CMS Expert Guide to Pensions in Serbia

Serbia has a two-pillar system. The first pillar is mandatory pension (and disability) insurance, which is provided by the Republic Pension and Disability Insurance Fund. The second pillar is optional pension insurance.

Private pensions are provided by private pension funds managed by companies set up for the management of optional pension funds (management companies). Benefits are provided on a defined contribution basis.

Private pension provision is not mandatory.

A pension plan may be established by an employer, an association of employers, a professional association or a trade union. Those who establish a plan must not be affiliated with the management company that operates the plan. An employer may establish a pension plan for its own employees only.

A pension plan can be operated only by a management company that holds a licence granted by the National Bank of Serbia (the NBS) for performing this type of activity.

The management company must set out a minimum level of pension contributions. These amounts will vary from one management company to another.

The management company must be established as a joint stock company that is not publicly listed, with a minimum share capital of EUR 1m. At least 50% of the share capital must be owned by banks, insurance companies or companies performing pension fund activities. Furthermore, a domestic legal entity whose majority of net capital is state-owned (or its affiliated entities) may not be a founder of a management company, except when it comes to state-owned banks and/or insurance companies.

7. What age are benefits taken?

The minimum age at which benefits may be taken is 58 and the maximum age is 70. However, benefits may be taken earlier in the event of permanent incapacity to work.

The costs of private pension provision are generally borne by the members. However, employers may also cover the costs of voluntary pension insurance for the benefit of their employees.

No special registration is required for members of a pension fund. Management companies must register with the tax authority and obtain a tax identification number, like any other company.

In general, contributions for private pension insurance are treated as part of an individual’s taxable income. However, the first RSD 8,449 (approximately EUR 72) per month of contributions is tax-exempt (adjusted each year in line with retail price growth). An employer’s contributions are deductible from its corporate tax liability.

No.

12. Are benefits taxed?

No. However, if benefits are paid through an annuity from an insurance company, the member will be subject to insurance income tax when the annuity comes into payment.

The amount of contributions determined by law (currently RSD 8,449 – approximately EUR 72 per month) is exempt not only from income tax but also from mandatory social contributions.

There are no upper limits on benefits or contributions.

The NBS supervises the work of management companies through direct and indirect control. It can review the documents of management companies and custody banks. In addition, the NBS can: issue warnings; require the remedy of specified irregularities within a set period; withdraw consents regarding the appointment of directors of management companies; revoke licences granted to management companies; and more. Furthermore, the NBS deals with complaints from members of the pension fund. The ministry in charge of labour and pension insurance (the Ministry) supervises pension plans. Approval from the Ministry is required for the initial pension plan agreement, as well as for any amendments to the agreement or for termination of the pension plan.

Management companies are obliged to provide the NBS with reports and information as prescribed by law. The NBS can also collect any required information directly by accessing the relevant documents at the premises of management companies.

The NBS supervises the investment of pension funds. The members of the pension fund bear the investment risk.

Those establishing a plan cannot discriminate in the conditions that apply for membership of the plan. They may organise a pension plan and conclude agreements with multiple management companies to allow members to choose different optional pension funds. In addition, they may set up different pension plans for specific groups of employees or members if they have previously established a plan and provided contributions for all employees or members. Membership of the pension plan cannot be a condition of employment, trade union membership or any other form of organisation.

Early leavers can withdraw their benefits before the age of 58 in the case of permanent incapacity to work. If, for any reason, payment of contributions ceases, membership in the pension fund will continue and any accumulated monies can still be taken at the age of 58.

No.

N/A

Foreign nationals may be members of voluntary pension funds. Foreign legal entities may not perform the activities of management companies, but share capital may be owned by foreign natural and/or legal entities.

No.