SERBIA - Neither the IMF nor local market players now expect to see a Serbian funded second pillar happening under the current government, despite the earlier prospect of reform.
Serbia is currently preparing a major reform of the first pillar pensions regime but mulled plans for the creation of a funded second pillar system are not part of this package. (See earlier IPE story: Serbia outlines major first pillar reform)
"The IMF did not oblige the Serbian government to create the legal framework for a second pillar as one of the measures in reforming the pension system," explained Marija Medenica, director of Erste Invest in Beograd, a subsidiary of the Austrian banking group which is running pension fund operations in various CEE countries.
According to the IMF, "setting up a funded second pillar pension system to relieve pressures on the first pillar is widely viewed as incompatible with fiscal sustainability considerations".
Similar considerations regarding the prospect of funded pension systems diverting money away from the state budget have recently led to a debate in Poland about the redirection money out of the mandatory second pillar. (See earlier IPE story: Debate on Polish second pillar transfers fails to resolve row)
However, IMF staff note that without a second pillar "additional rounds of parametric reforms will have to be considered, especially in view of the likely adverse demographic and migration trends over the next few years", in addition to the current pension reform.
Medenica is convinced no decision on a second pillar will be made "until the next elections in Serbia which can take place either within the next nine months or two years".