The Macroeconomic Framework of the Functioning of Public Compulsory Pension Insurance

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Gordana Đukić
Mladenka Balaban
Goran Radisavljević

Abstract

Unfavorable demographic trends, economic and political crisis created the need to analyze the current situation in the pension system and created the concept of the modern system. Existing public and private poles are the main causes of the crisis, especially the pension system based on intergenerational solidarity that has become unsustainable. The main problem is that the rate of the elderly population increases, the birth rate decrease, and revenues decreasing number of employees is not sufficient to support consumption ie. pension benefits a large number of pensioners. The sustainability of the system is reflected in the fact that the net income of pension funds should be increased to the same extent as net expenses, in order to maintain a constant net power. Maintaining living standards requires expenditure to finance the deficit of pension funds, which is achieved by budget transfers. Maintaining the balance of revenues and expenditures of pension funds, and the three pension pillars and the state budget is a priority to maintain economic stability, because the lack of purchasing power of pensioners causing social insecurity and unfavorable situation in public finances and the financial markets.

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References

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