Page 30 - Ekonomija i Biznis_noemvri 2016.indd

ECONOMY
Petar Debnikov
The author is an independent advisor,
Department of Financial Stability and
Banking Regulations, NBRM
THE SYSTEMIC RISKS OF THE
PRIVATE PENSION INSURANCE IN
MACEDONIA
At the end of September, the
IMF published the final state- membership for the persons who are em-
ment on the occasion of the
realized regular mission in
Macedonia. What attracted
the most attention among the national
public were the messages on the condi-
tions in the first column of our pension
system. Namely, in the announcement
of the IMF, clearly and unequivocally the
need of “urgent fiscal consolidation” was
pointed out, with a special emphasis on
the implementation of reforms for re-
duction of the deficit in the Pension and
Disability Insurance Fund of Macedonia.
The IMF identified some of the reasons
for the deficit in the Pension and Disabil-
ity Insurance Fund of Macedonia such
as “the relatively generous pensions, the
reduced rates of contributions and the
low rates of activity of the population.”
One must not forget the expected ef-
fect of increase of the deficit due to the
transition from one-pillar to multi-pillar
pension system, which will be present
in the following 15 to 20 years, until the
first major cohort of pensioners does not
start to receive pensions from the sec-
ond pillar. Just to remind, with the re-
form of the pension system, according to
the example of the developed countries,
capital financed pension insurance was
introduced in Macedonia with so called
defined contributions by establishing
privately managed second and third pil-
30 November 2016
lar. The second pillar has compulsory
ployed for the first time after 01.01.2003,
and voluntary membership for the other
persons, while the third pillar implies
voluntary individual membership or
membership through professional pen-
sion schemes formed by the employers.
Privately managed pension funds are cat-
egorized as institutional investors and
they are part of the national financial
system. The first pillar (the Pension and
Disability Insurance Fund of Macedo-
nia) continued to function according to
the principle of intergeneration solidar-
ity, that is, the current expenditures for
pensions are financed with the part of
the contributions for pension insurance
paid by the employees, as well as to the
already inevitable budget transfers.
The suggestions of the IMF incited
special interest among the citizens who
already realized the right to pensions
or they are close to pension, which is
completely understandable considering
that their income primarily depends on
the financial condition of the state fund.
The experiences of the other countries
show that the reforms for fiscal consoli-
dation, and particularly the ones related
to the pension systems, usually are not
politically attractive because the au-
thorities try not to implement them or
to postpone them as much as possible.
Ultimately, the authorities may even