Waiting for 30% decision, Trust value drops

How many months now, the opposition's demand in Kosovo is to enable citizens to attract up to 30 per cent of the funds from the Fund to cope, reportedly, more easily, rising inflation.

The bill, which would enable this, has been put to a vote in the Kosovo Assembly in June, but has been rejected by the ruling party, the Vetevendosje Movement, arguing that “would destroy the pension structure of the state”.

Last week, the Kosovo Parliament's Headship decided to submit it to the Government for the thought of this bill, based on a petition signed by more than 20,000 Kosovo citizens who have been handed over to the Assembly on 15 July.

It is not yet clear when the Government can give the opinion. Also, it is not known whether the bill will be brought back to the Assembly.

In an earlier Radio Free Europe poll, participating citizens have expressed themselves both at and against attracting vehicles.

Economic experts say similarly.

Over 160m euros less

The Kosovo Pension Savings Fund, also known as the Trust, collects the means of Kosovo taxpayers.

Its amount amounts to nearly 2.3 billion euros, but, currently, is less than 160m euros.

According to the Central Bank of Kosovo, the decline in value has occurred in recent months due to geopolitical developments, including the war in Ukraine, the energy crisis and two-way inflation. All of this has caused disturbances in international markets.

“Sfides of Kosovo's pension sector performance have increased emphasis on 2022”, said a BQK report published a few weeks ago.

With laws in Kosovo, 70 percent of Trust vehicles are invested in international financial markets in the long term in order to increase value, while 30 percent are invested in Kosovo's valuable letters.

All employees in Kosovo are obliged to pay 10 percent of their pension contributions: 5 percent pay their employer, while 5 percent are separated from employee salaries.

Retirement savings can only be used by the contributor after meeting the retirement conditions, respectively.

Are the taxpayers damaged?

Kosovo Pension Savings Fund spokesman Jeton Demi says recent moves on financial markets will not affect those who are close to retirement.

“Tools dedicated to contributors aged 63 and a half are invested in Kosovo's valuable letters, which have a default interest. For this year, there was a positive return from investments -- nearly 2 percent”, Demi says of Radio Free Europe.

Letters worth or Treasury bonds are issued by the Kosovo Ministry of Finance and Transfers whenever the Government needs more money.

Demi says the rest of the taxpayers under 63 and a half years of age will have time to recover, along with the movement of markets.

Kosovo's Pension Savings Fund does not consider the actual decline in investment loss, voicing confidence that it will be recovered, respectively, in the future.

Bektash: No more than 10% to the lenders distributed

Experts on economic issues say that until disorders in international markets continue, contributions' money will mark losses.

Economics Professor at the University of Pristina, Medi Bektashi, says it would be good for Kosovo taxpayers to be able to withdraw some of the pension savings. That, because of even, as he says, is a serious economic situation by increasing inflation.

The inflation rate in Kosovo in August has reached 13 per cent, compared to 0.2 per cent last August.

It would be good to have one piece, not more than 10 percent, of those tools. This would also have an effect on the circulation of tools on the Kosovo market”, Bektas says of Radio Free Europe.

What does the IMF say?

But, representatives of the International Monetary Fund, during a meeting with Kosovo Central Bank officials on September 21st, have indicated against withdrawing vehicles from the Trust, saying the move would cause a serious “goods on the sustainability of the pension system” and “would reduce the real value of pensions”.

In a research done earlier by the Institute for Advanced GAP Studies in Pristina, it is said that if Kosovo citizens were to attract 30 percent of the tools they have collected, they would be eight years to restore them.

According to this research, if the withdrawal bill is adopted, the Trust will be obliged to initiate procedures for distributing over 594m euros.

In 2020, Kosovo citizens have been enabled to withdraw 10% of their savings from the Trust. This is done with the Law on Economic Recovery, whose purpose has been to address the financial difficulties caused by the body's pandemic.

At the time, nearly 200m euros of over 420 thousand contributions have been withdrawn from the Trust. The International Monetary Fund has been against it ever since.