Mickoski: Government has not announced abolition of the second pension pillar

Prime Minister Hristijan Mickoski denied that the government plans to abolish the second pension pillar, responding to public concern sparked after authorities said comprehensive analyses of the pension system and the risks linked to the second pillar had begun.

“Who announced that the second pillar will be abolished? I can speak on behalf of the Government. There is no such announcement on behalf of the Government,” Mickoski said, dismissing claims that the undertaking of system-wide reviews was a prelude to shutting down the compulsory private pillar.

Government officials have repeatedly said reforms to the pension system are being considered, but the scope and direction of any measures remain undefined while analysts map out possible options. Authorities point to changed conditions since the second pillar was introduced as the reason for the fresh review.

Last month, the State Audit Office drew attention in its report to delays in transfers from the public fund to private pension funds, saying the Pension and Disability Insurance Fund (PIOM) has not always remitted money to the second-pillar funds within the legal deadlines.

Demographic pressures — population aging and the emigration of young people — are central to the system’s imbalance. Experts say a sustainable ratio would be roughly three employed people for each pensioner; North Macedonia currently has about 1.6 employed persons per pensioner. That gap means contributions are much smaller than pension payouts, steadily widening the budget deficit.

The Association of Pension Fund Management Companies warned that nationalising the second pillar is technically possible but likely the least desirable reform: it would only cover the shortfall for a few years — their estimate is about three years — before the structural imbalance re-emerges. “At the moment when it comes time to pay pensions in parallel from the first and the second pillar, the obligation to pay pensions for roughly half of the amount will fall on the second pillar. The state fund PIOM will continue to retain more than two thirds of the total pension and disability insurance contribution. In that way, a larger share of contributions in the first pillar, and a divided obligation for pension payments, means that over the years PIOM’s revenues and expenditures will gradually balance and we will reach a state of sustainability. That is the goal of the reform,” said Marijan Nikolovski, president of the Association of Pension Fund Management Companies.

Independent experts also call for a broad revision of the pension architecture. They argue multiple policy paths remain open, and that the final solution should minimise fiscal cost while maximally protecting contributors and beneficiaries.

Mirjana Joveska

Photo: press material from the event