FBiH Government Guarantees Pension Funds by the 5th of Each Month

The Government of the Federation of BiH, at today's session in Mostar, adopted several conclusions related to the demands of pensioners' associations in the Federation of BiH. The government agreed that by the fifth of the month, funds available for pension payments will be secured, reports the Patria agency.

The demand for guarantees for pension payments at the current level, regardless of the inflow of funds from contributions - treasury method of operation, is acceptable and will be an integral part of the new Law on PIO.

After additional consideration of the demand that the new law prescribe pension growth according to the cost of living, i.e., wage growth in the Federation of BiH, it was concluded that it is, primarily, not favorable for the pensioners themselves, nor for the Federation of BiH, and therefore this parameter does not always enable pension growth (last year we had deflation and the cost of living fell, and such data is not published in official statistical data, while linking to wage growth is unrealistic and unreliable). Therefore, a generally accepted formula, the so-called Swiss model, was proposed, according to which pensions are adjusted annually based on data from the Federation of BiH from the previous year. This adjustment is made according to a percentage that represents the result of the sum of the real GDP growth rate and inflation divided by two (formula GDP+inflation/2).

The demand for securing the payment of death benefits to families of deceased pensioners has been fully accepted and incorporated into the draft law text.

In line with financial capabilities, the demand for securing funds for the rehabilitation of sick and most vulnerable pensioners is also acceptable. The new law will include a provision that will create a basis for the application of the current practice of spa rehabilitation, with the note that this matter will be elaborated in a special rulebook.

Regarding the demand for exemption from paying taxes and contributions on funds collected from pensioners' membership fees, the Government's position is to immediately proceed with drafting amendments to the law regulating this matter, in order to create a basis for pensioners' associations to be exempt from paying taxes and contributions on total income realized exclusively from membership fees, which excludes income allocated from the budget or extra-budgetary funds.

Regarding the demand for a ten percent increase in pensions for all pensioners who retired by July 31, 1998, the Government of the Federation of BiH agrees that this will be considered in cooperation with the Association of Pensioners' Unions, after the Federal Institute for Pension and Disability Insurance is stabilized, i.e., when the necessary financial capabilities are achieved.