In just ten months of this year after the Government's reforms, the deficit of the Pension and Disability Insurance Fund (PIO) is more than 25 percent, or 156,45 million euros. This is a drastic increase, because in the whole of last year it was 36,7 million.
Even in the earlier period, the PIO Fund lacked incomparably less money, compared to ten months of this year. In 2019, the deficit was 96 million, in 2020, 102 million. However, after the change of government, at the end of 2020, the deficit starts to fall. That's how it was during the prime minister's government Zdravka Krivokapića i Dritan Abazović the deficit amounted to: 2021 million in 95, 2022 million in 86, and in the last year of the 43rd Government, it would be more than twice as small.
These are the data of the PIO Fund obtained by the Center for Investigative Journalism of Montenegro (CIN-CG).
This year's deficit will grow even more because the effects of the "Europe Now 2" reform of the Prime Minister's Government have not yet taken effect Milojko Spajić, by which the contributions to the PIO Fund were significantly reduced under the "puff, puff" system, without a deeper analysis. That program came into force only in October of this year.
From January to October 2024, the PIO Fund had total expenditures in the amount of 607,41 million euros. 125 million euros were paid to over 603,98 pensioners. In the same period, the fund had income from contributions for pension and disability insurance in the amount of 450,96 million euros, which is only 74,24 percent of total expenses.
The larger deficit this year is a consequence of the reforms, the Fund told CIN-CG:
"This kind of information is expected in the Fund and is a consequence of the amendments to the Law on PIO, which applies from January 1, 1, due to the increase of the minimum pension to 2024 euros and the payment of the difference to all pensioners whose pension at the time of application of this regulation moved in the interval from the previous to then valid amount of the lowest pension of 450 euros".
The Fund could not provide an estimate of the final shortfall for CIN-CG this year. They state that the implementation of the Government program "Europe Now 2" began in October, which also included amendments to the Law on Mandatory Social Security. The new law reduced the contribution rate for employees, which went to the PIO Fund, from 15 percent to 10 percent, and the rate of 5,5 percent charged to the employer was abolished.
The government consciously increased the deficit. Namely, in the Fiscal Strategy to 2027. it is stated that 2025 million euros will be needed to pay pensions in 777, that is, the deficit of the PIO Fund will increase from the current 167 million to 383 million euros. That trend, it says, will continue in 2026, when, according to calculations, the deficit will amount to 391 million, and in 2027, 406,5 million.
In the analysis of the Fiscal Strategy of Montenegro for the period 2024-2027. year, which was done by the Cabinet of the President of Montenegro Jakov Milatović, it is stated that the planned reforms carry the risk of fundamentally changing the structure of the pension system in Montenegro, where pension, instead of economic, would become a dominantly social category.
There was no one to hear the warnings
Even before this reform, which drastically reduces contributions to PIO, experts warned that everything could negatively affect public finances and threaten the stability of the pension fund, which is one of the important pillars of the country's economic system.
Before the introduction of the program "Europe now 2", at the invitation of President Milatović, economic experts Nikola Altiparmakov from Serbia, Mitja Čok from Slovenia and Predrag Bejakovic from Croatia presented experiences from their countries and warned that the reduction of contributions could threaten the public pension system.
"There is a danger that the public pension system will completely collapse," said Dr. Bejaković, an independent economic analyst, for CIN-CG. He believes that the unfavorable situation can be solved by higher contributions or by replacing the difference from the budget at the expense of other budget items:
"Neither is desirable. Therefore, the pension system is finding it increasingly difficult to perform its basic task: reducing the risk of old age, disability and death. That is why its changes, including serious reforms, have become a necessity that can no longer be postponed".
One of the key ways to preserve the pension system is to raise the legal age, especially the effective retirement age, believes Bejaković, noting that these conditions are low in the entire region. As it is an unpopular measure that citizens oppose, Bejaković believes that it can be achieved by mathematical calculations of early retirements, or by increasing pensions for longer stays at work.
In Montenegro, the population census data show that the number of pensioners is increasing, and thus the pressure on the PIO Fund is increasing.
"Compared to 1971, in 2011 the number of pensioners has almost quintupled. The total number of pensioners in the same period increased from about 32 thousand to over 103 thousand. Which means that every sixth resident was a pensioner in 2011, and now it is every fifth citizen," the demographer told CIN-CG. Miroslav Doderović.

Currently, there are 125.939 beneficiaries of pension, old-age, disability, family and 3.622 beneficiaries of other rights, such as other people's assistance and care, physical impairment, compensation for work-disabled persons and memorial allowance.
Doderović explains that, according to the census data from 65, the participation of people over 1971 in Montenegro was 7,1 percent, while the latest census data showed that their participation is now almost two and a half times higher - 16,8 percent.
Economic consequences of demographic aging
Doderović believes that the increasing number of pensioners can cause a burden on the state budget, lead to social tensions, and even political conflicts between the active population and pensioners.
"The most significant challenge is the demographic trend of population aging due to the increase in life expectancy and at the same time a negative birth rate. The share of people over 65 is increasing, which in some countries is more than a quarter of the total population," explains Bejaković.
This results in a decrease in the number of working people who finance the pensions of an increasing number of retirees. Thus, the unfavorable relationship between paid contributions and the need to pay existing pensions deepens.
And in the opinion of the adviser to the President of Montenegro for the economy and economic diplomacy on the fiscal strategy Mladen Grgić writes that it is worrisome that significant damage is being done to the PIO Fund for what appears to be modest and short-term benefits.
"Even the fiscal strategy itself foresees a slowdown in economic growth after 2025, while the investment momentum is insufficient compared to the needs for reaching developed economies. This project is clearly not the result of a careful and detailed analysis, but appears to be an ad hoc solution that only partially justifies strong but unrealistic pre-election promises," the opinion states.
The relationship between pensioners and employees
It is interesting to analyze how the number of pensioners and the number of employees have changed over the years. The analysis shows that the number of pensioners increased from year to year.
In 1971, there were 84.766 workers in Montenegro, according to the Statistical Yearbook of Yugoslavia, while there were 32.836 pensioners.
If we analyze only the period from 2009 to October 2024, we will see how this trend is going. So in 2009, there were almost 170 employees, and a little over 97 pensioners, so this year the ratio would be - about 257 employees, and about 116 pensioners.
The experts with whom CIN-CG spoke remind us of the fact that there are currently almost 100 foreigners in Montenegro and that we do not know exactly how many of them are in this number of workers.
The increase in the number of beneficiaries of the PIO Fund this year was also due to the re-establishment of the right to pension for mothers with three or more children. From January to June 2024, some of them again switched to using the right to pension and disability insurance due to the increase of the minimum pension to 450 euros, a total of 2.488 beneficiaries for the period.
"It was expected in Montenegro that the elderly are predominantly of weaker financial condition with greater health problems, more lonely, immobile and similar. Although we are not sure, given the economic crisis and demographic changes, to what extent the young, unemployed are in a more privileged position compared to the elderly. Unemployment, the unresolved housing issue, the inability to meet various needs are a major problem for young people who, unfortunately, live at the expense of their aging parents," explains Doderović.
In Croatia, for example, for every 100 pensioners, there are 1,31 people who pay pension contributions. A large share of elderly persons in the total population also means large allocations for pension expenditures, says Bejaković.

In addition to the elderly with low pensions, elderly people without pensions are a special problem in Montenegro, they represent a particularly vulnerable and socially threatened category of the population. Their risk of poverty increases compared to those with regular incomes regardless of the amount.
More and more old and less and less young
The socio-economic events of the past three decades have had a negative impact on the demographic potential of Montenegro, especially the northern region, which has been exposed to depopulation for years on two grounds - low natural growth and large emigration.
"The highest value of the total fertility rate was recorded in 1951, 4,6 children per woman, while the total fertility rate today is 1,8, which means that even simple reproduction of the population is not ensured," says Doderović.
Reduced births led to a decrease in the number of children of preschool, primary and secondary school age. Schools have become half-empty in most parts of the country. Also, we must not forget the very important aspect of emigration outside the country, because in this way one is directly left without the most valuable resource of every country, young people.
It is interesting that in the north we have both the oldest and youngest municipalities in Montenegro, Plužine, with an average age of 47,3 years, and Rožaje, with an average age of 35,8 years. Census data also show that the average age of the inhabitants of Montenegro has increased to 39,7 years.
So, in a little more than half a century, the average age of the population has grown significantly, because in 1971 it was around 28 years old.
"Negative migration balance and negative values of natural increase have led to the fact that nine municipalities in Montenegro are in the stage of the deepest demographic age, eight of which are in the area of the northern region," says Doderović.
The increase in the size of the elderly, mostly economically inactive population in Montenegro inevitably causes an increase in personal and public spending, primarily in the area of allocation of funds for health, social and pension insurance.
"In most countries, there are not enough mechanisms that encourage insured persons to work longer. Retention of able-bodied persons who could still remain in the world of work should be considered. The pension reform is very complex: the losses are immediate, clear and precisely aimed at certain social groups; the benefits are invisible, long-term, scattered and of course, they cause opposition from the insured, but they are necessary if the pension system is to be preserved", Bejaković explains to CIN-CG.
What is reflected in the problem of aging is that more and more elderly people live in cities in Montenegro, and those who live in villages, due to the migration of young people, are getting older and more lonely. As the life expectancy of women is longer than that of men, the aforementioned problems with age for women deepen. Demographic changes have an impact on all areas of life, they are especially unfavorable in poor and underdeveloped countries such as Montenegro.
"What is worrying about us is that pensioners are considered a 'burden' on the state's neck without sufficient awareness that the problems of old age cannot be ignored," says Doderović.
Pension rights cannot be significantly increased and citizens must take care of their old age as much as possible.
"It is necessary to systematically work on removing incentives for early retirement, strengthen the connection between contributions and pensions, improve preventive measures for occupational safety in order to reduce the number of disabled pensioners, but also resolutely break down prejudices about the lower productivity of older workers, and with lifelong education and training measures to improve their abilities, knowledge and expertise", explains Bejaković.
Predictions for the future do not give reason for optimism. The average life expectancy in Montenegro is about 78 years, while in developed countries, such as Japan, Italy, Spain, it has reached 85 years.
United Nations (UN) studies say that by 2050, negative demographic trends will cause a decrease in the number of inhabitants in Montenegro by about 8,2 percent.
"According to forecasts, 2050 people would live in our country in 574.000, which roughly corresponds to the population at the end of the 1970s. This data places us in 26th place on the list of countries in the world where the largest percentage decrease in population is expected in the specified period," says demographer Doderović.
And in the analysis of the Population Projection of Montenegro until 2060, published by the Institute of Statistics of Montenegro, it is written that the number of people over 65 years of age would more than double by 2061, from 79 thousand in 2011 to 176 thousand in 2061 , which would represent an average annual increase of almost 2 people.
Now the question is how to preserve the public pension system and ensure that people of the third age are not social cases in the conditions in which the population is aging and contributions to the PIO Fund are decreasing. It is obvious that the reformers of Milojko Spajić's government did not pay too much attention to these issues and trends.

Bonus video:
