December the 5th, 2022 - Eurozone accession is set for the 1st of January, 2023, but with inflation still raging and concerns about price hikes when we switch over to the single currency reigning strong, we can't forget about Croatian retirees. Will they be better or worse off when Croatia becomes a Eurozone member state?

As Poslovni Dnevnik writes, as of January the 1st, 2023, the lowest pensions will increase by a mere three percent, and a new model for the payment of family pensions will be launched in the country. The director of the Pension System Administration of the Ministry of Labour, Melita Cicak, pointed out that this is an additional increase, along with the regular adjustment of pensions, as reported by HRT.

"Beneficiaries of the lowest pensions will receive a pension that is higher than what they received during their working life," Cicak said, emphasising that the lowest pension will be higher the greater the number of years of service worked. Stefica Salaj from the Union of Croatian Pensioners welcomed the increase in pensions, but said that it was still not enough for the often difficult lives of Croatian retirees struggling to make ends meet from month to month.

"All Croatian retirees, as we've been pointing out for a long time now, should have their pensions increased by 10.5 percent," she added.

The president of the Social Democrats, Davorko Vidovic, said in no uncertain terms that he believes Croatian retirees will be worse off next year.

"Their pensions and the income they get each month will be lower, those amounts are going to be smaller. With this increase, it will be slightly less bad than it could be. And that's it," said Vidovic, stating that Croatian pension expenses are lower than the EU average.

Vidovic also said that this isn't about social rights, but about something that belongs to earnings, which people have made by paying into the intergenerational solidarity system. However, HSU MP Silvano Hrelja said that "not all pensions have been earned".

''278,000 of the lowest pensions haven't been earned. These people receive one third more than they ever paid. This is the solidarity of all those who paid more, who could eventually have more, according to them, who were either simply not lucky, or didn't want to pay themselves because they had the right to choose,'' said Hrelja.

"We'd like to have a pension system like the one in Germany, not to pay contributions and take as much as we need from the budget," he also said.

The new model for paying out family pensions was also discussed, and the topic of possible new price increases for care homes was also discussed. Vidovic said that he can understand the price increases because the costs of just about everything have increased, but that the local and regional self-government units and the state must help people who are in a state of existential threat.

Cicak said that the prices will not increase in the three care homes founded by the state itself, and she called on people to contact the social welfare centre and determine whether they're entitled to help with their expenses if there is an increase in prices.

For more, make sure to check out our news section.

June the 10th, 2022 - Could new Croatian Government plans see normal employment permitted for people until they reach the age of 68? While there are certainly many industries in which this would either not be possible or would simply be undesirable, it seems that it could well be on the cards.

As Poslovni Dnevnik writes, one of the most interesting novelties of the Croatian Government's legislative proposals is that it proposes extending the age until which a worker can be employed from 65 to 68 years of age, as confirmed by our interlocutors from the trade union and the Croatian Employers' Association (HUP).

At the same time, clearly, the age requirement for exercising the right to retirement remains 65 years in this country, which is prescribed by another law, Jutarnji list writes.

In other words, Croatian employers would not be able to terminate their employment contracts held with those employees who are turning 65 if the workers themselves do not want to agree to that, and after the age of 68, it will simply become a matter of agreement between the employee and the employer.

Of course, these new Croatian Government plans open up many questions, the most important of which being; who will want to work at that age, or in which industries is such a move remotely realistic? As HUP's negotiator for ZOR Nenad Seifert pointed out, when an employment contract is indeed terminated after an employee reaches 65 years of age, workers will not be entitled to any severance pay, given that they will then retire.

In the first version of the ZOR proposal, the age limit for the duration of employment was dropped, which, according to him, seemed somewhat insane.

Nevertheless, the Republic of Croatia is among the three European Union (EU) member states with a legal age limit for the termination of employment contracts. Fierce discussions were held in the negotiations on other issues, such as the extension of fixed-term contract periods.

Both the Ministry of Labour and the unions referred to data showing that the Republic of Croatia is at the infamous European top of the list (with an embarrassing share of more than 20 percent), and about 90 percent of new employment contracts are still concluded for a certain period of time, which is a very uncertain and often unwelcome form of work.

For more, make sure to check out our dedicated politics section.

ZAGREB, 21 April 2022 - Two pensioners' associations on Thursday asked the government to raise pensions by 10% and change the pension indexation model, due to the rise of inflation and food prices, for seniors shortchanged in the pension reform.

In an open letter to Prime Minister Andrej Plenković, they say that in February the average pension was 35.5% of the average pay, which puts Croatia at the bottom of the EU. Last year two in three pensions were below the poverty live at just over HRK 2,900.

Since the rise of inflation and food prices poses an additional blow to pensioners' low living standards, the associations expect the prime minister to take action to protect the oldest citizens.

The associations demand that by the end of June, pensions be raised by 10% for all those who retired after 1 January 1999, saying that this would total HRK 308 million a month for 1.14 million pensioners.

The associations don't want the 10% increase to be in force only until prices on the world market are put under control, but a lasting intervention for seniors whose pensions have been cut by 10% by the then pension reform.

They also demand that pensions up to HRK 2,000 be indexed by 120% and those from HRK 2,000 to 4,000 by 110%.

The government has announced that as of next month it will pay an energy allowance for seniors whose pensions are below HRK 4,000.

The associations welcome that, but propose that seniors whose pensions are below HRK 1,500 be entitled to a HRK 400 monthly energy voucher, to which only those receiving national and guaranteed minimum allowances are entitled.

For more, check out our politics section.

ZAGREB, 15 October 2021  - The Croatian Pensioners Party (HSU) warned on Friday that over 600,000 pensioners in Croatia received pensions below the poverty line, and that the ratio of the average pension to the average wage was never lower, amounting to 35.9 percent.

The number of poor people in Croatia is growing by the day, and according to Eurostat, the poverty line is currently HRK 2,927, while the risk of poverty rate is higher than ever before, HSU leader Veselko Gabričević told a press conference, held to mark the International Day for the Eradication of Poverty, observed on 17 October.

"We are seeing a surge in energy prices, notably in prices of petroleum products, which is having a direct impact on prices of all staples. The last pension adjustment of HRK 68 is almost next to nothing. Regardless of the legal requirement for pensions to be adjusted twice a year, pensioners' purchasing power is decreasing and their lives are becoming harder," Gabričević said. 

The HSU is dissatisfied with the present pension indexation formula, saying that it leads pensioners into even greater poverty. It says that this issue has been raised with the National Council for Pensioners to stop a further decline of pensions in relation to wages. The party is calling for a comprehensive pension reform to increase the lowest pensions.

According to the Croatian Pension Insurance Institute, 1,113,522 pensions were paid out this September, and 722,644 pensioners have pensions ranging between HRK 500 and 3,000.

Gabričević noted that 9,195 pensions paid out in September exceeded HRK 8,000, including those of members of Parliament. 

For more news, CLICK HERE.

ZAGREB, 16 Sept 2021 - Labour Minister Josip Aladrović informed the parliament on Thursday that despite all the challenges, Croatia had registered roughly 50,000 more pension insurees at the end of August than a year before and also 9,000 more than at the end of August 2019.

Minister Aladrović underscored these figures while presenting the draft amendments to the minimum wage legislation, which were supported by lawmakers.

The draft amendments envisage the stipulation of the gross minimum wage and also fines for employers who pay wages lower than the defined minimum wage.

Commenting on trends in gross minimum monthly payments, the minister noted that at the end of 2013, the gross minimum pay was HRK 2,984 and it rose to HRK 3,120 at the end of 2016,  which meant that during the term of the Social Democratic Party (SDP) government it rose only by 4.5% or by 135 kuna.

During the term of this government, it increased from HRK 3,120 to 4,250 or by HRK 1,130, he said.

The net minimum pay rose from HRK 2,496 to HRK 3,400 or by 904 kuna that is by 36.2%, he stressed and added that this June the average net monthly wage was HRK 7,175.

Aladrović said that the growth in the minimum wage was evident, however, some shortcomings had been spotted and the draft amendments were aimed at correcting them.

Parliamentary deputies welcomed the proposed changes, and some of them warned that there were still some employers who paid only the gross minimum pay, while they gave the difference to a higher earned pay directly to workers or they denied the right of employees to free days.

(€1 = HRK 7.470695)

For more about politics in Croatia, follow TCN's dedicated page.

ZAGREB, 15 Sept, 2021 - Abolishing the second pension pillar could, in the long run, result in higher public expenditure for pensions and a lower standard for pensioners, the Croatian Financial Services Supervisory Agency's board chairman, Ante Žigman, said on Wednesday. 

Addressing a conference, organised by the Hanza Media company on pensions, Žigman said that the pension reform was the biggest economic reform in Croatia's recent history and that it had been lasting for 20 years and had shown huge resilience, while being supported by both left and right governments.

He underscored that at the end of August the net assets of the mandatory pension funds (OMF) amounted to HRK 128 billion, an increase of almost HRK 9 billion compared to 2020. One-third of that is from payments while two-thirds of that amount is from yields.

He recalled that a lot of European countries had launched pension reforms twenty years ago but only Croatia and Bulgaria have managed to maintain the established system whereas in other countries significant amendments to reforms have been made due to the negative consequences of the global financial crisis.

A European Commission analysis on the future of pension systems to 2070 indicated that the gap between pension costs and contribution paid in will widen in those countries that abolished the second pillar.

In Croatia, the share of public costs for pensions in GDP should increase until 2030 and after that, it should begin to decrease, he said.

"The results without a doubt indicate that keeping the second pillar and combined pension allowances from the first and second pillar certainly contribute to a better status for pension recipients and lower public expenditure for pensions," Žigman underscored.

Aladrović: Demographic challenge is a pressing issue

Labour and  Pension System Minister Josip Aladrović said that the system needs to be upgraded so as to make it easier for management companies to  make investments which would result in greater prosperity for (pension) fund members.

Aladrović illustrated the complexity of the pension system saying that 40 years ago there were four people employed to one pensioner whereas now that ratio is 1 to 1.3.

"This illustrates the challenges of the demographic trend Croatia is faced with," said Aladrović, underscoring that the demographic challenge is the most pressing one in the entire European Union.

He underscored that compulsory pension funds have savings of €17-18 billion and those savings represent an opportunity to improve Croatia's economic prosperity as well as an opportunity to meet the objectives of adequate pension allowances and the pension system's sustainability.

For more about politics in Croatia, follow TCN's dedicated page.

ZAGREB, 20 Aug, 2021 - The indexation of pension allowances on 1 July will lead to their rise by 2.46%, which means that the average increase will be 68.93 kuna, with the lowest pensions going up by HRK 42.77 and the the highest by HRK 180.47, the Večernji List (VL) daily reported on Friday.

Pensions are indexed twice a year, on 1 January and 1 July, to account for increases in living costs and to be adjusted to changes in the gross average monthly pay. The latest calculation of these two variables paves the way for the 2.46% increase in pension allowances as of 1 July.

In July, there were 1,143,592 pension recipients in Croatia, and the average pension was HRK 2,581.99.

17.5% increase in pension allowances since October 2016

Since October 2016, the average pension has increased by 17.5%, the Zagreb-based daily reported.

The lowest pension, HRK 1,738.48, is currently paid to 270,495 beneficiaries.

A total of 1,752 recipients get pensions in the amount of HRK 7347.17. Their allowances have increased by HRK 1,376 kuna since October 2016.

 (€1 = HRK 7.5)

For more on lifestyle, follow TCN's dedicated page.

For more about Croatia, CLICK HERE.

ZAGREB, 15 April, 2021 - Parliamentary opposition parties on Thursday criticised the government's plan to pay a COVID supplement to pensioners and a tax refund to young people in the run-up to local elections as vote buying.

Arsen Bauk of the Social Democratic Party (SDP) told reporters in the parliament building that the government "has obviously sorted its priorities to ensure the best possible election result" for the ruling Croatian Democratic Union (HDZ).

"We support a COVID supplement for pensioners, even before elections. I think the Croatian democracy is mature enough and that this will not result in voters voting en masse for the HDZ," Bauk said.

Homeland Movement MP Stjepo Bartulica said that Prime Minister Plenković often expressed his disdain for populists. "I see a great dose of populism in the timing of this measure," he said.

"We are all equal in Croatia, but obviously some groups are more equal than others, especially with elections coming up. In principle, I am not against helping the pensioners, but the way in which the government runs its policies actually increases cynicism in Croatia," Bartulica said.

Bridge's Božo Petrov noted that the government had promised several years ago that the living standards and monthly incomes of pensioners would rise considerably, suggesting that the measures proposed by the government should remain permanent.

Bojan Glavašević of the Green-Left Bloc said that "the pensioners and young people, as vulnerable groups, need systematic rather occasional assistance."

Unlike the opposition, the HDZ's Ivan Ćelić disagreed that this was an attempt at vote buying for local elections. "Let me remind you that a month before elections the (SDP) government of Zoran Milanović gave away electricity vouchers of HRK 200, which can be seen in the same way as the COVID supplement," he said.

(€1 = HRK 7.5)

For more about politics in Croatia, follow TCN's dedicated page.

ZAGREB, 12 April, 2021 - Prime Minister Andrej Plenković said on Monday that an agreement has been reached with pensioners' representatives regarding COVID relief that will be paid to about 850,000 seniors in the end of April or early May.

The COVID supplements will be tax-free and not subject to enforcement collection.

"In this budget situation, we have done the most we could and hope that this one-off payment will nevertheless help our pensioners to ease their situation to some extent," said Plenković after a meeting with pensioners' associations.

The one-off supplement will be paid to relieve the consequences caused by the COVID-19 epidemic. The grant will be paid according to several categories, he explained.

The highest amount will be paid to recipients of the lowest pension allowance. Seniors receiving a pension allowance of up to HRK 1,500  will receive a one-off grant of HRK 1,200.

Pensioners with an allowance of between HRK 1,500 and HRK 2,000 will receive HRK 900 and those with a pension of HRK 2,000 to HRK 3,000 will receive HRK 600, while pensioners with an allowance of HRK 3,000 to HRK 4,000 will receive HRK 400.

Plenković underscored that supplement will be tax free, it cannot be included in any enforcement notices nor be added to any assets test that may affect free health insurance supplements.

An estimated that about 850,000 pensioners will receive the one-off payment, which will require about HRK 600 million from the state budget.

(€1 = HRK 7.569094)

For more about politics in Croatia, follow TCN's dedicated page.

ZAGREB, 9 March, 2021 - Labour Minister Josip Aladrović said on Tuesday that negotiations were underway with pensioner unions and associations about COVID supplements for retirees.

"We've had a few operational meetings and that issue is something that cannot be resolved in such a short time however, I am certain that we are on the right track for an agreement regarding a COVID supplement," said Aladrović, when asked by the press whether the talks reached a standstill.

He announced that talks on that issue would continue at the end of this week and in the coming period.

"I am certain that Croatia can become one of the countries that introduces a COVID supplement but we have to be aware on the other hand of the fiscal limits in our budget," he added.

Aladrović added that he would leave all options open,however, he is certain that good will for an agreement exists and that it is possible.

Asked whether the decision was waiting for the local election, Aladrović said that this is a supplement that is unknown in other European countries and that it cannot be brought into the context of current political circumstances and situations.

Last month during a meeting with Prime Minister Andrej Plenković, pensioner associations raised the issue of a COVID supplement and asked for just over 800,000 pensioners with a pension allowance of up to HRK 2,710 to be paid a COVID supplement of €150 (HRK 1,125).

They also proposed that about 244,000 pensioners with pension allowances between HRK 2,710 and HRK 5,000 be given a supplement of €100 (HRK 750) and for 7,200 single pensioners who receive a pension allowance of more than HRK 5,000 to be given a supplement of €50 (HRK 375).

The supplement would, according to their calculations, come to HRK1.93 billion.

For more about politics in Croatia, follow TCN's dedicated page.