Irena RisteskaIrena RisteskaMinistry of Labor and Social PolicyMinistry of Labor and Social Policy
Reformed Pension System in Reformed Pension System in Republic of MacedoniaRepublic of Macedonia
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• Mandatory rationalized PAYG system (first Mandatory rationalized PAYG system (first pillar)pillar)
Mandatory fully funded system (second Mandatory fully funded system (second pillar)pillar)
Voluntary fully funded system (third pillar)Voluntary fully funded system (third pillar)
Current Macedonian Pension Current Macedonian Pension SystemSystem
PDIFPDIF
451.491 contributors 451.491 contributors 273.281 pensioners273.281 pensioners
contributors/pensioners=1.65contributors/pensioners=1.65
This ratio from 2002 to 2005 was 1.3.This ratio from 2002 to 2005 was 1.3.
PDIFPDIF
In 2008:In 2008:- Increased the contribution collection Increased the contribution collection
by 17%by 17%- 21,66% indexation of pensions21,66% indexation of pensions
In 2009, the contribution rate for In 2009, the contribution rate for pension and disability insurance was pension and disability insurance was reduced from 21,2% to 19%.reduced from 21,2% to 19%.
Pension reform summaryPension reform summary Parametric reforms of solidarity PAYG system Parametric reforms of solidarity PAYG system Mandatory fully funded system introduced in Mandatory fully funded system introduced in
2005/20062005/2006 April 2005 - Two licenses granted to Pension April 2005 - Two licenses granted to Pension
Companies with mixed capital (domestic and Companies with mixed capital (domestic and foreign) for managing one Mandatory Pension foreign) for managing one Mandatory Pension Fund each selected in international bidding Fund each selected in international bidding processprocess
September 2005 – Start of Membership September 2005 – Start of Membership Process for Mandatory Pension FundsProcess for Mandatory Pension Funds
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Pension reform summary (cont.)Pension reform summary (cont.)
January 2006 – Start of second pillar January 2006 – Start of second pillar contributions flowcontributions flow
January 2008 – Start of transfer process for January 2008 – Start of transfer process for second pillar memberssecond pillar members
First half of 2009First half of 2009• Opening of the market, licensing of new Opening of the market, licensing of new
Pension Companies allowed Pension Companies allowed • Transfer of custodian role for second pillar from Transfer of custodian role for second pillar from
Central bank to commercial banksCentral bank to commercial banks• Implementation of third pillarImplementation of third pillar
Second pillar membersSecond pillar members Transition RulesTransition Rules
• Hired on or after January 1, 2003 must join two-pillar Hired on or after January 1, 2003 must join two-pillar pension system (PAYG + mandatory fully funded)pension system (PAYG + mandatory fully funded)
• Hired before January 1, 2003 had one-time option to join Hired before January 1, 2003 had one-time option to join voluntary (up to December 31, 2005)voluntary (up to December 31, 2005)
• Those joining two-pillar system had future solidarity Those joining two-pillar system had future solidarity benefits reducedbenefits reduced
Number of members (as of 31Number of members (as of 31stst of March 2009) 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
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Contributions and benefitsContributions and benefits in the two-pillar system in the two-pillar system
First pillar: 65% of total contribution First pillar: 65% of total contribution old age (30%), disability and old age (30%), disability and survivors survivors pension, and minimum guaranteepension, and minimum guarantee
Second pillar: 35% of total contribution Second pillar: 35% of total contribution old age pension old age pension
Future contribution rate changesFuture contribution rate changes
Total Total contribution contribution raterate
% of gross wage% of gross wage
CurrentCurrent 21.2 %21.2 %First pillar: 65% of total contribution First pillar: 65% of total contribution (13.78% of gross wage) (13.78% of gross wage)
Second pillar: 35% of total contribution Second pillar: 35% of total contribution (7.42% of gross wage)(7.42% of gross wage)
20092009 19%19%
20102010 16.5%16.5%
2011 onward2011 onward 15%15%
II pillar assetsII pillar assets 31.12.2007 31.12.2008 31.03.2009
Equity and investment funds 21,74% 9,18% 6,44%
foreign 2,89% 2,12% 1,17%
domestic 18,85% 7,06% 5,27%
Fixed income 59,78% 47,92% 54,98%
domestic government 59,78% 47,26% 54,38%
domestic corporate 0,00% 0,66% 0,60%
Deposits (domestic banks) 18,46% 41,90% 36,82%
Cash and receivables 0,02% 1,00% 1,76%
Total assets 100,00% 100,00% 100,00%
Net assets (in EURO) 50.796.265,00 81.373.621,00 92.446.121,00
Average nominal net investment Average nominal net investment returnreturn
31.12.2006-31.12.2006-31.12.200731.12.2007
31.12.2007-31.12.2007-31.12.200831.12.2008
31.12.2008-31.12.2008-31.03.200931.03.2009
8,78%8,78% -10,20%-10,20% 0,54%0,54%
Thank you for your attentionThank you for your attention
mtsp.gov.mkmtsp.gov.mkmapas.gov.mkmapas.gov.mk
