Pensions in FBiH will definitely be higher with the beginning of July. It is a semi-annual adjustment of pensions, which is guaranteed by the new model. However, we asked the Federal Institute of PIO/MIO and the Ministry of Labor and Social Policy of the FBiH whether pensions will be able to be further adjusted like this from when.
Details of July pension payments
- the lowest pension of 666 KM is increased to 706 KM
- the guaranteed pension of 842 KM increases to 892 KM
- the average independent pension increases from 851 KM to 900 KM
Federal PIO/MIO Institute: The FBiH Government has become the guarantor of pension payments
The Federal Institute of PIO/MIO says that today they operate on the principles of financial stability and responsible management of funds. The payment of pensions, they add, is predominantly financed from the contributions of active insured persons, which represents the basic principle of intergenerational solidarity.
“However, like all pension systems in Europe, the system of the Federation of Bosnia and Herzegovina depends on demographic and economic trends. Long-term sustainability depends on the growth of employment, the level of wages, the collection of contributions and demographic trends. It is important to note that in 2020 the Federal Institute of PIO/MIO completely switched to treasury operations, with which the Government became the guarantor of pension payments.
Since the payment of pensions is predominantly financed from the contributions of active insured persons, we asked whether there are already indicators of income from contributions.
Contributions for PIO could be lower by 8 percent
As stated by the PIO/MIO Institute, the impact of the increase in the minimum wage should be observed over two periods, since during the year 2025 there was also a reduction in the contribution rate for PIO. In the first six months of 2025, the growth in income from contributions compared to the same period in 2024 amounted to about 16.5%, while in the second half of the year this growth was significantly lower and amounted to approximately 4.5%.
They also emphasize that the increase of the minimum wage to 1,000 KM applies from January 1, 2025, while from July 1, 2025, the contribution rate for PIO is reduced from 6% to 2.5%, i.e. by 3.5 percentage points.
“The essential effects of the simultaneous increase of the minimum wage and the reduction of the contribution rate will be fully visible only after the end of 2026. However, based on the data for the first five months of 2026, it can be concluded that the income from contributions at the end of the year will be significantly lower compared to 2025. Namely, the income from contributions in the first five months of 2026 is on average lower by about 8% compared to the same period of the previous year,” stated the Federal Institute PIO/MIO.
Ministry of Labor and Social Policy FBiH: Complexity of the pension system
We asked the Ministry of Labor and Social Policy FBIH whether FBiH can finance two regular adjustments of pensions per year in the long term without additional burden on the budget.
“It is precisely on this issue that the complexity and delicacy of any pension system can best be seen. On the one hand, there is a need to provide pensioners with a dignified standard of living and continuous growth of pensions, and on the other hand, an obligation to ensure that the system remains stable and sustainable for future generations. Of course, in the long term, the pension system cannot independently finance a continuous and significant increase in pensions without growth in employment, the economy and the total base of insured persons. If allocations from the system increase, and the number of insured persons does not grow at an appropriate pace, the difference in funds must be secured from the budget or other sources of financing.” they answered us from this ministry.
They emphasized that almost all European countries finance their pension systems from the budget to a certain extent today precisely because of demographic changes and the extension of the population’s life expectancy. As an example, they stated that the Republic of Croatia provides more than 60 percent of the funds needed for the payment of pensions from the budget. Similar models exist in other European countries.
“In addition to the increase in employment, which is a basic prerequisite for the long-term stability of the system, there are a number of other factors that affect the state of pension funds around the world. One of the most important is certainly the extension of the life expectancy of the population. Today, people live longer than before, which is a positive civilizational trend, but at the same time it also means a longer period of using the rights from the pension system,” the Ministry stated.
As they further state, the minimum requirement for exercising the right to an old-age pension is 15 years of insurance experience, while the right to a pension can be used for 20, 25 or even 30 years. This discrepancy, they emphasize, must be covered by additional sources of financing, which represents a challenge for all modern pension systems, he writes. Focus.
