“Honoring pensioners before the elections”: Is there money in the budget for Vučić’s one-time payments? – Economy

This is the opinion of Danas interlocutors, who assess that these measures are not the result of the state’s systemic plan, but part of the pre-election campaign.

As they point out, the practice of using social policy as a means of securing political support continues.

The President of Serbia, Aleksandar Vučić, as well as other state officials, have been intensively announcing increases in pensions in recent months. with the message that pensioners with the lowest incomes will benefit the most.

However, apart from the regular adjustment of pensions, which according to the current law has been implemented since December 1st, so it is not about any extraordinary increase, Vučić recently announced an additional package of assistance for pensioners.

In a guest appearance on TV Prva, he promised pensioners vouchers for going to spas, cheaper medicines and one-time financial assistance.

“We will especially look at how to give something more to the poor than to those with high pensions,” Vučić repeated his earlier promise.

“Help is feasible, but it is a way to gain political support”

Announced measures to help pensioners, which include one-time benefits, subsidized medicines and other types of support, are in principle possible and feasible, says Milojko Arsić, a professor at the Faculty of Economics in Belgrade, for Danas.

However, our interlocutor points out that the impression is given that they are not part of the state’s systemic plan, but primarily an instrument for gaining political support from older citizens ahead of the expected elections.

“That, it seems to me, is the main motive for the implementation of those measures,” points out Arsić.

He points out that assistance to socially disadvantaged citizens is justified, but warns that it should not be aimed exclusively at pensioners.

“Such incentives are justified for all poor people. We should not limit ourselves to pensioners, because there are poor people among the elderly who are not pensioners, but also among the younger ones who are not retired and have relatively low incomes. If social policy is already being conducted, they should also be included so that they are not discriminated against,” the professor says.

According to him, in some cases pensioners are even in a more favorable position than citizens who do not receive a pension or are unemployed.

Speaking about the availability of funds in the budget, Arsić points out that it is not yet possible to accurately estimate its total costs, because it is not known how much money will be allocated for this aid package.

“It is not certain how much the aid package will cost in total. It is possible that it will exceed the agreed limit of three percent of GDP, but I think that the excess will not be particularly large and care will probably be taken to keep it moderate,” says Arsić.

As he explains, the final assessment will depend on the amount of one-time assistance, the scope of subsidizing medicines and the circle of beneficiaries who will be entitled to support.

When asked if there is a danger that such measures will further stimulate inflation, Arsić replies that he does not expect them to lead to an increase in prices.

“There should be no pressure on inflation, because it is not a significant package. A more precise assessment will be possible only when it is known how many funds will be set aside for that purpose, how much pensioners will receive, which pensioners will be covered and similar,” he states.

Asked if the funds intended for one-time benefits could be used for a permanent increase of the lowest pensions, Arsić says that such a solution would certainly be more favorable for the pensioners themselves, but at the same time would represent a significantly greater burden on public finances.

“That would be preferable from the point of view of pensioners, but it would cost much more. This is given once and it is probably motivated by the upcoming elections, but from the point of view of fiscal policy this is better than a permanent increase, which would mean that expenditures increase permanently in future years,” explains Arsić.

As he adds, a permanent increase in pensions would imply the need for the state to provide additional sources of funding in the coming period.

“That would again mean that additional taxes should be provided for those expenses or that some other expenses should be reduced,” he warns.

Nevertheless, Arsić estimates that certain measures of permanent social protection would make sense, bearing in mind that allocations for social protection in Serbia are not particularly high compared to other countries.

However, he stresses that such decisions should be part of long-term planning and not a reaction to current political circumstances.

“We insure ourselves to get a pension, not a one-time benefit”

Economist Milan Kovačević assesses that the practice of one-time payments to pensioners should be reduced and insists that the funds from the Pension and Disability Insurance Fund are primarily used for regular pension payments.

“There should be as few one-time issuances and spending from the funds of the Pension Insurance Fund as possible in order to maintain the regular payment of pensions, because these individual benefits always serve another purpose and are not part of real insurance,” Kovačević told Danas.

He reminds that the purpose of pension insurance is to provide regular pensions, not one-time assistance.

“When we insure ourselves, we insure ourselves to get a pension, not a one-time benefit,” he points out.

Kovačević adds that this type of assistance is not systemically organized and does not include all beneficiaries under equal conditions.

He believes that, rather than one-time aid, it is much more necessary to return to clear rules for the adjustment of pensions.

“I think we have to return to a principle of how pensions will be adjusted, because lately there have been deviations from what was decided. The Swiss formula was adopted, it was not applied, but it was done differently,” he states.

According to him, even the last pension increase of 12.2 percent does not fit into the previously defined rules.

Therefore, he believes that the current announcements of additional benefits can be viewed in a political context, bearing in mind the importance of pensioners as an electorate.

“So this is clearly now a matter of some preparation of pensioners, because pensioners are an important part of the electorate for Vučić and he will certainly time it before the elections to try to honor pensioners as much as possible in order to stay in power,” concludes Kovačević.