Montenegro’s widening reliance on budget funding for state pensions is strengthening the case for reviving voluntary retirement savings, potentially opening a new market for asset managers, insurers and employer pension schemes.
The Pension and Disability Insurance Fund received €482.3 million in the first seven months of 2026, including €229.2 million from contributions. The remaining gap of about €253 million was covered from other budget revenues.
Contribution income nevertheless rose 20.1% year on year, while the funding gap was 6.35% lower than in the same period of 2025. The gap partly reflects pension contribution reforms that reduced the combined contribution rate from 20.5% to 10%.
The figures do not imply that state pensions are at immediate risk. They do, however, underline Montenegro’s dependence on general taxation to finance retirement benefits as demographic pressures increase.
That could revive interest in a private third pillar.
Montenegro has had no active voluntary pension funds since 2019, when its two previous funds were liquidated. One of them, Penzija Plus, had about 2,251 members, highlighting the limited scale reached by the earlier market.
A new voluntary pension funds law was adopted in 2025, while the government proposed further amendments in January 2026 covering taxation, supervision, risk management and other requirements.
The Capital Market Commission has said regulation alone is unlikely to restart the sector and that commercial viability may depend on tax incentives.
That puts employers at the centre of the potential market.
Payroll-linked pension contributions could become part of compensation packages used to retain skilled workers, while insurers and investment managers could offer retirement products alongside existing savings and protection policies.
A functioning private-pension industry would also create a pool of long-term domestic investment capital, something Montenegro’s shallow capital market currently lacks.
The key challenge will be rebuilding confidence after the failure of the previous funds.
For private retirement savings to return at meaningful scale, Montenegro will need credible supervision, transparent fees and incentives strong enough to persuade households and employers to lock money away for decades.
The state pension system will remain dominant. But a €253 million seven-month funding gap is strengthening the argument that future retirement income cannot rely exclusively on one pillar.
