THE NECESSITY OF RAISING THE RETIREMENT AGE FOR OLD-AGEPENSION ELIGIBILITY

Abstract

The effective functioning of a pay-as-you-go pension and disability
insurance system, based on the principle of intergenerational solidarity,
largely depends on maintaining a favourable ratio between contributors
and beneficiaries. When this ratio is disrupted, the social security
contributions collected are no longer sufficient to finance the benefits
payable to current pension recipients, and the resulting shortfall must be
covered from the state budget.
The persistently low birth rate and population ageing in the Republic of
Serbia have repeatedly necessitated increases in the statutory retirement
age for old-age pension entitlement. The latest gradual increase will be
completed in 2032, when women will become eligible for an old-age
pension under the same conditions as men, namely upon reaching the age
of 65 and completing at least 15 years of pensionable service. However,
this reform alone will not significantly improve the long-term
sustainability of the pension system. Consequently, it will be necessary
to introduce a further gradual increase in the retirement age for both men
and women, as has already been implemented in many countries. In
addition, other measures should be considered, including raising the
minimum age for women to qualify for a survivor's pension from 53 to
58 years of age, as well as conducting a comprehensive review of
pensionable service credited with extended duration (privileged or
accelerated pensionable service).
The paper analyses the current legal framework and demographic
situation and proposes appropriate legislative solutions aimed at
improving the long-term sustainability of the pension system.