REPUBLIC OF SRPSKA

GOVERNMENT

Republic of Srpska
Pension System
Snjeana Rudi
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%

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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

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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)

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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 survivors

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 survivors
pension

70% of contributors 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

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
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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)
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Situation of PAYG schemes

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Projections of Contributors and Pensioners

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Projections of Deficit as % of GDP

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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
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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)
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REPUBLIC OF SRPSKA
GOVERNMENT

Pension Reform Working Group

www.vladars.net
Phone: +387 51 339 178
Fax: +387 51 339 655
s.rudic@mf.vladars.net

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