Pension system in North Macedonia
The pension system in the Republic of North Macedonia is regulated by the Law on Pension and Disability Insurance.
Pension and disability insurance rights include:
- right of old-age pension;
- right of disability pension;
- right of family/survivor pension;
- right of lowest pension amount
- right of professional rehabilitation and of appropriate compensation;
- right of money compensation for physical impairment.
MK-MOD – Tax and Benefit Model uses this law to simulate pensions in North Macedonia. The model models the rights 1) to 4).
- Old-age pension
The insured person acquires the right to old-age pension when s/he turns 64 years of age (men), i.e. 62 years of age (women) and at least 15 years of pensionable service (tenure).
The old-age pension is determined by the average of the monthly wages that the insured person earned during the total duration of the insurance, and as early as of January 1, 1970. In addition to the average of monthly wages, the determination of the pension base also takes into consideration the additions to salaries, and the unemployment benefit.
The old-age pension is determined by the pension base in percentages determined depending on the length of the service, which for each year of service is 0.75% (men) and 0.86% (women) from the pension base, and for a pension period shorter than one year and at the minimum of six months, equals 0.375% (men), or 0.43% (women) of the pension base.
The lowest amount of the old-age pension from the mandatory pension and disability insurance on the basis of generational solidarity and the pension obtained from the mandatory fully-funded pension insurance cannot be less than the determined average salary of all employees in the Republic of North Macedonia in 2002, for:
- the beneficiaries who have received the pension with a pensionable service of over 35 years (men), and over 30 years (women), in the amount of 41%,
- the beneficiaries who have earned the pension with a pensionable service of over 25 years (men), and over 20 years (women), in the amount of 38%, and
- the beneficiaries who have earned the pension with a pensionable service of up to 25 years (men), and up to 20 years (women), in the amount of 35%.
- Disability pension
Disability exists when due to a change in the health condition that cannot be fixed by treatment or medical rehabilitation, the working ability of the insured person is permanently reduced by more than half compared to a physically and mentally healthy insured person with the same or similar education and ability.
The disability is determined according to the following categories:
- category I – if the insured’s working ability is reduced by more than 80%, there is a permanent loss of working ability (general incapability to work)
- category II – if the insured’s working ability is reduced by more than 50% and up to 80% (occupational incapability to work).
If the insured’s working ability is reduced by 50% compared to a physically and psychologically healthy insured person with the same or similar education and ability, and s/he cannot perform a full-time work, s/he may work part-time or be allocated on other appropriate job in accordance with the regulations related to the labor relations and the collective agreement.
Disability can occur due to illness, injury from work, injury at work or occupational diseases.
The insured person with general incapacity for work, as well as the insured person with a residual working ability who, due to the attainment of certain years of age, cannot be qualified for performing other appropriate job with a professional rehabilitation, is entitled to a disability pension if s/he meets the following conditions:
- disability is caused by an injury at work or an occupational disease – no matter the length of service or
- the disability is caused by an injury out of work or with a disease conditioned prior to the occurrence of disability, that is, on the day of the termination of the insurance after the disabled person is older than 45 years of age and has at least 12 years of years of service or
- disability is caused by an injury out of work or illness, if the insured has completed over 30 to 37 years of age, should have a retirement period which covers 30% of the service life, counting the working life of full years, and the insured completed over 37 to 45 years of age, should have a retirement period which covers 40% of the service life, counting the working life of full years.
An insurer whose disability arose prior to attaining 30 years of age as a result of an injury outside of the work or of illness acquires the right to disability pension if on the day of occurrence of the disability s/he had the capacity of an insured person and if:
- the disability occurred by the age of 20, if s/he had at least six months of insurance;
- the disability occurred by the age of 25, if s/he had at least nine months of insurance; and
- the disability occurred by the age of 30, if s/he had at least 12 months of insurance.
Disability pension in case of disability caused by work injury or occupational illness is determined in the amount of 80% of the pension base for a pension realized by 2015, and the one realized after 2015 is determined in percentages given in the Law on Pension and Disability Insurance.
- Family/Survivor pension
Family/Survivor pension can by assigned to the following family members:
- children (born in or out of marriage or adopted, the grandchildren and other orphans who the insured has taken care of) and
- parents (father and mother, stepfather and stepmother) and the adoptive parent, who the insured has taken care of.
A family pension may also be exercised by a spouse of divorced marriage if a court decision entitles him/her to a right of alimony.
It is considered that the insured has taken care of grandchildren, the other orphans and the parents, if during that period:
- they were not in employment or did not earn income on another basis;
- the were not users of old-age, disability or survivor pension;
- the income from the agricultural activity per member of the narrower, i.e. wider family did not account for more than 25% of the average salary earned in the Republic in the previous year, and
- all other income per family member was not more than 25% per monthly average salary earned in the Republic in the previous year.
Family members acquire the right to a family/survivor pension if the deceased insured person:
- has completed at least five years of insurance or at least ten years of retirement service, or
- has fulfilled the conditions for old-age or disability pension, or
- was a beneficiary of old-age or disability pension.
If the death of the insured occurred as a consequence of a work injury or an occupational illness, family members acquire the right to a family/survivor pension, regardless of the length of the insured’s length of service.
Widow / widower is entitled to a family pension if:
- until the death of the insured person, on which basis this right belongs to him/her, the person has turned 50 years of life;
- until the death of the spouse, the person was incapable of work or such incapability occurred within one year from the date of death of the spouse;
- after the death of the spouse, one or more children who are entitled to family pension remained, and the widow / widower performs the parental duties towards those children; or
- until the death of the spouse, the person was 45 years old, when he turned 50 – or if in those years it became incapable of work.
A widower who during the exercise of the right to perform parental duty becomes incapable to work or has turned 50 years, s/he permanently reserves the right to a family pension.
The widow / widower who has lost the right to a family pension on the basis of performing parental duty after completing 45 years of age, acquires the right to a family pension when s/he turns 50 years of age.
The child acquires, i.e. uses the right to a family pension:
- up to 15 years of age, and if he is at school until he is 26 years of age, or
- if before the death of the insured person was incapable of work or such incapability occurred within one year of the day of death of the insured person.
If the child’s schooling has been interrupted due to illness, the right to a family pension can be acquired, that is, it belongs to him/her during the sick leave until the age of 26, as well as over those years, but at most for as long as regular schooling time has been lost because of illness.
The child who has stopped schooling for the voluntary serving of the military term is paid the family pension during that time.
If, during the exercise of the right to family pension, the child becomes incapable to work, s/he permanently reserves the right to a family pension.
A child with disabilities is entitled to a family pension after termination of employment.
The parent, whom the insured person, i.e. the beneficiary of a pension, sustains until his/her death, acquires the right to a family pension, if:
- until the death of the insured, i.e. the beneficiary of the pension, has reached 55 years of age, and
- is younger than 55 years and if up to the death of the insured, that is, the beneficiary of the pension was incapable of work.
The amount of the family pension is determined as a percentage of the basis that constitutes the old-age or disability pension: 70% for one family member, and for each next member another 10%, but not more than 100% of the base.
For children without two parents, the lump-sum pension earned by one parent increases for a part of the pension that the other parent used or would use, for:
- two children, 20%
- three children, 30%
- four or more children, 40%.
When the family pension is used by three or more family members, the amount of the family pension can not be less than 40% of the pension base of the deceased insured person.
As a basis for determining a family pension from an insured person who has a retirement service period of less than 15 years and does not fulfill the disability pension condition, the old-age pension calculated for a 15-year retirement service period is taken.