Pension System in Pension System in Federation Bosnia and Federation Bosnia and

HerzegovinaHerzegovina

Nikolina Obradović, Advisor to Minister and Zehra Novo-Nikolina Obradović, Advisor to Minister and Zehra Novo-Omanović, Assistant to MinisterOmanović, Assistant to Minister

Sarajevo, 25.02.2009. godineSarajevo, 25.02.2009. godine

Pension System in Federation of Bosnia and Herzegovina• According to Anex IV of the Dayton Peace

Agreement, social protection is within competence of entities. In the Federation of B&H, social protection is within shared competance between the entity and cantons.

• State Ministry of Civil Affairs has coordinating role with regard to social policy. State agreements on social protection are signed through this ministry.

• Bosnia and Hezegovina has two autonomous systems of pension and disablility insurance on entity level.

The Main Characteristics of Pension and Disablity Insurance in the

Federation B&H

•Single pillar - Public PAYG system of defined benefits

• Contribution rate of 23,5% of gross salary is compulsory for all employed, self-employed,…

• Article 51 of the Law prevents delays and accumulation of debt towards pensioners

OVERVIEW OF RIGHTS OVERVIEW OF RIGHTS

Disability Pension

Phisical Disabily Altered Work Ability

Family Pension

Old Age Pension

Rights guaranted by Pension and Disablity

Insurance Act

OLD AGE PENSIONOLD AGE PENSION

Conditions for old age pensionConditions for old age pension::• 65 years of age and minimum 20 years of 65 years of age and minimum 20 years of

contribution paymentscontribution payments..• With 40 years of contribution payments With 40 years of contribution payments

regardless of ageregardless of age..• Exceptionally (until 2015): withExceptionally (until 2015): with 55 55 years of years of

ageage andand 30 30 years of contributionyears of contribution for for womenwomen, 60 , 60 years of ageyears of age andand 35 35 years of years of contributions for mancontributions for man

DISABILITY PENSIONDISABILITY PENSION

Granted to a person categorised with I Granted to a person categorised with I Grade DisabilityGrade Disability::

• when disabilty is caused by work injury or when disabilty is caused by work injury or profesional illness regardles of years in profesional illness regardles of years in insurance;insurance;

• If disability was caused by out of work If disability was caused by out of work injury or illness, the pension is granted injury or illness, the pension is granted under condition that beneficiary has under condition that beneficiary has covered by pension insurance at least one covered by pension insurance at least one third of hers\his work span (calculated third of hers\his work span (calculated from age of 20 until the day of disability)from age of 20 until the day of disability)

FAMILYFAMILY (survivor’s) (survivor’s) PENSION PENSION

Widow, widower and children have right to Widow, widower and children have right to family pension under one of the following family pension under one of the following conditionsconditions::

• 45 years of age for women or 60 years of 45 years of age for women or 60 years of

age for man reached before death of sposeage for man reached before death of spose• If within a year after death of spose, he \ If within a year after death of spose, he \

she becomes unfit for workshe becomes unfit for work• If she or he is guardian to children that If she or he is guardian to children that

have right to family pension.have right to family pension.• Children have right on family pension until Children have right on family pension until

age of 15, or if attending full time school age of 15, or if attending full time school until age of 25 until age of 25

MAIN PENSION INDICATORSMAIN PENSION INDICATORS

Number of employed 430.745

Number of unemployed 345.346Activ population (employed and unemployed) 776.091

Participation rate (LFPR) 49,1%Pension coverage of activ population 55,5%

Dependency rate 1,25

Average salary (Euros) 405,1

Average pension (Euros) 178,3

Replacement rate 0,44

THE MAIN PROBLEMS:THE MAIN PROBLEMS:

• Low coverage due to grey economy, Low coverage due to grey economy, contribution evasion and miopiacontribution evasion and miopia

• 51% of pensioners receive minimal 51% of pensioners receive minimal pension of 156 Eurospension of 156 Euros

• Special legislation for war veterans Special legislation for war veterans and some other chategoriesand some other chategories

• Low efective pensionable ageLow efective pensionable age• Low GDP, population aging, etc.Low GDP, population aging, etc.

Any questionsAny questions??