PIOM could face about €1.3 billion shortfall without reforms; experts propose gradual rise in pension contributions
Experts say a package of measures — gradual contribution increases, tackling grey economy and indexation on inflation only — could prevent a €1.3 billion gap.
Domestic experts warned that the Pension and Disability Insurance Fund (PIOM) could face an additional shortfall of about €1.3 billion unless reforms are implemented, according to an analysis presented today.
The specialists proposed a package of measures to reduce the fund's deficit: a gradual increase in pension contribution rates, stronger action against the grey economy and changing the formula for pension indexation so that only inflation is taken into account. They also cautioned that failure to act now would force authorities to adopt harsher steps in the future.
Gradual contribution rises recommended
"This reform — this package of measures — is some kind of phased distribution tolerable at the moment so we don't resort to more painful reforms, and if at this moment we do not implement such shared reforms, after 2035 we will have no other options," said Blagica Petreski of Finance Think.
Experts argued the contribution increase should start on time and be introduced gradually. "All actors, all analyses say it must be gradual. It could even be by 0.3 or 0.2 percentage points annually. It's better to do it gradually now, and I think that's not a big problem or political cost," said Fiscal Council chair Abdulmenaf Bedzeti.
PIOM director Nikola Memov agreed that contribution rates need upward adjustment. He warned that PIOM's deficit rose by about €160 million in one year.
"This contribution rate should increase, but gradually. Whether by two percentage points or three, it must be calculated, so that those insured who are currently employed will pay for our pension," said PIOM director Nikola Memov.
The analysis finds that implementing the proposed package would save roughly €550 million annually — money that would no longer need to be transferred from the state budget. At present, more than 40 percent of PIOM's expenditures are covered by state funds. The World Bank and the IMF have repeatedly recommended, in addition to raising contributions, increasing the retirement age.
Photo: press material from the event
