The Fokus party on Friday announced its own proposal for pension reform, suggesting an increase in payments towards own pension savings from 5 to 7%, reducing contributions to the first pension pillar from 15 to 13%, as well as establishing a fund for the stabilisation of the pension system.

“The pension system currently looks good, but in the first more serious recession, it will prove to be unsustainable in the long run because there are too few employed persons and too many pensioners,” Fokus leader Davor Nadji said at a news conference.

The worker to pensioner ratio of 1:1.36 will additionally worsen so Fokus proposes a pension reform that would lead towards system stabilisation and to increasing the own component of pension saving, he said.

The party proposes the establishment of a fund for the stabilisation of the pension system that would be filled two to three years before the start of the reform from various tax revenues and the central bank’s profits as well as from pension insurance payments made into the state budget, which constitute the first pension pillar, based on intergenerational solidarity.

“If the fund were to be filled to amount to 2-3% of GDP, a pension reform would be launched to raise payments into the second pillar (individual capitalised savings) from 5 to 7%, which would help increase own savings by 40%, and to reduce contributions to the first pillar from 15 to 13%,” Nadji said.

The fund would serve to compensate for a weaker pension contribution payment into the first pillar, and if a recession should happen, it would have sufficient funds for the payment of pensions under the first pillar in case the state budget was filled not so well, he said.

In a time of economic growth, the fund would withdraw a part of funds from the market and reduce inflationary pressures, while in a period of recession it would release them back into the economy and facilitate recovery from a recession through pension payment, he said.

This kind of pension reform would result in more stable and more secure pensions for current pensioners while the component of own savings would be larger for future pensioners and they would have higher pensions, Nadji said, adding that his party’s proposal also envisaged the one-off payment of 25% of pension savings, if pensioners opt for a combined pension payment.