The Theoretical Aspect of Pension Reforms, Labor Market and Financial Sector Reforms

Abstract

Abstract

The Republic of Macedonia has a good pension system for disability insurance, which is similar in some european countries with more traditional pension system, but this system works in the defined pension regime. The pension system has functioned and functions based on generational solidarity which means that insured persons who are employed pay the pensions for current pensioners hoping that in the future individuals or employees insured and registered in the Invalidity Pension Fund of Republic of Macedonia will pay also for their pensions. The pension system in Macedonia has been applied for almost 50 years but has had some legislative changes and especially in labor legislative, always bearing in mind that these changes have not been created random but they have been created for efficiency in the area of disability pension reforms. Socio-economic changes have affected the system not to be effective and also efficient and adaptable to the population. In early transition the capital market has significantly affected the number of enterprises that have worked with loss and in the end policyholders have finished as redundancy and enterprises have been led to the bankruptcy stage, in the time of transition this was the reason for stagnation because the number of insured people and employees was greater than the number of retirees. All these problems has happened in 1993 and also at same time there were changes in pension and disability insurance law of RM. In early 1997, the new legal changes brought positive effect for the new reform, but what is the main problem of disability pension is that their life expectancy is very short, because of many new laws and obligations that never have foreseen potential risks that may arise in the future. With all these destabilization of the pension system is expected that in 2020 the financial situation of pensions to be stabilized , because an employee who has a pension insurance will fund a pensioner, costs for pensioners will rise and GDP will reach up to 13%. This analysis shows that the RM will not reach to pay pensions for future pensioners according to this law and this phenomenon represents a financial destabilization. These are the reasons for pension and RM pension system reforms for this purpose in 2002 enters into force the law of financing required capital for pensions fund.

  Keywords: Reforms of pension system, financial capital, minimum risk of pensions, Republic of Macedonia