Centre-left Social Democratic Party leader Pedja Grbin on Tuesday presented a proposal designed to help alleviate the impact of growing inflation on pensioners in the form of a pension allowance bonus for allowances amounting to less than 4,000 kuna, proposing also an adjustment of pensions to wage and inflation growth.
“Croatian pensions are low and at a time of growing inflation they become even lower, which requires action. The government is late with responding, it first capped fuel prices for two months, which was insufficient, and now it has to cap them again at a higher amount,” the SDP leader said at a news conference.
Long and short-term measures for pensioners
Other countries introduced measures to alleviate the inflationary effects of euro adoption a year before adopting the euro, while in Croatia a bill on euro adoption is still under public consultation, Grbin said.
“We cannot expect its entry into force before April, and neither can we expect before that date measures that should cushion the inflationary blow to citizens,” he said, proposing two measures to help pensioners.
One is a long-term measure envisaging a change of the model of adjusting pensions to wage and inflation growth, and the other is a short-term measure in the form of an inflation bonus.
SDP MP Branko Grcic said the current adjustment of pensions did not follow wage growth. Five years ago, when the incumbent government took over, the average pension accounted for around 40% of the average wage while now it accounts for less than 37%, he said.
Grcic said that if inflation growth was higher than the growth of wages, pensions should be adjusted 100% to the inflation rate, and if the wage growth was higher, pensions should be adjusted to the wage growth rate.
Average pension could drop below 30% of average wage
Had this model been used over the past five years, the average pension, which now amounts to 2,645 kuna, would have been 200 kuna higher, Grcic said, warning that if the current model of pension indexation was not changed, the average pension would fall below 30% of the average wage in the next 10-15 years.
SDP MP Boris Lalovac said he believes that the parliament can introduce the inflation bonus already this month so that pensioners can receive it in April.
“The government has said it will give a 200 kuna bonus only to pensioners with guaranteed minimum allowances, and there are around 60,000 such pensioners. We believe that the scheme should be expanded… to cover around 850,000 pensioners whose pension allowance is below 4,000 kuna, which would cost up to 700 million kuna,” said Lalovac.
The SDP proposes that pensioners whose allowance is below 1,500 kuna should receive a one-off bonus in the amount of 1,200 kuna, those whose pension amounts to 1,500-2,000 kuna should get a 1,000 kuna bonus, those with pensions ranging from 2,000 to 3,000 kuna should receive a 600 kuna bonus, and those with pensions ranging from 3,000 to 4,000 kuna a bonus of 400 kuna.
Lalovac said that the state budget was the biggest winner at a time of inflation growth, which was why there should be no problems in securing funds for the inflation bonus for pensioners.
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