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Irena Risteska Ministry of Labor and Social Policy

Irena Risteska Ministry of Labor and Social Policy. Reformed Pension System in Republic of Macedonia. Current Macedonian Pension System. Mandatory rationalized PAYG system (first pillar) Mandatory fully funded system (second pillar) Voluntary fully funded system (third pillar). PDIF.

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Irena Risteska Ministry of Labor and Social Policy

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  1. Irena Risteska Ministry of Labor and Social Policy Reformed Pension System in Republic of Macedonia

  2. Current Macedonian Pension System • Mandatory rationalized PAYG system (first pillar) • Mandatory fully funded system (second pillar) • Voluntary fully funded system (third pillar)

  3. PDIF • 451.491 contributors • 273.281 pensioners contributors/pensioners=1.65 This ratio from 2002 to 2005 was 1.3.

  4. PDIF In 2008: • Increased the contribution collection by 17% • 21,66% indexation of pensions In 2009, the contribution rate for pension and disability insurance was reduced from 21,2% to 19%.

  5. Pension reform summary Parametric reforms of solidarity PAYG system Mandatory fully funded system introduced in 2005/2006 April 2005 - Two licenses granted to Pension Companies with mixed capital (domestic and foreign) for managing one Mandatory Pension Fund each selected in international bidding process September 2005 – Start of Membership Process for Mandatory Pension Funds 5

  6. Pension reform summary (cont.) • January 2006 – Start of second pillar contributions flow • January 2008 – Start of transfer process for second pillar members • First half of 2009 • Opening of the market, licensing of new Pension Companies allowed • Transfer of custodian role for second pillar from Central bank to commercial banks • Implementation of third pillar

  7. Second pillar members • Transition Rules • Hired on or after January 1, 2003 must join two-pillar pension system (PAYG + mandatory fully funded) • Hired before January 1, 2003 had one-time option to join voluntary (up to December 31, 2005) • Those joining two-pillar system had future solidarity benefits reduced • Number of members (as of 31st of March 2009) • 210.519 (21% of labor force, 40% of the pension contributors) • Average age of members :31 • First big cohort of retirees expected in 15 years • No retirees currently

  8. Contributions and benefits in the two-pillar system • First pillar: 65% of total contribution  old age (30%), disability and survivors pension, and minimum guarantee • Second pillar: 35% of total contribution  old age pension

  9. Future contribution rate changes

  10. II pillar assets

  11. Average nominal net investment return

  12. Thank you for your attentionmtsp.gov.mkmapas.gov.mk

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