As many as 40 percent of people who are about to retire plan to continue working after retirement and 64 percent of citizens believe their pension allowance will not be sufficient, according to a survey conducted by the Croatian Financial Services Supervision Agency (Hanfa).

The survey on how financial literacy affects financial readiness for retirement was conducted last year on 1,000 respondents aged 50 to 65 and it showed that 43% of retirees plan to rely on a family member for additional finances and 40% believe that they will depend on or are already dependent on other people’s help.

According to the survey only a small portion of citizens rely on other saving options for retirement in addition to mandatory pension insurance when planning their retirement, and insufficiently consider other sources of income.

As Hanfa said, the Croatian pension system is relatively complex considering that it consists of three pillars, so it is very important for people who are actively planning their retirement or are about to decide on the choice of pension allowance to be adequately informed about the structure and the functioning of the pension insurance system and the possibilities and rights they have and can exercise within its framework.

Pension literacy includes being informed about the national pension insurance system as well as individual readiness and responsibility in planning pension benefits. This is part of broader financial literacy and is a prerequisite to making appropriate financial decisions about retirement, Hanfa said.

According to Hanfa’s survey, the overall rating of financial literacy of citizens aged 50 to 65 was 12.2 out of a maximum of 20 points.

“This shows that the respondents on average gave the correct or desirable answer to a total of 61% of the questions asked, which is two percentage points more than the financial literacy of all adult citizens of Croatia according to a survey by the OECD in 2019,” added Hanfa.

As many as 35% of respondents aged 50 to 65 are in retirement

The survey also showed that as many as 35% of respondents aged 50 to 65 are in retirement and more than half of them went into early retirement.

Only a small portion of retired respondents earn some income apart from mandatory pension insurance, which is how 91% of all retirees receive their pension allowance. Additional sources of income are mainly realised through further work during retirement (24%), while reliance on voluntary pension savings (5%) is significantly less common.

Only five percent of retirees rely on a permanent income from financial or non-financial assets and an additional five percent on occasional income from their sale.

Only 22% of respondents have life insurance

Of the other financial services available, elderly people mostly use insurance, especially supplementary or additional health insurance (92%) or mandatory automobile liability insurance (58%), stated Hanfa.

“Other forms of insurance are used significantly less. So only about 22% of respondents own a life insurance policy, which can also be an additional source of income in retirement, while only 4% of people who are already retired have life insurance,” Hanfa said.

Untimely and inadequate planning and long-term savings for retirement have a negative effect on the financial resilience of retirees, Hanfa concluded.