Pension Reform in Serbia
2006–2010 || U.S. Agency for International Development
The USAID-funded Serbian Economic Growth Activity (SEGA) worked with the Government of Serbia (GoS), its institutions and private sector enterprises between 2006 and 2010 to implement a variety of reforms, including pension reform. Overall, the project aimed to help strengthen macro-economic conditions through improved fiscal and monetary policies and resulted in a restructured and modernized financial sector which helped the country absorb the effects from the global financial crisis better than many of its European neighbors. In the pension reform component of the project, the Deloitte team worked closely with local stakeholders to strengthen the nation's capacity to establish and maintain an economically viable pension system, which is an integral part of achieving macroeconomic stability and securing the country's financial future.
A pressing challenge to achieve macroeconomic stability was the reform of the State pension system, inherited from the Communist era. The pay-as-you-go system was fiscally unsustainable and represented a growing share of budget transfers. Serbia's challenge in reforming the pension system was rooted in an incomplete understanding of the issues and inadequate analysis and policy-making tools to evaluate reform options.
Deloitte’s work helped strengthen fiscal decision-making capabilities and supported the development and implementation of policy reforms which are intended to lead to an economically viable pension system. Working closely with the GoS and local academics, SEGA activities addressed knowledge gaps identified among local specialists and policy-makers, strengthened tools for evaluating policy options and designed reforms leading to a fiscally sustainable system. By pairing local professionals with international specialists, the local professionals gained in-depth experience with effective practices employed around the world. SEGA also introduced and embedded modelling capabilities and actuarial techniques which enabled more refined analysis in evaluating policy options.
Specific technical assistance activities included the following:
As a result of Deloitte's technical assistance, the GoS strengthened its capacity to effectively design and implement pension reforms and pursue fiscal consolidation. In addition, the quality of dialogue on pension reform and the issues surrounding the reforms improved. The team's work helped build local capacity to continue reforming the pension system and supported efforts to promote continued fiscal viability. The use of international specialists in the initial stages of the project helped promote consistency of Serbia's reforms with effective international practices while the transfer of knowledge and capabilities to local specialists facilitated ongoing analyses and helped Serbia take steps to keep reforms on track and achieve fiscal consolidation.
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