How to change encoding type

Dump your database, drop your database, recreate your database with the 
different encoding, reload your data.  Make sure the client encoding is 
set correctly during all this.

P.S.: 

CREATE DATABASE test

  WITH OWNER = postgres

       ENCODING = 'WIN1250'

       TABLESPACE = pg_default

       LC_COLLATE = 'Serbian (Latin)_Serbia.1250'

       LC_CTYPE = 'Serbian (Latin)_Serbia.1250'

       CONNECTION LIMIT = -1;