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Although the president originally announced that the calculation of pensions would change to grow more than under the current formula, now there is a hint of a change that will actually reduce that growth.
In the October talks, one of the important issues between the Serbian government and the IMF will be how to adjust pensions, that is, how much will they increase next year.
Photo: BETAPHOTO / DRAGAN GOJIC / MOUnder the so-called Swiss model, which was adopted last year, pensions are 50 percent in line with inflation and 50 percent in line with wage growth.
Although we still have to wait for the salary data in September, Nikola Altiparmakov, a member of the Fiscal Council, estimates that, as things stand now, pensions as of January 1, 2021 should be higher by about four percent. .
Finance Minister Siniša Mali said yesterday that he would discuss with the Fund the refinement of the Swiss pension growth model.
“The most important thing is that we will not have a reduction in salaries and pensions. In October, we will discuss with the International Monetary Fund, among other things, the refinement of the Swiss formula for pensions. And to repeat once again, regardless of the problems in the functioning of the global economy, we will have an increase in minimum wages and pensions in 2021 ”, said Mali.
The statement on this issue was given by the President of Serbia, Aleksandar Vučić, and that “pensioners can rest easy because, despite the crisis caused by the corona virus, their pensions will not be reduced, but will increase.”
He also mentioned that the “Swiss model” will apply. This is interesting, because there is no basis for a pension reduction in the law, nor has anyone proposed it. In addition, in January before the crisis, Vučić said that “the Swiss formula will be adjusted so that in the coming years the income of pensioners is higher in relation to the amount that would allow the application of that formula.”
At this time, pensioners do not expect that the correction could go towards a greater increase, but the other way around. Jovan Tamburić, president of the Association of Retired Military Personnel Trade Unions of Serbia, is skeptical and believes that the change in the formula “will certainly be to the detriment of retirees”.
“Our assessment is that the story about raising pensions and wages in the public sector is dizzying, and the government will start talking about it every year in February until the end of the year.” Until we see data on economic trends in the second half of the year, we don’t know how much pensions could increase.
What we do know is that due to the crisis, a large number of people lost their jobs and that contributions to the Pension and Disability Fund dropped considerably.
We estimate that more than a million people pay pension contributions above the minimum wage. This will not only affect current pensioners, it will also reduce their pension, they just don’t have time to think about it now, ”says Tamburić.
According to him, the public is under the impression that pensions will increase a lot and, in fact, the actual increase will be minimal.
He also points out that the request to set a limit so that the average pension cannot fall below 50 percent of the average salary is realistic and that now that ratio is around 46 percent.
Altiparmakov, from the Fiscal Council, adds that from the point of view of the state treasury, it would be sustainable to continue with the Swiss formula next year.
“The calculations show that this is a sustainable long-term model. Before the crisis, we had the initiative of the government and the union to correct the Swiss formula so that pensions grew more than what the formula offers because we had economic growth. The position of the Fiscal Council is that if they want to correct the formula in that way, then it should reflect not only the effects of growth, but also the crisis, so if pensions grow more when things are going well, then move down when there are If the estimated GDP growth were to hold, that would mean, for example, a correction of the model so that 75 percent of pensions are in line with wage growth and 25 percent with inflation. the crisis ended, I think it should be the other way around, 25 percent with salaries and 75 percent with inflation. Everything is a matter of social agreement and intergenerational solidarity, but that solution is fiscally responsible, ”explains Altiparmakov.
He points out that such a correction would mean an increase in pensions by three percent next year, which would represent a budgetary saving of about six billion dinars compared to the Swiss model. She also referred to the idea of fixing the average pension by the average salary.
“It is unsustainable and it is a comparison of the incomparable. The average pension includes agricultural pensions that are minimal, then the pensions of the self-employed who consciously paid contributions on a minimal basis. If a comparison were made, then one would have to compare the pensions of old age of the employees with the average salary, and Serbia is not bad at all in relation to the region, “said Altiparmakov, who does not see the possibility of thinking about increasing pensions above what it offers. Swiss formula.
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