The pension system's deficit covered by transfers from the state budget is currently 17 billion kuna (€2.3 billion), and the government's goal is to extend the 30-year working life so to enforce extending the retirement age to 67 as early as 2031, Croatia's Labour and Pension System Minister, Marko Pavic, said on Wednesday.

Asked by reporters before a cabinet meeting what the pension reform would bring and when the final decision on it would be made, Pavic said that “the draft framework of the comprehensive pension reform will be sent to (government’s) commissions today.”

“The comprehensive reform aims to ensure the system’s long term stability, but also to increase pensions. What we want to do is give people the option to return to the first pillar after retiring, so that they can claim the 27 percent pension payment,” he said, and added that “the idea is to solve the problem of the 27 percent allowance, but also for those who in the next 10, 15, or 20 years had not capitalise enough on their savings in the second pillar.”

The government had introduced an additional payment financed from the state budget in 2007 paid to Croatians who receive pensions from the first, state-run, pillar. In 2010, the payment was set at 27 percent on top of the state-paid pension. However, the addition is only paid to to retirees receiving pensions from only the first pillar, meaning everybody who was born in 1962 or later and who are members of both the first and second pillars don’t have the right to claim the 27 percent payment, even though they are required by law to pay more into the state-run first pillar than into the privately-run second pillar funds.

“We will also make sure that current and future pensioners can work, not just those with the full 40 years of service – who make up only 20 percent of pensioners – but also those who retire early. They will be allowed to work four hours per day, and still receive full pension,” Pavic said.

Data by both Eurostat and Croatia’s state statistics bureau show that Croatia had 71,000 more persons employed in the first quarter of 2018 compared to the same period in 2017, Pavic said, adding that the “pensioner-insuree ratio is rising, and these numbers are certainly reason to be pleased.”

It is estimated that there are some 1.2 million pensioners in Croatia, opposed to some 1.4 million full-time employees whose contributions finance the pension system. Some 19.2 percent of the entire population is estimated to be older than 65, and the average pension is around 3,400 kuna (€461).

(€1 = 7.37 kuna)

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