Pension System Minister Marko Pavic said at the conference on the tax and pension systems on Monday that the pension reform was being launched to ensure the system’s long term sustainability and adequate pension allowances, but the proposal was slammed by majority of participants of the conference who called for it to be scrapped.
The aim is to begin sensitising the public on the gravity of the problem which is being openly discussed for the first time in 16 years, ever since the 2nd pension pillar was introduced, Pavic said.
Current pensioners have small allowances and we wish to improve their standard by allowing them to work, Pavic said.
We also want to help people who will retire in 10 to 15 years time and haven’t capitalised their savings in the 2nd pillar, while for younger generations we want to secure adequate pensions by increasing contributions to the 2nd pillar as of 2020 to 5.5 percent and to 6 percent as of 2022, he said.
“Funds for current pensioners are already lacking 17 billion kuna (€2.30 billion) a year… That deficit will continue to grow to 18 billion kuna (€2.43 billion) next year and then to 19 billion kuna (€2.57 billion),” Pavic said.
It is necessary to secure 39 billion kuna (€5.27 billion) for pension allowances, he said, with about 22 billion kuna (€3 billion) coming from contributions and 17 billion kuna (€2.3 billion) from taxation. The cost will continue to grow, he said.
“If we don’t implement these reforms, future pensioners with an average salary who pay contributions will have a pension allowance of 500 kuna (€67.7) less and we want to prevent that,” Pavic added.
That is why the government is proposing a longer working life, increasing the number pensioners who can receive a pension allowance and continue to work, and resolving an entire series of issues of lower pension allowances from both pillars and the supplement of 27 percent as well as accelerating balancing conditions for old age pension and early retirement for men and women.
Other participants, apart from representatives of government institutions, called for the proposal to be scrapped.
Head of the association of societies managing pension funds, Damir Grbavac, said that they didn’t even take part in preparing the proposal.
“We commended those who proposed a reform for starting to resolve the problem of the supplement to pension allowances which members of compulsory pension funds aren’t eligible for, but we think there is a better way to solve that issue. That can’t be resolved in such a way that 97 percent of our members transfer funds into the 1st pension pillar,” Grbavac said.
Earlier today the opposition MPs harshly criticised the pension reform proposal in parliament, calling it “blackmail” and saying that the government was allowing the people “to be robbed.”
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