The Pension and Disability Insurance Fund, with the consent of the Government, may exercise the right to propose an extraordinary adjustment of pensions if it considers that the increase obtained through the official adjustment formula is insufficient or if it believes that pensioners are being harmed due to differences in statistical calculation periods.
The Board of Directors of the Pension and Disability Insurance Fund, based on statistical data and the formula from the law, decided to increase pensions for January by 0,38 percent, which caused outrage from pensioner associations. The Fund did not respond to the question of "Vijesti" on what data they based this calculation on and whether they will propose an extraordinary adjustment like they did in 2023.
The payment of the January pension begins on February 19th, while its calculation is usually completed by the 13th of the month, so a decision on extraordinary adjustment could possibly be made by then.
According to information from "Vijesti", the Board of Directors of the Pension and Disability Insurance Fund, using the official formula and Monstat data, found that in the last part of last year, inflation was 0,3 percent compared to the previous quarter, and that gross wages increased by 0,4 percent, resulting in a January increase of 0,38 percent. The law states that in the adjustment formula, the higher percentage (wage growth or inflation) is multiplied by 0,75 and the lower percentage by 0,25 percent, and that the sum of the two obtained numbers constitutes the adjustment percentage.
That is, 0,75 X 0,4 = 0,3, and 0,25 X 0,3 = 0,075, so the sum obtained was 0,375, and the Fund's Board of Directors rounded it to 0,38 percent.
The Fund used its right to propose extraordinary adjustments due to problematic calculation of the formula twice in 2023, when it was headed by Ranko Aligrudic, with the consent of the then Minister of Finance Aleksandar Damjanović and the final decision of the then Prime Minister's Government Dritan Abazović.
Pensions will be adjusted three times a year, in January, May and September (every four months) starting in 2022, according to quarterly statistical data on price increases and net earnings. The problem is that there are four quarters in a year and three adjustments for pensions.
The mathematical formula for adjusting pensions in May 2022 showed that these benefits should be increased by 5,5 percent. However, the Pension and Disability Insurance Fund announced at the time that this increase was not enough due to higher inflation and the fact that pensioners would lose a quarter in the calculation, so it proposed that pensions be additionally adjusted by another 2,95 percent. The government accepted this, and pensions were increased by a total of 8,45 percent that month.
A similar thing happened in the next adjustment for September, when the form showed that pensions needed to be increased by 2,55 percent, and at the Fund's proposal, the Government approved an additional adjustment of 2,45 percent, so pensions increased by five percent in total. In that year, with three regular and two extraordinary adjustments, pensions increased by a total of 17 percent.
At the beginning of 2023, the collection of contributions for pension and disability insurance was almost equal to the money needed to pay pensions, which happened for the first time in 40 years. In April, the collection of contributions was worth 43,5 million euros, while 43,6 million euros were needed to pay pensions. The difference increased after these regular and extraordinary adjustments in May and September.
However, in October 2024, through the "Europe Now 2" program, the Government halved the percentage of contributions for wages from 20,5 to 10 percent. This resulted in 353 million euros being collected from PIO contributions in 2025, while 796 million euros were needed for pension payments. In other words, the PIO Fund deficit amounted to 443 million euros. Any increase in the amount of pensions would now mean an increase in this deficit for the Government.
In this year's budget, the expected income from PIO contributions is 400 million, while the projected amount for pensions is 837 million.
The most difficult situation is for pensioners whose minimum wage was frozen at 450 euros for the past two years, after which they received a raise of 0,38 percent or 1,71 euros. The official inflation rate for the past two years was 6,1 percent, so their pensions have lost a significant part of their value.
President's Office: Political parties to get 75 percent raise, pensioners to get 0,38 percent
Advisor to the President of Montenegro Jakov Milatović for sustainable development Olivera Vukajlović She told "Vijesti" that this adjustment of pensions by 0,38 percent shows how far the current pension system is from the needs of the people who built the state.
"Pensioners must not be collateral damage of economic policies and budgetary priorities that are not sufficiently geared towards their needs. An increase in pensions of only 0,38 percent, or less than two euros, clearly shows how far the current system is from the real needs of the people who have built this country for decades. This increase is the result of regular legal adjustment to wage growth, but due to the weak growth of wages, it cannot keep up with the increase in the cost of living. When we take into account inflation and the changes brought about by the "Europe Now 2" program, it is clear that pensions should primarily be adjusted to the real increase in prices, which would mean a significantly larger increase at this point," said Vukajlović.
She pointed out that the economic slowdown, especially in tourism, is further limiting wage growth, as increases in VAT and excise duties reduce competitiveness and room for wage increases.
"Without wage growth, there is no sustainable growth in pensions. At the same time, budget priorities send the wrong message. The government must not allow allocations to political parties to increase by 75 percent, from 8 to 14 million euros, while pensions for pensioners are increased by only 0,38 percent. A responsible and development-oriented policy is needed, based on strengthening the economy and a fairer distribution of public funds. Only in this way can future pension increases be real and worthy of people who have worked their entire lives and contributed to the development of this country," Vukajlović stated.
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