North Macedonia Pension Guide 2026

Overview — North Macedonia's Multi-Pillar Pension System

North Macedonia reformed its pension system in the 2000s, transitioning from a single PAYG state pension to a multi-pillar model inspired by the World Bank's framework. The Pension and Disability Insurance Fund manages the first pillar, while licensed private pension funds manage the second pillar. The third pillar consists of voluntary pension savings offered by banks and insurance companies. The system aims to diversify retirement income sources and improve long-term sustainability in the face of an ageing population.

Retirement Age — 64 (Men), 62 (Women)

The standard retirement age is 64 for men and 62 for women. Women's retirement age is gradually increasing to 64 over a transition period. Early retirement is available at age 60 (men) or 58 (women) with reduced benefits if the individual has at least 40 (men) or 35 (women) years of contributions. Deferred retirement beyond the standard age increases the pension by approximately 0.5% per month of deferral (6% per year). A minimum of 15 years of contributions is required for the minimum state pension.

First Pillar — PAYG State Pension

The first pillar is a defined-benefit, pay-as-you-go state pension managed by the Pension and Disability Insurance Fund. Contributions to the first pillar total 16% of gross salary (employee 7% + employer 9%). The pension amount is calculated based on the average salary of the best 10 consecutive years of earnings, multiplied by a coefficient based on total contribution years. The maximum pension is capped. The first pillar provides a basic retirement income, but replacement rates are modest (approximately 40-50% of average salary). The fund also provides disability pensions and survivor benefits (70% of the deceased's pension to the surviving spouse, 20% to each child).

Second Pillar — Mandatory Funded Pension

The second pillar is a mandatory defined-contribution scheme where 6% of gross salary (employee's share) is contributed to an individual account managed by a licensed private pension fund. Key features:

• Employees may choose their pension fund from a list of PRO-approved funds
• Funds invest in a diversified portfolio (government bonds, equities, corporate bonds, bank deposits)
• At retirement, the accumulated balance is used to purchase an annuity from a licensed insurance company
• The annuity provides a monthly pension for life or a guaranteed period
• Funds are fully vested and portable between jobs
• Early withdrawal is not permitted (except for permanent disability or emigration)

The second pillar funds have been growing steadily, with assets under management exceeding EUR 2 billion as of 2026.

Third Pillar — Voluntary Pension Savings

The third pillar consists of voluntary retirement savings accounts offered by banks, insurance companies, and investment funds. Contributions are tax-deductible up to certain limits. Individuals may contribute up to 15% of their annual income to a voluntary pension account, deductible from personal income tax. The funds accumulate tax-free and are taxed upon withdrawal at the standard income tax rate. Voluntary pension accounts are flexible — contributors may choose their contribution amount, frequency, and investment strategy.

FAQs

Can I withdraw my second pillar pension as a lump sum?

No, the second pillar balance must be used to purchase a life annuity from a licensed insurance company. The annuity provides a monthly pension for life. Lump-sum withdrawals are not permitted.

What happens to my pension if I emigrate?

If you emigrate permanently, you may claim a refund of your second pillar balance (minus tax). First pillar contributions remain in the system — you may be eligible for a proportional pension based on your contribution years in North Macedonia.

How much will my state pension be?

The state pension is calculated as a percentage of your average salary (best 10 years). For 40 years of contributions, the replacement rate is approximately 40-50% of average salary. With the second pillar annuity, the total replacement rate may reach 60-70% for those who contributed throughout their career.

Disclaimer

This guide provides general information about North Macedonian pensions for the 2026 tax year. Pension laws, contribution rates, and benefit calculations may change. Always consult with a qualified Macedonian pension advisor or the Pension and Disability Insurance Fund for advice specific to your situation. InvestmentKit does not provide pension advice.