Retirees Opposed to Croatian Government’s Pension Reform

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ZAGREB, November 13, 2018 – The leader of the HSU pensioners’ party, Silvano Hrelja, said on Tuesday that the government’s pension reform would produce negative effects because of the harsh penalisation of early retirement without taking account of working life.

Addressing a press conference, Hrelja commended the “27% supplement for each year since 2001 and the 20.25% supplement on the Second Pillar pension,” and the right of Second Pillar beneficiaries to choose the more favourable pension allowance, which he said has in fact become a voluntary pillar.

He noted that it wasn’t true that Croatian workers have a short working life and said that on average workers have a working life of 34 years and not 30 years because it is necessary to exclude “disability and family pensions that are never counted in the same statistics anywhere in the world.”

He added that they support the idea of a bonus for those remaining on the labour force even after the age of 65, even though it will benefit only doctors, judges and academicians.

HSU has made some calculations regarding the pension system and the consequences of the future reform for a person with an average wage, which currently amounts to 6,200 kuna, and with 40 years of service who goes into early retirement, prior to the age of 62 for women and 65 for men, and for a person who earned the minimum wage and who, with 40 years of service, became eligible for an age pension or early retirement.

The current penalty for early retirement is 6%, and the government proposes that it be 20.4%, whereas the bonus would be 3.13%. “We are opposed to a rigid penalisation of 0.34% for each month without taking working life into consideration,” Hrelja said.

For a person with the average pay who wishes to retire five years earlier, currently their pension would amount to 2,466.56 kuna, whereas according to the government’s proposal, their pension allowance would amount to 2,088.70 kuna.

Someone on a minimum wage and 40 with years of working life would receive an age pension of 2,544.40 kuna, while after the reform they would receive 2,624 kuna, which is an increase of 79.60 kuna due to the 3.13% bonus, Hrelja explained. If that person were to retire earlier, their pension would currently amount to 2,391.70 kuna, whereas after the reform it would be 2,088.73 kuna, regardless of the 3.13% bonus.

“The increase of 3.13% is a big farce due to the rigid penalisation of early retirement,” he stressed.

Instead of the increase of 3.13%, HSU proposes an income and assets test for pensioners and that pensioners receive a Christmas bonus because they will get more from the state than they do now and that won’t upset the system of contributions.

HSU also recommends that each woman is accredited with an additional year of working life for each child for the purpose of pension insurance.

Hrelja also recommends introducing the Family Pension as exist elsewhere in Europe. As an example he cited a working couple who together have 70 years of working life, and if the husband dies earlier the wife would be eligible for her own pension and a portion of her late husband’s pension.

For more on Croatia’s pension system and pension reform, click here.

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