Amendments to the Law on Pension and Disability Insurance allowing privatisation of spas owned by PIO fund
More resultsIntroduction
The Law on Pension and Disability Insurance, which regulates Serbia’s compulsory pension and disability insurance system and specifies the management and financing of the Pension and Disability Insurance Fund (PIO Fund), was amended in July 2014. The amendments were approved under urgent procedure.
- Country
- Serbia
- Sector
- Culture and tourism
Description of the law
The Law on Pension and Disability Insurance, which regulates Serbia’s compulsory pension and disability insurance system and specifies the management and financing of the Pension and Disability Insurance Fund (PIO Fund), was amended in July 2014. The amendments were approved under urgent procedure.
Specifically, an amendment to Article 155 reduced the number of management board members from 21 to seven. All seven members are now appointed by the government: the minister proposes four members, and one member each is proposed by representatives of the unions, employers and pensioners. As a result, the amended law gives the government control of the management board and the capacity to decide relevant issues. Previously, the board had 21 members. The government had appointed only two out of seven members representing employers, while pensioners and unions appointed seven representatives each (see page 6).
The new management board decided to approve the privatisation of spas and resorts owned by the PIO Fund. As a result, the Vranjska Banja and Kuršumlija Banja spas were undervalued and sold to businessmen affiliated with the ruling Serbian Progressive Party (SNS). In August 2019, the pensioners association requested the annulment of the decision taken by the PIO Fund’s management board, but their request was ignored. The privatisation of PIO Fund’s spas is part of a wider government tourism strategy to privatise all spa complexes in Serbia. The pensioners association claims that the selling of spas owned by the PIO Fund is illegal, while the Anti-Corruption Council suspects systemic corruption.
Full Law Name
Amendments to the Law on Pension and Disability Insurance
(Official Gazette of the Republic of Serbia, No. 34/2003, 64/2004 - odluka USRS, 84/2004 - dr.zakon, 85/2005, 101/2005 - dr.zakon, 63/2006 - odluka USRS, 5/2009, 107/2009, 101/2010, 93/2012, 62/2013, 108/2013)
Type of law
Amendment to an Act of Parliament
Scope of application
Substantive: regulation of the pension and disability insurance system
Personal: Pension and Disability Insurance Fund (PIO Fund), pensioners and retirees
Territorial: national
Temporal: until abrogated
Time of adoption and entering to force
Amendments to the law were adopted under urgent procedure on 18 July 2014 and entered into force eight days later.
Who drafted it
The Government of Serbia
Who submitted it to parliament or other collective body, such local council
The Government of Serbia
Relevant developments in the process of adoption that show signs it is tailor-made
By amending Article 155, the government took complete control of the PIO Fund’s management board, which decided to privatise all of its spa complexes in Serbia in accordance with the government’s tourism strategy. The spas were sold under the market price to people close to the ruling party.
The pensioners association, which had seven representatives on the previous PIO Fund management board, claimed that the privatisation caused enormous material damage to contributors and to the PIO Fund as a whole, and the association filed criminal charges. Several criminal proceedings are ongoing.
Who adopted it
The Parliament of Serbia, where the ruling SNS party has the majority
Enforcement
It is enforced.
Initiatives to challenge it and their outcomes
The change in the law triggered strong negative reactions from the pensioners association, which filed criminal charges claiming illegal acts in the privatisation process.
Affected sector
Public finance
Direct beneficiaries and related networks
The direct beneficiaries of the amendments to the law were businessmen and companies close to the regime. In particular, A.D. Planinka, owner of two other spas, purchased Kuršumlija Banja spa below the market price. Planinka’s co-owners are SNS officials, one of whom is the mayor of Kuršumlija.
Direct victims
All pensioners (1,700,000) and all citizens in Serbia are contributors to the PIO Fund and indirect owners of the country’s spas.
Socio-economic impact (on markets, sectors, etc)
The privatisation and sale of PIO Fund assets below the market price damaged the fund. The pensioners also suffered damages because they lost the opportunity to use the spas for their own benefit. At the same time, important resources are increasingly controlled by a group of people close to the ruling party.
Impact on rule of law
The capture of public decision-making bodies resulting in the use of public resources for private interests is against democratic values and the rule of law.
Initiatives to challenge it and outcomes
The pensioners association initiated proceedings for assessing the constitutionality of the law, especially Article 155 (see here and here). There are no other relevant initiatives to challenge the amendments to the law. Nevertheless, the decision to privatise spas owned by the PIO Fund at under the market value and the government’s plans to sell 27 spas promoted a strong reaction from the pensioners association, which filed criminal charges and asked for revocation of the privatisations.
Criminal cases
Yes, several criminal proceedings are ongoing in relation to the privatisation of spas in Serbia and requests to return their ownership to the PIO Fund.
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