With the first days of the New Year, pension indexation has begun to apply under the so-called “Swiss formula”, which implies that pensions align with inflation and average earnings, with experts pointing out that the model is economically viable, used by a large number of countries in the United States region and has received widespread social support.
The president of Serbia, however, indicated that the Swiss model could “complement something” with the aim of increasing the share of pensions in the country’s total GDP, all with the ultimate goal of making pensioners better off. Fiscal Council member Nikola Altiparmakov points out that the Swiss model is good and that the council also thinks it could be “empowered” and made suggestions on how best to do it.
He points out that last year the Fiscal Council made an analysis and pointed out the possibility that if we have very high economic growth and high wage growth over the long term, the share of pensions in GDP will start to fall below the target 10 percent, which is also European average, and it has proven financially viable for Serbia.
“We have suggested that in addition to the Swiss formula, another additional mechanism of intergenerational solidarity should be introduced, which implies that if high rates of economic growth and pensions are reduced to 9.5 percent of GDP, an automatic extraordinary adjustment of five percent will occur to increase participationpension in GDP returned to ten percent which is European practice and is economically viable for Serbia”, Altiparmakov told Tanjug.
He says they suggested it to the Ministry of Finance and that they showed an interest in “that additional mechanism” but that it should be implemented better when fiscal rules with the IMF are strengthened, that is, through them the “Swiss formula” is also strengthened.
He states that it is inadequate to insist on the average wage/pension ratio, but it is possible to ensure that the share of total pensions in GDP does not fall below 10 percent, which is the European average, Altiparmakov added.
The Swiss model otherwise implies a reconciliation of pensions, gender with rising earnings, and inflation, and is applied by many countries in Europe as well as in the region, such as Croatia, Bulgaria or Romania.
It existed in Serbia in the early 2000s, but was shut down in 2006. It is very important, as Altiparmakov noted, that this model has received widespread social support from unions, pensioners’ associations, the government, but also from the expert side that it is sustainable.
Secretary General of the Association of Pensioners Union of Serbia Ljubisa Babic points out that since pensioners have been affected by the reduction in income, the Swiss formula encourages that pensioners will live more decently.
He recalls that the oldest fellow citizens were affected by the reduction in income and that it was good that pensions were finally rising.
“Still, there are a lot of unresolved problems that would have to be addressed systematically in the coming years”, Babic said.
Labor Minister Zoran Djordjevic said that the goal is for average pensions to be around 430, 440 euros in 2025.
“This is something that we need to work on together”, the minister said, particularly assessing the care of pensioners, noting that the Pension and Disability Insurance Act had been amended, as well as the increase of pensions by 5.4 percent and the introduction of Swiss formula for calculating pensions.
The Swiss formula is not the only novelty for retirees this year, with a 5.4 percent increase planned for the January retirement check.
In six months, the limit for women’s retirement and early retirement of both sexes was moved.
This year, women will retire at the age of 63.
From this year also, the right to eligible seniority has been extended, and pensions will be inherited from extramarital partners, writes Tanjug.