Government’s Capitulation of Pension Reform Will Not Jeopardise Public Finances

Total Croatia News

ZAGREB, September 19, 2019 – Finance Minister Zdravko Marić on Thursday said that the acceptance of demands set by the “67 is too much” initiative would not jeopardise public finances and that the payment of pension allowances was safe.

If the union demands are met, pension payment will be safe, Marić said after the cabinet meeting at which Prime Minster Andrej Plenković announced that the demands for which unions had collected the signatures of more than 700,000 citizens, would be upheld.

Citizens signed a petition to call a referendum against raising the pension eligibility age from 65 to 67 but also against stricter penalties for early retirement.

Former labour minister Marko Pavić in the spring warned that that would cost the government 45 billion kuna by 2040.

Marić, however, recalled that those forecasts were made for long term and for the sustainability of the system in the next 40 or 50 years.

Amendments to the pension act will not have any impact in the short term, over the next two or three years, he explained.

Marić announced a new set of laws that in addition to the pension act will also deal with labour legislation that will allow people to continue working after 65 if they wish.

Health Minister Milan Kujundžić said that the government’s decision to accept the demands by the “67 is too much” initiative was a sign of respecting citizens’ wishes for a referendum and reality and that it was not a sign of political weakness.

“That is not political weakness of the government but a sign of maturity and courage,” Kujundžić said after the cabinet meeting.

Labour and Pension System Minister Josip Aladrović said on that the government had accepted the will of more than 700,000 citizens who had signed the “67 is too much” referendum initiative because the pension system can remain sustainable and adequate and ensure inter-generational equality even if the initiative’s demands are met.

“We have accepted the will of 700,000 citizens. We realised that our claims of the sustainability, adequacy and inter-generational equality can remain even if the demands of the referendum initiative are upheld, namely to accept the articles of the law as formulated by the unions,” Aladrović told reporters after the cabinet meeting on Thursday.

He announced that at the same time amendments to labour legislation would be put forward, which he believes will achieve the objectives that the government hoped for, and that is for people to remain on the labour market longer and for higher pension allowances.

Asked why the government hadn’t done this before but now, he said that that part of the law that the “67 is too much” initiative referred to was adopted by the SDP-led government.

“That part of the law was insignificantly changed. However, citizens expressed their will. We respect the will of the people and have accepted their demands. In that way we are retaining our objectives that we communicated at the beginning of the pension reform. Among other things, we expect the system to remain sustainable, stable and that pension allowances will be adequate,” he said.

Aladrovic said that his predecessor Marko Pavić should not suffer any consequences for scaring the public by saying that the union demands would cost the pension system 45 billion kuna (6 billion euro).

MP Mirando Mrsić (Democrats) on Thursday called out former Labour and Pension System Minister and incumbent Regional Development and EU Funds Minister Marko Pavić to step down because he had consciously misled the public about the sustainability of the pension system.

“Today’s move by the government is proof that Pavić consciously misled citizens and spent our money to finance a campaign that attempted to prove to citizens that our pension system would cave in if we don’t save 40 billion kuna,” Mrsić said in parliament on behalf of the HSS and Democrats group while commenting on the government’s decision to accept the demands set by the “67 is too much” initiative for a referendum on the pension reform.

Mrsić underscored that millions of kuna had been spent on the campaign that Pavić, as the then minister, organised to convince citizens that if the union demands were met that would lead to “lower pensions, indebt our children and destabilise the pension system.”

“Millions of kuna were thrown to the wind just to save Plenković’s and Pavić’s hides,” Mrsić said and added that he expected Pavić to resign before the end of the day.

Mrsić asked incumbent labour minister Josip Aladrović why he raised his hand to uphold the demands by the “67 is too much” initiative today when until recently he considered the union demands would be destabilising.

He added that the pension system would not cave in because of the retirement age being 65 or 67 but rather due to the inflation of privileged pensions and suggested that the unions should insist on the referendum.

More news about the pension system can be found in the Business section.


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