Transcript Presentation by the Bosnian Delegation (Republica Srpska)

REPUBLIC OF SRPSKA
GOVERNMENT
Republic of Srpska
Pension System
Snježana Rudić
Ministry of Finance
Regional Seminar on Pensions
Zagreb, 09-10. March 2009
General
•
BiH is consisted of 2 entities:
–
–
•
Federation of BiH
Republic of Srpska (RS)
RS figures:
–
–
–
–
–
–
GDP per capita: 3.227 EUR
real GDP growth: 7,2%
rate of unemployment: 20,5%
population: 1,302 million
total fertility rate: 1,25
life expectancy at birth:
– men: 73,9
– women: 78,6
–
economic dependency ratio: 27,5%
2
Pension landscape
• Mono pillar, DB, PAYG financed
•Types of benefits:
– Age pension 53,14 %
– Survivors
– Disability
29,95 %
16,91 %
•Administration of pension arrangement – Public Fund,
PDIF RS
•Centralized Tax and Contribution Collection –
Undergoing project
3
Pension landscape
• Contribution rate 24% net salary (17% gross salary)
• Substantial budget transfers and support (22,14% of
total PF revenues, 1,95% GDP)
• III pillar regulation – DC, funded, voluntary,
individual/collective, privatelly managed (introduced in
February 2009)
• Demographic pension reserve fund (buffer fund) –
assets from privatisation (aimed to finance mandatory
PAYG fund)
4
Personal scope of pension arrangements
Pension
parameters
Republic of Srpska
Retirement age
A) 65M/65F with at last 20 years of contribution as of 2006 (60F, 35 years of contribution penalised)
B) Any age with 40M/35F years of contribution
Accrual rate
2,25% annually for the first 20 years (gross salaries)
1,5% annually for the next 20 years
0% beyond 40 years
Replacement rate
45% replacement rate for the first 20 years
1,5% accrual rate between 20 and 40 years
Maximum 75% with 40 years of contribution
Pensionable base
Net wages earned since 1970. revaluated based on historical average salary growth (1992 and 1993 are excluded
from calculation of the pensionable base due to the hyperinflation from this period)
Indexation
In line with the growth of average salaries, but subject to revenue constraint (balancing of revenues and
expenditures using the coefficient system)
Eligibility for disability
pension
Contributed for 1/3 of working life from age 20 to age of disability; until the moment of occurrence of disability;
No requirement in case of work injury (it is defined as inability to work at previous job)
Level of disability
pension
50%M/ 57,5%F for up 20 years of contribution
1,25%M/ 1,16%F for subsequent years with maximum of 75%
Automatic maximum irrescepctive of years if in case of work injury
Eligibility for survivor’s
pension
Age 45, incapacity, or caring for a child in case of widow
Age 55, ancapacity, or caring for a child in case of widower
Children aged 15 or younger and until 26 if full time students or lifetime if incapacitated
Level of survivor’s
pension
70% of contributor’s entitlement if 1 person: 80% to be divided by 2; 90% to be divided by 3; and 100% to be divided
if 4 or more
Contribution rate
17% of gross salary
5
Situation of PAYG schemes
•
•
•
•
Pension expenditures / GDP: 8,5%
Insured / pensioners: 1,43
Average age at retirement: 53 years
System delivers a low rate-of-return & low
replacement rate
• High % of employed are not contributing to
the pension system or are sub declaring
6
Situation of PAYG schemes
• RS PAYG system is always fiscally balanced
• Special mechanism for adjusting pension
levels in order to prevent deficits from
emerging (pension expenditures = pension
system revenues)
• Substantial budget transfers and support
(22,14% of total PF revenues, 1,95% GDP)
7
Situation of PAYG schemes
8
9
Projections of Contributors and Pensioners
10
Projections of Deficit as % of GDP
11
The building up of pension entitlements
• Low income (out of works) categories – Social
protection system (general budget)
• Self employed and farmers – voluntary PAYG
• People with an incapacity to work – included in
Social protection system (General and Municipality
budgets)
• Unemployed people – Unemployment Fund (0,7%
gross salary)
• Immigrating people – Proportional pension right
12
Conclusion
•
•
•
•
Increasing deficit PAYG system
Negative demographic trends
Decreasing replacement rate
Limited posibilities for further parametric
reforms (introduced in 2000)
• Considering funded mandatory II pillar
indroduction
• Macro model developed
• Evaluation of demographic and economic
preconditions (reconsideration)
13
REPUBLIC OF SRPSKA
GOVERNMENT
Pension Reform Working Group
www.vladars.net
Phone: +387 51 339 178
Fax: +387 51 339 655
[email protected]
14