Statutory schemes of social security (Directive 79/7)

• Author: Krstic, Ivana
• Pages: 54-57

54

7 Statutory schemes of social security (Directive 79/7)

7.1 General (legal) context

7.1.1 Surveys and reports on the practical difficulties linked to statutory schemes of social

security (Directive 79/7)

There are many surveys and reports showing that the Serbian pension system needs total

reform and that the current situation is very unfavourable. It is illustrative to mention one

study from 2017, of which the key findings are: low adequacy of current pension system;

the at-risk-of-poverty or social exclusion rate for the elderly in 2016 was 31.2 %, while

the severe material deprivation rate was 20.9 %, much higher than EU 28 averages; the

2014 fiscal-consolidation measures imposed cuts on pensions that were above the national

average; demographic projections show rapid population ageing, which will i ncrease the

old-age (20/64) dependency ratio to 42.8 % by 2035; the greatest challenge will be

maintaining the sustainability of the Pension Fund as the working-age population shrinks;

the provision of better safety nets for the most vulnerable elderly people, aged 75+, by

relaxing the financial social assistance eligibility conditions – this is vital, due to rapid

population ageing; and there is also a need to increase the coverage of personal pension

schemes, through tax subsidies and flexible investment options for the Voluntary Pension

Funds.155

7.1.2 Other relevant issues

The problems with the pension system in Serbia reflect gender perspective. The pension

reform in 2014 imposed a phased-in equalisation of the retirement age for women, raising

it to 65 by 2032. However, the coverage rate of pension payments for people aged 65-79

was higher for men (89 %) than for women (81.5 %) in 2011, while in 2016 the gender

gap in coverage rates was 15.0 percentage points.156

The rates of severe material deprivation for persons aged 65+ and 75+ are 20.9 % and

21.7 % respectively, almost four times more than the EU 28 averages (5.9 % and 6.1 %).

Gender differences are prominent, as the above-quoted rates are much higher for

women.157

The share of self-employed pensioners i n the total number of old -age pensioners is low,

at 4.9 % in 2016, although it had increased 2.3 times compared with 2008. The share of

women in this category is low at 22.2 %, reflecting the low level of participation by women

in the self-employment sector.158 However, another important issue with self-employed is

that they enter retirement earlier than other workers: 34.6 % had fewer than 20 years of

service, while 77 % retired with fewer than 30 years of service. T herefore, the average

old-age pension for the self-employed category was EUR 219.70 per month, which is 7.1 %

lower than the average for the employee category (2016).159

7.1.3 Overview of national acts

The statutory schemes of social security are prescribed in several laws.

155 Pejin Stokić Lj., Bajce J., (2017), ESPN Thematic Report: Assessment of Pension Adequacy in Serbia,

European Social Policy Network.

156 Pejin Stokić Lj., Bajce J., (2017), ESPN Thematic Report: Assessment of Pension Adequacy in Serbia,

European Social Policy Network, 5.

157 Pejin Stokić Lj., Bajce J., (2017), ESPN Thematic Report: Assessment of Pension Adequacy in Serbia,

European Social Policy Network, 8.

158 Pejin Stokić Lj., Bajce J., (2017), ESPN Thematic Report: Assessment of Pension Adequacy in Serbia,

European Social Policy Network, 10.

159 Pejin Stokić Lj., Bajce J., (2017), ESPN Thematic Report: Assessment of Pension Adequacy in Serbia,

European Social Policy Network, 10.