Nikola Altiparmakov, a member of Serbia’s Fiscal Council, stated that the unplanned higher pension increase in Serbia will require significant budgetary resources in 2026. To accommodate a 12.2% pension rise, the government will need to implement more modest public sector wage increases. However, he emphasized that such a large pension increase will not undermine the financial stability of the pension system.
Altiparmakov explained that the stability of the system is maintained by the “extended Swiss formula” used in Serbia, which automatically balances the pension system financially. This means that larger increases in one year are offset by smaller increases in subsequent years. He also noted that advancing the pension increase by one month—from January to December of the previous year—does not significantly affect sustainability, provided the current indexation formula remains in use.
Regarding frequent changes to pension calculation formulas, he said these formulas must balance social expectations with economic realities. He pointed to Germany as an example of a country that has successfully achieved this balance, ensuring that pensions do not overburden public finances or the economy.
Altiparmakov highlighted that Serbia’s extended Swiss formula, updated in 2022, allows pensions to fully align with wage growth during periods of high economic expansion when pension expenditures are below 10% of GDP. He described this mechanism as one of the most robust examples of social fairness and economic sustainability in Eastern Europe.
He contrasted Serbia’s system with Romania, where retirees from the same professions received vastly different pensions due to inconsistent reforms, costing Romania nearly 2% of GDP (around €1.5 billion in Serbian terms).
Looking ahead, Altiparmakov emphasized that Serbia’s public pension system will remain in place for decades. While future pensions may be more modest, particularly for higher earners, he stressed that additional private savings during working life will help maintain financial security. He concluded that long-term planning is essential to ensure the predictability and sustainability of the system, which remains a cornerstone of both the economy and society.
