SERBIA – Serbia says it plans to raise the minimum retirement age by five years from the current “in a phased manner”.

The change is a key element of fiscal reform plans, Serbia and Montenegro said in a letter to the International Monetary Fund signed by the republics’ ministers of finance and central bank governors.

“Fiscal reforms in 2003 will concentrate on launching the VAT, improving treasury operations, and reforming the pension system.”

There is a new pension law planned, which may require amendments to the state budget. The new legislation would “raise the minimum retirement age by five years in a phased manner” the letter said. The current age of retirement is 60 for men and 55 for women.

And the new law would shift the indexation of pensions from wage changes to a weighted average of price and wage changes.

“A pension law is currently under preparation with technical assistance from the World Bank,” it says. There would be a tighter eligibility requirement for disability pensions and a move to “strengthen the link between contributions and benefits”.

The tax base for contributions to the Pension Fund would be widened, which would add 0.1% to gross domestic product. Other fiscal reforms included the introduction of VAT and a new property tax.

The Serbian pension system is seen as being in crisis, with a report by Zoran Popov of the Belgrade-based Economics Institute saying that pensioners account for around 17.5% of Serbia’s total population. Popov said the system became untenable in 1983 when the ratio between insured and pensioners fell below 3.5:1.