STATE AUDIT OFFICE
- Press Release-
Skopje, 22.06.2021
37% of revenue funds of the Pension and Disability Insurance Fund are from the Budget of RNM for covering deficit for payment of pensions
The State Audit Office conducted audit on the financial statements of the Pension and Disability Insurance Fund of the Republic of North Macedonia for 2019 together with compliance audit.
The authorized state auditor expressed qualified opinion on the reality and objectivity of the financial position and the results of financial activities for 2019, and qualified opinion on the compliance of financial transactions with the relevant legal regulations, guidelines and policies in place.
The authorized state auditor identified shortcomings in the system of internal controls in the process of exercising the rights from pension and disability insurance (PDI) and the process of payment of pensions. There is no complete segregation of duties and responsibilities of employees involved in the processes and a risk of irregularities in the procedure for recognition of PDI rights, as well as a risk of payment of pension after the expiration of the legal right.
The audit report also disclosed identified shortcomings concerning:
- lack of professional and trained employees for making actuarial analyses of the situation in the pension system; IT staff to support the existing processes; internal audit operates without the legal minimum, which affects management’s ability to take action for improving the work; and insufficient human resources of the Commission for work capability assessment i.e. doctors specialist, which affects the quality and timely diagnosis, assessment and opinion for exercising PDI rights;
- weaknesses in storing and archiving data in the registry records prevent verification of reliability and completeness of registered data, which are necessary for exercising the rights of the Pension and Disability Insurance Fund. In addition, the exercise of personal and material long-term rights of some insured persons that do not have mechanisms for proving paid contributions for a certain period is violated and questioned;
- the Fund cannot use non-allocated funds amounting to 142 million denars and the insured persons cannot exercise their PDI rights;
- insufficient mechanisms for forced collection of recognized damages due to unfounded payment of pensions that result in receivables from citizens and the low percentage of return of overpaid funds indicate uncertainty of collection in the upcoming period;
- insufficient degree and intensity of digitization and electronic archiving of documents from microfilm tapes in the past period has an effect on the rational use of funds.
Revenue from collected PDI contributions in 2019 has increased by 10% compared to the previous year due to the amendments to the Law on PDI from December 2018, and the refunded contributions with returns from private pension companies. The increase in revenue in 2019 is still not sufficient to cover expenditures for social benefits, which are also increasing from year to year for payment of pensions of 333.722 pension beneficiaries. The amount is 6.7% higher compared to 2018.
To cover the deficit for payment of pensions in 2019, 28 billion denars were transferred from the Budget of RNM, which is 37% share in the total revenues of the Fund.
The authorized state auditor continuously points out weaknesses of the system in place for determining, controlling and collecting contribution performed by the Public Revenue Office since 2009 without ensuring full up-to-date and accurate integration and timely exchange of data between the institutions. Consequently, the Fund does not have complete and precise data on the claims based on unpaid PDI contribution, nor it has the authority to collect it, which affects completeness of the revenue and realization of PDI rights of the insured for whom the contribution is not paid.
Link to the Audit Report:
Press contact:
Albiona Mustafa Muhadziri +389 72 228 203
[email protected]
Mijalche Durgutov +389 70 358 486
[email protected]
Martin Duvnjak +389 75 268 517
[email protected]