STRUCTURESTRUCTURE::PILLAR I

Mandatory Pension and Disability insurance Mandatory Pension and Disability insurance – – PAYGO SystemPAYGO System

Pension and Disability Insurance Law

PILLAR III

Voluntary pension insuranceVoluntary pension insurance Voluntary Pension Funds and Plans LawVoluntary Pension Funds and Plans Law

**it is estimated that conditions are not in place forit is estimated that conditions are not in place for introduction introduction of pillar IIof pillar II

I PILLARI PILLARMANDATORY PDIMANDATORY PDI – – PAYGO SYSTEMPAYGO SYSTEM

CONTRUBUTORSCONTRUBUTORS::

EmployeesEmployees;; Self-employedSelf-employed;; FarmersFarmers;;

RIGHTSRIGHTS::

Old age pensionOld age pension Disability pensionDisability pension Survivors pensionSurvivors pension Funeral compensationFuneral compensation Corporal impairment cash Corporal impairment cash

benefitbenefit Compensation for health and Compensation for health and

care by another personcare by another person

PDI RIGHTSPDI RIGHTS

Old age pensionOld age pension

OLD AGE PENSION CRITERIAOLD AGE PENSION CRITERIA::

6565 years of age years of age ((MM),), 6060 ((FF)) and minimum and minimum 15 15 years of insurance spanyears of insurance span

4040 of insurance spanof insurance span ( (ММ),), 3838 ( (FF) ) and minimum age ofand minimum age of 5858

Minimum Minimum 4545 years of insurance span regardless of ageyears of insurance span regardless of age

REFORM MEASURESREFORM MEASURESGradual increase of CONDITIONS

for entitlement to OLD AGE PENSIONOLD AGE PENSION Law Amendments fromLaw Amendments from 2011 2011

Current conditions in 2Current conditions in 2013:013: FF 5353 y. and y. and 4 4 m. of age m. of age andand 35 35 y y. . andand 4 4 m. m. of insurance spanof insurance span MM 5454 y. of age y. of age and and 4040 y y. . of insurance spanof insurance span

NoteNote: : The applicable conditions for entitlement to old age pension in The applicable conditions for entitlement to old age pension in 2011 were 2011 were 5353 years of age life and years of age life and 4040 years of insurance span for years of insurance span for men, and men, and 5353 years of age and years of age and 3535 years of insurance span for years of insurance span for women, but pursuant to reform of the pension systemwomen, but pursuant to reform of the pension system

for men for men years of age increases for 4 months from 2011 to 2019, and for years of age increases for 4 months from 2011 to 2019, and for 6 months from 2020 to 20236 months from 2020 to 2023

for women for women years of age increases for 4 months from 2013 to 2015 and years of age increases for 4 months from 2013 to 2015 and for 6 months from 2016 to 2023for 6 months from 2016 to 2023

EXTENDED DURATION OF INSURANCE SPANEXTENDED DURATION OF INSURANCE SPANBENEFIT FOR CERTAIN OCCUPATIONSBENEFIT FOR CERTAIN OCCUPATIONS

Workplace in which the insurance span is counted for Workplace in which the insurance span is counted for EXTENDEDEXTENDED duration is the job at which work is duration is the job at which work is particularly difficult, dangerous and harmful to healthparticularly difficult, dangerous and harmful to health;;

also job posts on which the performance of also job posts on which the performance of professional services is limited when certain age has professional services is limited when certain age has been reached, or because of the nature and difficulty been reached, or because of the nature and difficulty of the job and decline of physiological function that of the job and decline of physiological function that prevents successful performing of the jobprevents successful performing of the job

PENSION SERVICEPENSION SERVICEFAVOURABILITY OF CERTAIN CATEGORIES FAVOURABILITY OF CERTAIN CATEGORIES

OF INSUREDOF INSURED

Pension Law provides for extended insurance span Pension Law provides for extended insurance span (every (every 12 12 months are taken as months are taken as 14, 15, 16 or 1814, 15, 16 or 18 months of months of insurance span)insurance span) depending upon strenuousness of job depending upon strenuousness of job taskstasks

Age condition for retirement for this group of Age condition for retirement for this group of contributors increases gradually by four months from contributors increases gradually by four months from 5353 to to 5555 years of age in period from years of age in period from 20112011 until the until the 20152015; ;

Retention of the advantage that the age limit can be Retention of the advantage that the age limit can be lowered up to lowered up to 5050 years for insured persons who work in years for insured persons who work in the toughest job posts (12-18) (miners, ballerinas, etc.).the toughest job posts (12-18) (miners, ballerinas, etc.).

Certain categories of insured areCertain categories of insured are::o Police officers - uniformed authorized officials and police officers Police officers - uniformed authorized officials and police officers

who work on particularly complex, specific and operational activitieswho work on particularly complex, specific and operational activities; ; o Employees in the Ministry of Foreign Affairs working in jobs Employees in the Ministry of Foreign Affairs working in jobs

which shall be calculated for extended duration, BIA members, members which shall be calculated for extended duration, BIA members, members of the Military Security Agency and Military Intelligence Agency;of the Military Security Agency and Military Intelligence Agency;

o Staff of the Directorate for Execution of Sanctions who work in Staff of the Directorate for Execution of Sanctions who work in jobs which insurance span shall be calculated for extended duration;jobs which insurance span shall be calculated for extended duration;

o Authorized officers of the Tax Police;Authorized officers of the Tax Police;o Professional officers and other police officers.Professional officers and other police officers.

CERTAIN CATEGORIES OF INSUREDCERTAIN CATEGORIES OF INSURED

PDI RIGHTSPDI RIGHTSDisability pensionDisability pension

CContributor is entitled to disabilityontributor is entitled to disability pensionpension iin case n case

ofof TOTAL LOSSTOTAL LOSS OF WORKING OF WORKING ABILITYABILITY

If disability is due toIf disability is due to::

1)1) Occupational injury and diseaseOccupational injury and disease - no requirements - no requirements regarding previous insurance spanregarding previous insurance span;;

2)2) Injury or disease unrelated to work –Injury or disease unrelated to work – disability occurred disability occurred prior to age eligibility for old age pension plus completed prior to age eligibility for old age pension plus completed 5 years of insurance span5 years of insurance span

1)1) for individuals aged for individuals aged 2020, at least , at least one year of pensionable one year of pensionable service service is required;is required;

2)2) for individuals aged for individuals aged 2525, at least , at least two years of pensionable two years of pensionable serviceservice are required; are required;

3)3) for individuals aged for individuals aged 3030, at least , at least three years of pensionable three years of pensionable serviceservice are required. are required.

DISABILITY PENSION CONDITIONS FOR PEOPLE DISABILITY PENSION CONDITIONS FOR PEOPLE WHO BECAME DISABLED BEFORE AGE 30WHO BECAME DISABLED BEFORE AGE 30

PDI RIGHTSPDI RIGHTSSurvivors pensionSurvivors pension

Eligible family members ofEligible family members of::

Deceased contributor who completed minimumDeceased contributor who completed minimum 5 5 yearsyears** of insurance span, or fulfilled conditions for of insurance span, or fulfilled conditions for disability pensiondisability pension;;

Deceased beneficiary of old age or disability pensionDeceased beneficiary of old age or disability pension; ;

* If death occurred due to occupational injury or disease, insurance span is not taken into account;

Survivors pension criteriaSurvivors pension criteria

WWidowidow//widower are entitled if prior to death of spousewidower are entitled if prior to death of spouse:

she completedshe completed 553 3 years of age years of age / / he he 558 8 years of ageyears of age;; ss//he is deprived from the capacity for work within 1 yearhe is deprived from the capacity for work within 1 yearfrom death of spousefrom death of spouse if they have parental duties towards children who are eligibleif they have parental duties towards children who are eligiblethe survivor's pension if they become the survivor's pension if they become unable to workunable to workacquire a permanent right acquire a permanent right widow who has not reached widow who has not reached 5353 before the death of a spouse, but is before the death of a spouse, but isattained the age of attained the age of 4545, is entitled the right upon reaching , is entitled the right upon reaching 5353 years of age years of age

ChildrenChildren:: Up to Up to 15 15 years of age years of age High school students up to High school students up to age of age of 20 20 StudentsStudents up toup to age of age of 2626 Without working capacity and supported by the deceasedWithout working capacity and supported by the deceased contributor -contributor - entitled to permanent survivor pensionentitled to permanent survivor pension

PDI RIGHTSPDI RIGHTSCash benefit for corporal impairment Cash benefit for corporal impairment due to occupational injury or diseasedue to occupational injury or disease

Contributor shall become entitled to cash benefit when Contributor shall become entitled to cash benefit when corporal impairment caused by an accident at work or an corporal impairment caused by an accident at work or an occupational disease is at least occupational disease is at least 30%.30%.

Body damage is classified into 8 degrees.

Cash compensation is the regular monthly amount.Cash compensation is the regular monthly amount.

Funeral compensation is granted to the person Funeral compensation is granted to the person who covered funeral expenses of a deceased who covered funeral expenses of a deceased retiree.retiree.

PDI RIGHTSPDI RIGHTSFUNERAL COMPENSATIONFUNERAL COMPENSATION

Exists for contributors and beneficiaries of pension, which is due to the Exists for contributors and beneficiaries of pension, which is due to the nature and severity of injury or illness, identified need for help and care nature and severity of injury or illness, identified need for help and care to perform actions in order to satisfy basic needs.to perform actions in order to satisfy basic needs.

Such persons are:Such persons are:• persons who are stationary, or that because of the severity and persons who are stationary, or that because of the severity and

nature of permanent sickness and diseased state is not able to move nature of permanent sickness and diseased state is not able to move independently or within the apartment with the use of appropriate independently or within the apartment with the use of appropriate means, or to feed himself, undressing, dressing and maintain basic means, or to feed himself, undressing, dressing and maintain basic personal hygienepersonal hygiene

• a blind person who has lost the sense of light with accurate projection a blind person who has lost the sense of light with accurate projection and a person who achieves vision corrected to 0.05and a person who achieves vision corrected to 0.05

PDI RIGHTSPDI RIGHTSCOMPENSATION FOR HEALTH AND COMPENSATION FOR HEALTH AND

CARE BY ANOTHER PERSONCARE BY ANOTHER PERSON

Law on Employment and Unemployment InsuranceLaw on Employment and Unemployment Insurance

National Employment ServiceNational Employment Service

The unemployed can be entitled to benefit under 7 basisThe unemployed can be entitled to benefit under 7 basis

It can be paid 3, 6, 9, 12 and 24 monthsIt can be paid 3, 6, 9, 12 and 24 months

SOCIAL SECURITY SYSTEMSOCIAL SECURITY SYSTEMUNEMPLOYMENT INSURANCEUNEMPLOYMENT INSURANCE

Act on financial field support for families with childrenAct on financial field support for families with children

CondititonsCondititons

In November 2013, regular – 2.568,07, increased – 3.338,46 In November 2013, regular – 2.568,07, increased – 3.338,46 RSDRSD

SOCIAL SECURITY SYSTEMSOCIAL SECURITY SYSTEMCHILD SUPPORTCHILD SUPPORT

Measure of population policyMeasure of population policy

It belongs to motherIt belongs to mother

Benefit is connected to first, second, third and fourth Benefit is connected to first, second, third and fourth childchild

ConditionsConditions

SOCIAL SECURITY SYSTEMSOCIAL SECURITY SYSTEMPARENTAL ALLOWANCEPARENTAL ALLOWANCE

REGULARREGULAR indexationindexation – – 2 times a year2 times a year: : April 1 and October 1April 1 and October 1 Parameter: cost of living in the previous six monthsParameter: cost of living in the previous six months

Exceptionally from the above, in accordance with the real Exceptionally from the above, in accordance with the real possibilities of Republic of Serbia budget:possibilities of Republic of Serbia budget:- - in Aprilin April 2014. 0,5 % 2014. 0,5 % increase increase;;- - in Octoberin October 2014. 1 % 2014. 1 %;;- - inin April April 2015. 0,5 %;2015. 0,5 %;- - in Octoberin October 2015. 0,5 %; 2015. 0,5 %;- - in Aprilin April 2016. 0,5 %; 2016. 0,5 %;- - in Octoberin October 2016. 0,5 %; 2016. 0,5 %;

INDEXATIONINDEXATION

AMOUNT OF AVERAGE PENSION Share of average pension in net wage

Average pension/Average wage Ratio

40,0%

45,0%

50,0%

55,0%

60,0%

65,0%

70,0%

2006 2007 2008 2009 2010 2011 2012

Average pension/Average wage Ratio

YEARYEAR AVERAGE PENSIONAVERAGE PENSION AVERAGE WAGE(NET AVERAGE WAGE(NET VALUE)VALUE)

AVERAGE AVERAGE PENSION/AVERAG WAGE PENSION/AVERAG WAGE RATIO IN %(NET VALUE RATIO IN %(NET VALUE

OF WAGE)OF WAGE)

20122012 23.02423.024 41.37741.377 56%56%

The minimum amount of pension in insurance of employees and self-The minimum amount of pension in insurance of employees and self-employed insurance employed insurance ::

these pension amounts are adjusted from the 1these pension amounts are adjusted from the 1stst January of 2011, for January of 2011, for percentage of their participation that ensures that the lowest amount of pension percentage of their participation that ensures that the lowest amount of pension for January 2011 in average earnings without taxes and contributions of for January 2011 in average earnings without taxes and contributions of employees in the Republic of Serbia in 2010 is higher by one percentage point employees in the Republic of Serbia in 2010 is higher by one percentage point compared to the lowest share of the pension paid in 2010. in average earnings compared to the lowest share of the pension paid in 2010. in average earnings without taxes and contributions of employees in the Republic of Serbia in 2010. without taxes and contributions of employees in the Republic of Serbia in 2010. Such adjusted amount shall be adjusted further in accordance with law.Such adjusted amount shall be adjusted further in accordance with law.The lowest amount of old age or disability pension for insured farmers shall be The lowest amount of old age or disability pension for insured farmers shall be in the amount of 9,000 RSD from 1in the amount of 9,000 RSD from 1stst January 2011. This established minimum January 2011. This established minimum pension amount is adjusted further in accordance with law.pension amount is adjusted further in accordance with law.

MINIMUM PENSIONMINIMUM PENSIONProtective measure of pensioners standard

Minimum pension in November 2013

13.222RSD

The minimum amount of pension forThe minimum amount of pension for

insured farmersinsured farmers::

MINIMUM PENSION IN NOVEMBER 2013 - 10.395

RSD

1) 1) For pension and disability insuranceFor pension and disability insurance::

contributions for mandatory pension and disability insurance;contributions for mandatory pension and disability insurance; additional contribution for the insurance span of extended duration in additional contribution for the insurance span of extended duration in

accordance with the law;accordance with the law; contribution in case of disability and physical impairment from occupational contribution in case of disability and physical impairment from occupational

injuries and diseases in the cases determined by law;injuries and diseases in the cases determined by law;;;

2) For health insurance:

contributions for mandatory health insurance;contributions for mandatory health insurance;

contribution to employment injury and occupational diseases in the cases contribution to employment injury and occupational diseases in the cases determined by law;determined by law;

3) 3) Insurance in the case of unemployment Insurance in the case of unemployment - - contributions for mandatory contributions for mandatory insurance in the case of unemployment .insurance in the case of unemployment .

..

TYPE OF CONTRIBUTION IN TERMS OF REGULATIONS ON TYPE OF CONTRIBUTION IN TERMS OF REGULATIONS ON MANDATORY SOCIAL INSURANCEMANDATORY SOCIAL INSURANCE

In accordance with the Law on Mandatory Social In accordance with the Law on Mandatory Social Insurance Contributions, when contributions are paid at Insurance Contributions, when contributions are paid at the same time from the base and of the base, the rate at the same time from the base and of the base, the rate at which it is calculated and paid contributions for which it is calculated and paid contributions for mandatory pension and disability insurance costs mandatory pension and disability insurance costs 13%13% from the base, i.e. on the employee and from the base, i.e. on the employee and 11%11% of the base, of the base, i.e., the employer, and i.e., the employer, and 24%24% in aggregate. in aggregate.

CONTRIBUTION RATES FOR MANDATORY PENSION CONTRIBUTION RATES FOR MANDATORY PENSION AND DISABILITY INSURANCEAND DISABILITY INSURANCE

MANDATORY PDI - ORGANIZATIONMANDATORY PDI - ORGANIZATION

Mandatory Pension and Mandatory Pension and DisabilityDisability Insurance Insurance is providedis provided and and administered byadministered by

The Republic The Republic Pension and Disability Insurance Pension and Disability Insurance FuFundnd

The Fund is The Fund is an an legal entity having status of legal entity having status of organization for mandatory social insurance where organization for mandatory social insurance where PDI rights are exercised and resources for PDI are PDI rights are exercised and resources for PDI are providedprovided

III PILLARIII PILLAR

VOLUNTARY PENSION FUNDS AND PLANSVOLUNTARY PENSION FUNDS AND PLANS

III PILLAR GOALIII PILLAR GOAL

Pension investment funds of members of voluntary Pension investment funds of members of voluntary pension funds in order to gain additional income in old pension funds in order to gain additional income in old age.age.

BASIC PRINCIPLESBASIC PRINCIPLES : : voluntary membership, voluntary membership, fund accumulation, investment risk distribution, fund accumulation, investment risk distribution, equality of membership and transparencyequality of membership and transparency

III PILLARIII PILLAR

VOLUNTARY PENSION FUNDS AND PLANSVOLUNTARY PENSION FUNDS AND PLANS

Established inEstablished in 20062006

End of 2013End of 2013 – – 4 Funds4 Funds, 1, 18080,6,66969 insuredinsured – – 31%31% active active contributorscontributors

Tax free contributionTax free contribution – – 55,,214214 RSDRSD

Minimum age for drawing pension – – 5588 yearsyears

.

Contributors / Pensioners RatioContributors / Pensioners Ratio

NovemberNovember 20132013

ContributorsContributors PensionersPensioners RatioRatio

EmployeesEmployees (including army (including army

officials)officials)

2,02,01616,,577577 1,1,443535,,345345

SELF-EMPLOYED

313111,,776776 7171,,441441

FARMERSFARMERS 116868,,464464 212122,,777777

TOTALTOTAL 2,496,2,496,817817 1,1,771199,,563563 1 : 1.1 : 1.55

.

Beneficiaries - structure Beneficiaries - structure

November 2013

Beneficiaries Share

Old - age 1,017,706 59.2%

Disability 334,717 19,5%

Survivors 367,140 21.3%

TOTAL 1,719,563 100%

The Republic of Serbia has signed social security agreements with 27 countries.The Republic of Serbia has signed social security agreements with 27 countries.

In Serbia, social security includes pension and disability insurance, health insurance and In Serbia, social security includes pension and disability insurance, health insurance and unemployment insurance, occupational injury and disease, and in a broader sense, the unemployment insurance, occupational injury and disease, and in a broader sense, the right to child support, i.e. all branches of social security covered by the essential right to child support, i.e. all branches of social security covered by the essential requirements of the European Community.requirements of the European Community.

Most of these agreements were entered into at the time of the existence of Yugoslavia Most of these agreements were entered into at the time of the existence of Yugoslavia and the Republic of Serbia as the successor applies them in relation to international and the Republic of Serbia as the successor applies them in relation to international agreements. Certain agreements (older conventions concluded by the former agreements. Certain agreements (older conventions concluded by the former Yugoslavia) are based on Yugoslavia) are based on the principle of citizenshipthe principle of citizenship, i.e. apply to nationals of , i.e. apply to nationals of Contracting States and their family members.Contracting States and their family members.

Other agreements are based on Other agreements are based on the principle of insurancethe principle of insurance, and shall apply to all , and shall apply to all persons who are or have been covered by the legislation of the Contracting States, as persons who are or have been covered by the legislation of the Contracting States, as well as family members of such persons.well as family members of such persons.

SOCIAL SECURITY AGREEMENTS SOCIAL SECURITY AGREEMENTS

These agreements are covered by the basic European principles and These agreements are covered by the basic European principles and policies, such aspolicies, such as::

Lex loci laborisLex loci laboris

The principle of aggregation of insurance periods for eligibility for Social The principle of aggregation of insurance periods for eligibility for Social SecuritySecurity

Equal treatment of nationals of the Contracting StatesEqual treatment of nationals of the Contracting States

Equality of the territories of Contracting StatesEquality of the territories of Contracting States

SOCIAL SECURITY AGREEMENTS SOCIAL SECURITY AGREEMENTS Basic principlesBasic principles

Pensions and compensation paid to beneficiaries resident or domiciled Pensions and compensation paid to beneficiaries resident or domiciled outside the territory of the Republic of Serbia:outside the territory of the Republic of Serbia:

Under the conditions provided in international agreements on social Under the conditions provided in international agreements on social insurance, insurance, or if it is not closed,or if it is not closed,

On a reciprocityOn a reciprocity

Payment of pensions and cash benefits Beneficiaries of Pension

outside the territory of the Republic of Serbia

- - Republic of AustriaRepublic of Austria - - Kingdom of BelgiumKingdom of Belgium - - Republic of BulgariaRepublic of Bulgaria - - Czech RepublikCzech Republik- - Slovak RepublicSlovak Republic - - Kingdom of DenmarkKingdom of Denmark - - French RepublicFrench Republic - - Republic of ItalyRepublic of Italy - - Kingdom of the Netherlands Kingdom of the Netherlands - Hungary- Hungary- - Kingdom of NorwayKingdom of Norway - - Republic of PolandRepublic of Poland

- - Federal Republic of GermanyFederal Republic of Germany - - Kingdom of SwedenKingdom of Sweden- - Swiss ConfederationSwiss Confederation - - RomaniaRomania- - Republic of PanamaRepublic of Panama - - Republic of CyprusRepublic of Cyprus- - Republic of MacedoniaRepublic of Macedonia - - Republic of CroatiaRepublic of Croatia - - Republic of MontenegroRepublic of Montenegro - - Republic of SloveniaRepublic of Slovenia- - Republic of Bosnia and HerzegovinaRepublic of Bosnia and Herzegovina - Republic of Turkey- Republic of Turkey- - Grand Duchy of LuxembourgGrand Duchy of Luxembourg- - United Kingdom of Great Brittany United Kingdom of Great Brittany and Northern Ireland and Northern Ireland - - Great Socialist People's Libyan Arab JamahiriyaGreat Socialist People's Libyan Arab Jamahiriya

SOCIAL SECURITY AGREEMENTSSOCIAL SECURITY AGREEMENTSStates with which the Republic of Serbia signed the Agreement on Social Security are:States with which the Republic of Serbia signed the Agreement on Social Security are:   

Countries with which we don’t have concluded agreements on social security so Countries with which we don’t have concluded agreements on social security so far, but is established de facto reciprocity in pension payments are:far, but is established de facto reciprocity in pension payments are:

ArgentinaArgentina AustraliaAustralia BrazilBrazil GreeceGreece CanadaCanada MexicoMexico Russian FederationRussian Federation USAUSA ChileChile

FACTUAL RECIPROCITY IN PENSION PAYMENTSFACTUAL RECIPROCITY IN PENSION PAYMENTS

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