Pension increase by 12% from January announced – IMF says resources for raise must be secured

Pensions will be increased by 12% from December, Serbian President Aleksandar Vucic announced on Thursday evening. The first such increased pensions will be paid in January.

This was confirmed by Finance Minister Sinisa Mali on Friday.

So far, there have been public speculations about an eight percent pension increase as a regular adjustment of pensions according to the Swiss formula.

Namely, the Swiss formula implies that pensions are adjusted 50% to wage growth and 50% to price growth. However, this does not apply if the pension fund falls below 10% of GDP. In that case, pensions are adjusted exclusively to wage growth.

The question arises as to how the share of pensions in GDP fell so sharply, given that pensions have been steadily increasing for years, in some years even more than the Swiss formula requires.

The answer seems to lie in the revision of national accounts that the Republic Institute conducted last year, according to which GDP in 2023 nominally increased by 8.2% compared to what was previously shown. Thus, the share of pensions in GDP fell to 9.6%.

Revision of statistical calculations is a regular practice and is done in cooperation with Eurostat, but what is not usual is that there are such large deviations as those recorded in Serbia.

In any case, this increase in GDP is likely to be a justification for increasing pensions by as much as 50 percent more than originally announced.

As announced by Minister of Finance and First Deputy Prime Minister Sinisa Mali, with the upcoming increase, the average pension in Serbia will amount to EUR 485 for December this year, while the average pension for the entire year 2025 will be around EUR 437.

Vlada Republike Srbije

Ministarstvo finansija Republike Srbije

Narodna banka Srbije Beograd

Međunarodni monetarni fond-MMF Beograd

Government of Serbia

Ministry of Finance

NBS

National Bank of Serbia

IMF

Eurostat

Siniša Mali

Aleksandar Vučić