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.

November the 14th, 2022 - A new Croatian pension model is on the horizon, which will likely make the payouts retirees receive each month higher in the long run.

As Poslovni Dnevnik writes, a new Croatian pension model will come into force on January the 1st next year, as will Croatian entry into Schengen and the Eurozone. The news is that what are known as family pensions are set to increase by 10 percent, and for the first time, widows and widowers will be able to keep their personal pension and inherit part of their deceased spouse's pension, which wasn't even possible until now.

The new Croatian pension model will cover more than 155,000 pensioners, and the average increase will be around 510 kuna, which while small in the eyes of some, isn't entirely insignificant to those receiving a criminally low amount each month. In order to be entitled to this type of pension, you must be 65 years old. In addition, at the time of your partner's death, you should be able to meet all of the other conditions for exercising the right to a family pension, according to a report from HRT.

"For example, if someone was 50 years old at the time of their spouse's death or they were taking care of their children, that means they were fulfilling their parental duties. And, on top of that - that the sum of their personal pension and part of their family pension doesn't exceed 80 of the current value of the pension, which currently stands at 6,212 kuna," said Melita Cicak, the director of the Pension System Administration in the Ministry of Labour.

What is the actual procedure?

Considering the differences, each user will be able to get information from the Pension Insurance Institute (HZMO) about which Croatian pension model is the most profitable for them.

"Users who use only their family pension, and haven't been granted the right to a personal pension, will need to submit a request for the realisation of the right to a personal pension or family pension before requesting the payment of part of the family pension," said Maja Cakarun, head of the Public Relations Office of the HZMO.

The new law enters into force on January the 1st, 2023, and its implementation will require around one billion and 400 million kuna.

For more, make sure to keep up with our dedicated news section.

August the 17th, 2022 - Croatian pensions are set to increase by at least six percent in September this year for a large group of those in receipt of them.

As Poslovni Dnevnik writes, during the month of September of this year, Croatian pensions will increase by at least 6 percent, or more precisely from 150 kuna to 210 kuna for the largest group of pensioners whose pensions range from between 2,500 kuna and 3,500 kuna, according to a report from Vecernji list.

The average pension paid out to those entitled to them during the month of July 2022 stood at around 2,700 kuna, and if you look only at people who completed their entire working life in Croatia, then the average is slightly higher, standing at 3,050 kuna.

With this increase in Croatian pensions, the average worker's pension during the month of September will be around 3,200 kuna.

People with fifteen years of service have pensions of less than 1,000 kuna, and in receipt of those between 1,500 kuna -2,000 kuna are those with 23 years of service. Those who have worked for 32 years receive 2,500 kuna - 3,500 kuna, and for 38 years of service, Croatian pensions stand at around 4,500 kuna - 8,000 kuna.

The average salary in this country currently stands at around 7,600 kuna, meaning that at this moment in time, Croatian pensions are unfortunately still almost two and a half times less than the average salaries of working people are.

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

April the 26th, 2022 - Some Croatian pensioners have received a mere 180 kuna more on their bank accounts, but it hasn't come in the form of some sort of generosity from the powers that be, and this system error means they will need to pay it back.

As Poslovni Dnevnik writes, back at the end of last year, during the process of the payment of pensions to Croatian pensioners, there was a "system error" within the Croatian Pension Insurance Institute, which caused 1258 Croatian pensioners to accidentally receive slightly increased pensions. The amount of wrongly redirected money amounts to 226,080.92 kuna, which means that the average pensioner affected by this error received about 180 kuna or so more on their accounts than they're entitled to.

Deputy director Ivo Bulaja spoke out about the situation for the portal Mirovina.hr/Pension.hr, and he described it as a "minor system error" involving both human and technical factors. He explained that 10 percent of the money wrongly paid out to Croatian pensioners has already been returned, and that the remaining 90 percent is currently being worked on.

''We've sent an inquiry to the Pension Insurance Institute to look into how this mistake was made and in what way Croatian pensioners will have to return the money that doesn't belong to them. Some people who received increased amounts saw for themselves that something was wrong, and they contacted the Bureau about the instructions for the return of the funds. However, it seems that the Institute is heavily insured in such cases because such system errors are even covered in the Pension Insurance Act.

"A person who receives their pension or some other income from the Pension Insurance Institute that doesn't belong to them is obliged to return it to the Institute as they've acquired it without the proper grounds. The obligation to return the funds they've received without grounds to do so exists when the pension or other form of income is paid in a larger amount than the due amount,'' reads Article 166 of the Pension Insurance Act.

In addition, the decision on the recognition of the right to a pension states that the beneficiary is obliged to report to the Institute "any change caused by personal or actual circumstances that affect the right or scope of exercise of this right'' within a period of just fifteen days.

The Croatian Pension Insurance Institute (HZMO) will determine the amount of improperly paid funds ex officio by a decision within their administrative procedure, and the beneficiaries will state in the notification the account number (payment instructions) to which the amount can be returned.

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

April the 10th, 2022 - A concerning amount of Croatian retirees have decided to take up work despite drawing their pensions owing to continue financial difficulties and a frequent struggle to make ends meet.

As Poslovni Dnevnik writes, research for the development of a socially innovative programme to encourage and support Croatian retirees shows that as many as 74 percent of those drawing their pensions who participated in reactivation in the domestic labour market stated financial issues as a reason for them returning to work, as was reported by the portal Mirovina/Pension. This is the information that the Ombudsman Tena Simonovic Einwalter warned about in her annual Report for 2021.

According to the latest available data for the month of February, 19,692 part-time workers in Croatia were retirees, which would mean that more than 14,500 retired employees work because they don't have enough money to live on, or because they have to.

In addition to the fact that pensions are insufficient for most people, many Croatin retirees continue to go to work because they haven't yet repaid some kind of loan or settled some other outstanding financial obligations, such as debts for utilities, foreclosures and the like.

Therefore, although perceived as a benefit, the reactivation of Croatian retirees on the labour market is often the result of their poor financial situation and pensions from which they simply cannot live, the aforementioned ombudswoman warned.

According to the survey, Croatian retirees were most often employed as salespeople (51 percent) and bus drivers (22 percent), followed by chefs and assistant cooks, telephone interviewers, transfer drivers, valet and facade makers.

“Croatian retirees have access to mostly low-paid jobs that require a lower level of education. This is a consequence of the fact that some groups are legally barred from continuing to work in their professions, such as school staff,'' Einwalter said in her report.

The labour market isn't particularly favourable when it comes to hiring Croatian retirees, and one of the biggest difficulties in finding a job in the survey is the existence of prejudices among employers about retirees as a homogeneous group without much potential.

For more, check out our lifestyle section.

March the 19th, 2022 - Two Croatian towns, one on the coast in Kvarner and one inland close to the City of Zagreb, pay out the highest Easter bonuses for Croatian retirees in the entire country.

As Poslovni Dnevnik writes, while the amounts for Easter payouts for Croatian retirees are mostly symbolic and depend on a rather low pension income threshold as a basic condition, these two Croatian cities still loosened up their purse strings in order to make Easter a little better for Croatian retirees living there, as reported by Mirovina.hr/Pension.hr.

The City of Velika Gorica will pay up to 800 kuna to Croatian retirees who are drawing a monthly pension of up to 2,000 kuna over Easter. Those who are receiving a pension of up to 1,000 kuna will also be paid an Easter bonus in the amount of 800 kuna, and Croatian returees who receive a monthly pension of 1,000.01 kuna to 2,000 kuna will be paid an Easter bonus in the amount of 400 kuna. Croatian retirees from Velika Gorica are also paid out the exact same amount for the Christmas period.

The picturesque town of Opatija close to Rijeka in Kvarner isn't lagging very far behind Velika Gorica either. It does have a slightly lower final amount, but a much higher threshold. Thus, all Croatian retirees drawing a pension of up to 4,000 kuna per month will receive an Easter bonus, and the amounts range from 500 to 700 kuna.

Croatian retirees with pensions of up to 2,000 kuna per month are entitled to an Easter bonus of 700 kuna, while those drawing a monthly pension of 2,000 to 3,000 kuna will receive 600 kuna on their bank accounts for Easter. 500 kuna is paid out to Opatija's resident pensioners who are drawing monthly pensions ranging from 3,000 to 4,000 kuna.

For more on retirement in Croatia, make sure to check out our dedicated lifestyle section.

March the 18th, 2022 - The much talked about Croatian national pension is now a reality, but just who will be receiving this sum of money on their bank accounts each month?

As Poslovni Dnevnik writes, as the Croatian Pension Insurance Institute announced recently, the national benefit for the elderly, also known as the Croatian national pension, was set to be paid out to the beneficiaries (into their bank accounts) yesterday, more precisely on Thursday, March the 17th, according to a report from Mirovina.hr/Pension.hr.

The Croatian national pension is currently being received by 5,808 people, all of whom are over the age of 65 and who aren't receiving a pension of another kind because they haven't met the requirement of a minimum of fifteen years of service in the workforce.

If they had acquired that minimum length/time of working service, their pension would have been at least 1,072 kuna per month. However, instead the state pays them 820.8 kuna every month, provided that their total household income doesn't exceed the same amount per household member.

For example, if the husband has a pension of less than 1,641.6 kuna, the wife will receive a Croatian national pension sum on her bank account each month. If it is higher, there will be no such payments made to her.

The Croatian national pension, about which many have been talking for some time now, has a primary aim of reducing poverty in the country in old age. Women make up the most vulnerable members of the population, accounting for two-thirds of the Croatian national pension's beneficiaries.

The number of beneficiaries of the Croatian national pension, which is something multiple European countries have introduced, is only growing, but very slowly, given that the Government's projection was that this national benefit would eventually cover a far larger number of 20,000 Croatian residents.

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

January the 17th, 2022 - As if the 2021 Croatian census results weren't damning enough for the country now numbering less than four million inhabitants, now it has emerged that of those inhabitants, almost every third person is drawing their pension.

As Index/Vedran Salvia writes, here in Croatia, the number of insured persons on the 30th of November, 2021, stood at 1,583,131. The number of pension beneficiaries in that same month of November was 1,234,991. The ratio of the number of pension beneficiaries and insured persons is 1: 1.28.

In other words, if we take into account that, according to published data from the Central Bureau of Statistics, Croatia has a population of 3,888,529, this means that practically every third person in Croatia is retired and drawing their pension.

Of course, the number of those who receive their pensions abroad should also be taken into account, and according to the Mirovina.hr portal, back in October 2021 there were a total of 181 thousand of them. However, the bigger picture doesn't change that much.

The number of older employees is growing

Index contacted economic analyst Andrej Grubisic (who answered some more 2021 Croatian census questions here), who pointed to the research piece entitled "An analysis of the Croatian pension system (with proposed adjustments) and global trends in private pension savings", which was prepared by Grubisic and his partners for the Association of members of mandatory and voluntary pension funds.

Among other things, this study states that within the age structure of employees, negative changes are also visible in the form of increasing growth in the number of older employees who are expected to retire soon, while the number of younger employees (as a share of total employees) is declining.

"The existing macroeconomic and demographic foundations don't indicate the possibility of a significant improvement in the ratio of insured persons and beneficiaries in the next 5-10 years," the research states.

These changes in the decline in population and working capacity, with currently extremely low levels of activity and employment compared to other European countries and low GDP "per capita" indicate an additional burden on the existing pension system in the form of limited potential for significant growth in contributions to the coverage of current pensions, and in particular, it all has a negative impact on the possibility of a significant increase in the pensions of existing retirees in terms of real purchasing power,'' the study said.

Reduce contributions for the first pillar...

The research also proposes adjustments to the existing system, ie it is stated that from the year 2024, contributions made to the first pillar should be gradually reduced until in 20 years they fall from the existing 15 percent of a person's gross salary down to 5 percent of it. It also states that allocations for private pension savings should be increased. This is so that the allocations from 2024 would increase from the existing 5 percent of gross salary in a period of 20 years to 15 percent.

The proposals also imply that members of mandatory pension funds should have financial resources at their disposal, but also that those financial assets should be inherited after the death of the beneficiary.

For more on the 2021 Croatian census results, make sure to check out our lifestyle section.

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.