During a recent visit to Varvarin, Serbian President Aleksandar Vučić engaged in a heated exchange with Miloje Sarić from the village of Toljevac, who has been disabled since losing his arm at 24. Vučić criticized Sarić, questioning when his pension had ever been increased by 11 percent, a figure touted by the government. However, official data paints a more nuanced picture of pension increases and their real impact on citizens.
Approximately one million pensioners in Serbia receive pensions lower than the national average, which for December, after a 10.9 percent nominal increase, amounted to 50,683 dinars. On the other hand, about 660,000 pensioners earn more than the average.
Miloje Sarić, in an attempt to explain the significance of an 11 percent pension increase, emphasized the challenges faced by pensioners with minimal incomes, such as his own disability pension of just over 8,000 dinars per month.
“I’m increasing the pension by 11 percent!” Vučić asked rhetorically. “When did someone increase your pension by 11 percent in your life? When? What year? ’75, ’85, ’95, 2005, 2015? Tell me!”
Sarić, who had not yet been a pensioner during those years, struggled to respond. However, official data from Serbia’s pension fund offers a clearer perspective on pension increases over the years, particularly in relation to inflation.
Pension growth and economic reality
The Republic Institute of Statistics regularly publishes data on the real growth of pensions in Serbia, based on information from the Pension and Disability Insurance Fund (PIO Fund). While official figures for 2024 are yet to be fully released, the PIO Fund reports two major pension increases in 2024: 14.8 percent in January and 10.9 percent in December. These are nominal increases, but the real impact, adjusted for inflation, remains to be seen.
According to Gordana Matković, a professor at the FEFA Faculty and former minister for social affairs, pensions in Serbia have essentially doubled since 2001. However, she notes that the significant growth occurred primarily until 2010, and since then, pensions have been falling in real terms. The downward trend only halted in 2018 with the repeal of the Law on Temporary Regulation of Pension Payment Methods.
Pension cuts in 2014: A painful period
In 2014, Serbia introduced a temporary pension reform as part of fiscal consolidation efforts. Pensions above 25,000 dinars were significantly reduced, affecting approximately 700,000 pensioners. The reform was progressive, meaning that pensions above the 25,000 dinar threshold were subjected to reductions: 22 percent for pensions between 25,000 and 40,000 dinars, and 25 percent for pensions above 40,000 dinars.
This pension cut lasted for three and a half years until 2018, when the law was repealed. Despite the increase in nominal pension amounts in recent years, pensions have never fully kept up with the rise in inflation or the cost of living.
Pension growth vs. inflation
Official statistics show that the average nominal pension has increased from year to year. However, when adjusted for inflation, the real purchasing power of pensions has decreased. For example, while the nominal average pension increased by 20,769 dinars in the first 12 years of the century, it only grew by an additional 20,843 dinars over the following 12 years. As inflation has risen, the real growth of pensions has lagged behind.
Official data also reveals that two average pensions have never been enough to cover the average consumer basket. Many pensioners are struggling, especially as about one million pensioners in Serbia live with incomes below the average pension of 50,683 dinars.
The current situation: Who’s struggling?
As of December 2024, there are 1,657,549 pensioners in Serbia. The lowest pensions are received by agricultural workers, averaging 21,958 dinars, with 129,973 recipients. Self-employed pensioners receive an average of 47,084 dinars, with 116,783 individuals in this category. The majority of pensioners—1,410,793 people—receive their pensions based on employment, with an average of 53,627 dinars.
However, detailed statistics for November 2024 show that 1,076,000 pensioners live on less than 50,000 dinars per month. Of these, 580,000 pensioners receive less than 30,000 dinars, which raises questions about the adequacy of the increases in relation to living costs.
In conclusion, while the Serbian government touts nominal pension increases, the real impact on pensioners’ lives is more complex. With inflation, the cost of living, and past pension cuts, many pensioners continue to struggle with inadequate incomes, unable to cover basic living expenses. The debate over pension increases is far from over, as Serbia grapples with how to ensure a fair and sustainable future for its retirees.
