurance funds will show that the government is conducting a strong and responsible social policy, which will, as of 2006, increase the number of pensioners receiving the lowest pension amount.
Lalovic announced that by 2010, the average salary in Serbia should be €300 and the lowest pension €170.
Lalovic stressed that the reform of the pension system, which will continue for about the next ten years, is indispensable, because at the moment there is one pensioner for each employee in Serbia, and that is why the existing funding system can no longer remain in force.
For the same reason, the amendments to the Law on Pension Insurance envisage different dynamics of pension indexation, meaning that the indexation will be performed once a year, starting from April 1, 2006, unlike the current practice of quarterly indexation, Lalovic explained.
The current indexation dynamics will gradually shift in the course of the next four years, though pensions will also be indexed if retail prices increase by more than five percent.
According to the minister, the law envisages that as of 2006, the mandatory retirement age be raised to 60 years for women and 65 for men. However, this will be done gradually at the rate of six months per year, and should be completed by 2009.
The law retains the option that redundant workers and those who lost their jobs because of bankrupt or dissolved companies, retire after a mandatory two-year period, namely at the age of 63 for men and 58 for women.
Lalovic said that the Law on Voluntary Pension Insurance will be the third insurance pillar to provide citizens with a sort of savings programme for old age. By means of establishing investment funds, this pillar should supplement the existing state pension insurance, he explained.
Lalovic said that the bill on the payment of contributions, namely on consolidating years of service, is one of the government’s social policy measures that aims to deal with holes in the years of service of those employees who had not had their contributions paid by their employers.
All employees will be able to apply for the consolidation of their years of service for certain periods, while the state will retain the right to retroactively collect debt from employers who had intentionally dodged payments on their employees’ wages.
However, Lalovic said that the greatest problem occurred as a result of the sanctions in the 1990s, which hit hundreds of thousands workers - mostly in the textile and construction industries.
The laws on the assumption of debts of pension and disability insurance funds will show that the government is conducting a strong and responsible social policy, which will, as of 2006, increase the number of pensioners receiving the lowest pension amount.
Lalovic announced that by 2010, the average salary in Serbia should be €300 and the lowest pension €170.
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