Government's next trick: You pay with your money.

The adoption of the resolution in the Assembly for additions of children and dozens of other social categories expected to be included in the pension system has prompted the Labour Ministry to come up with a proposal to establish a new Pension Fund in Kosovo.

In the Labour Ministry's concept of pension system reform, drafted this month, this minister has proposed the creation of a Resilient Pension Fund, which would function along with the Trust, writes the Economic Bulletin.

Through this fund, the Government is aiming to pay pensions for several social categories, taxing Kosovo businesses and workers, writes the Economic Bulletin.

According to this ministry's proposal, to finance this fund, each employer and employee in Kosovo must first contribute 1.5 percent of gross income, but which can reach up to 5 percent.

Of this fund, which according to the ministry's calculations could raise between 15m and 80m euros a month, additions for children and several new social categories expected to be included in the pension system are expected to be paid.

This system's “Ries will be the design of the first pension and disability system column, respectively, the social security system, this system based on the contributions of employers and employees, which will be divided by zero columns or schemes financed by the State Budget”, says in the Labour Ministry document, which is called “concept-document for regulation and pension management”.

The new pension fund will be responsible for managing contributions collected for the first pillar, pensions and first column respectively, such as age pension, disability pension, family pension, early retirement, parental protection, protection from unemployment and additions for children.

Ministry foresees fund funding form in detail

According to the ministry's document, there are two sources of which this fund will be filled.

“From the state budget for pension payments and compensation from the Zero Pillar and contributions paid by the employer by initially 1.5% and employed by 1.5% of its gross income”, the document said.

The collection of contributions will be made through the Kosovo Tax Administration, while the Fund will be managed by the Ministry of Labour and Social Management, writes the Economic Bulletin.

“By law will determine that the value of contributions collected by employers and employees, under no circumstances can be spent for other purposes”, it says.

However, the Labour Ministry proposal gives the new Fund nearly similar competencies to the Trust. This is in case the contributions collected after the first column payments, including age pension, disability labour pension, family pension, early retirement, parental protection, unemployment protection, and child supplements.

The Social Insurance Fund will manage them through investments in government bonds and conservative investments in financial markets”.

Otherwise, the main goal of this Labour Ministry document is to address the social security system in Kosovo, respectively, the pension and disability system. The document suggests re-inventing the social security system, primarily the first pillar of the system, which is based on employers and employers' contributions, separating it from zero pillars or schemes financed by the state budget.

The primary innovation of this Government initiative is the creation of the Social Insurance Fund with a new column in itself, as an instrument responsible for managing first-barrel contributions and pensions, age pension, disability pension, family retirement, early retirement, parental protection, protection from unemployment and child additions, respectively.

New Social Categories and the Danger of Turmoil

The Economic Bulletin, referring to the same document, wrote days ago that increasing demands for involvement in the pension system of new social categories and small budgetary opportunities to cover them could lead the country towards social unrest. This claim is supported by the Labour Ministry's support in over 20 social categories as they currently receive retirement from the state budget and dozens of new demands for involvement in the pension system.

The document, called “Regulating and Management Pensions Field and Beneficiation by Social Security”, is aimed at reforming the pension system in Kosovo, and was warned days earlier by Labour and Social Management Minister Skender Recica.

The continuation of this system does not allow pension raising because millions of euros will go to financing new pension schemes. In such a situation, social polarization will be inevitable and this situation can and will be out of control where we will have demonstrations of different groups to benefit new pension schemes and current ones to increase pensions”.

The document says that the current pension system allows the expansion of pension schemes uncontrolledly and is too easy to misuse from policy for electoral purposes by favouring a certain group to gain pension rights.

“In the event the current situation continues, the differences between categories will increase, the number of complaints will continue to increase, the number of new schemes will be added. ”

Moreover, the Labour Ministry document warns that with the implementation of many pension schemes without any actual criteria, the path to new demands for various groups which, based on up to now, feels that they meet the conditions to make financial profit”.

The labour ministry in the document points to the impending danger of the state budget to accommodate all these requirements. According to her, the problem is and will remain in the future financing of all current schemes, but especially the schemes expected to come.

When we consider that today we have over 22 personal schemes, several bills -- such as the law for police, educators, and based on these criteria -- should not be excluded from retirement demands by 9050, sports workers of the 1990s, other workers of the Republic of Kosovo in the 1990s. Thus, in the short and medium term, financial difficulties will appear to pay all these retirement costs”, it says. /Agon Sinanay