Macedonian Workers Get to Choose: Using Today’s Technology to Plan for
Tomorrow’s Retirement
The older we get, the more we worry about our pensions. For most of us, just the thought of sorting out the complexities puts us off. So imagine living in a country that has just reformed its state-owned and previously socialist era system. Imagine being told you need to make important decisions that could affect your future. Where do you turn for help?
Gabriela Sekulovska found herself in just this situation. She wasn’t sure whether the new alternative was suitable for her or whether she should stick with her current plan. All she’d heard were rumors which made her head spin.
So she was delighted to find a full page ad in the newspaper explaining her options, written in a straight forward way, and best of all, listing a website where she could get more information.
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| Website enables Macedonians to decide which pension system is best |
"The idea that my own savings will go for my own pension benefit is wonderful! The website clearly explained that I would have my own individual account,” says Gabriela. “I told Altay, my colleague about this new pension scheme and we both explored possibilities and made calculations using the website calculator. It helped us to decide to join the new pension system."
Macedonia is embarking on a bold reform of its pension system that will give workers a choice about how their retirement benefits are invested. Workers are being asked to choose whether to join a privately managed pension system or remain in the old state-owned system. A USAID sponsored website allows workers to access an actuarial model to help them determine which system is best for them.
Negative demographic trends will cause the state-owned pension system to come under financial stress, as the number of new pensioners drawing benefits from the system are outpacing the number of new workers contributing to it. In response, a reform program designed and implemented with World Bank and USAID funded assistance over the last five years has been launched.
The new system allows workers employed before Jan 1, 2003 to decide whether to stay in the old state-run system or split their contributions between the state run pillar and a new pillar that will be managed by two private pension funds. These funds will collect and invest pension contributions and gradually build up a retirement nest egg. The question is: which system will produce a bigger retirement benefit?
To enable workers to make an informed decision, USAID created a website to inform them about the pension reform and give them access to a “pension calculator” based on an actuarial model developed with World Bank assistance. The website was created by the Financial Services Volunteer Corps (FSVC). The calculator allows workers to enter their individual biographic data to the model and receive a recommendation whether to join the new system or stay in the old one.
The website has proved to be a valuable resource to workers who otherwise would not have access to actuarial models. The website received over 15,000 “hits” and over 100,000 page views in the months leading up to the start of the reform, demonstrating that a large number of individuals who were undecided relied on the website for information. . The website is also being used by pension fund agents as a tool to educate workers on their rights and benefits under the new system.
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