Minister Mrsic aims for more transparent and cheaper pension system

Labour and Pension System Minister Mirando Mrsic on Tuesday said that the government had secured stable pensions and that measures being taken should contribute to making the pension system more transparent and cheaper.

"The government has secured stable pensions and their indexation, and, despite the poor forecasts, the system is stable and pensions are being paid out on time," Mrsic told a press conference.

Pension indexation did not occur last year because salaries and the cost of living did not increase but if such a growth were to occur this year, the money to cover the cost of indexation has been secured in the pension insurance budget, he said.

Even though the pension allowance for one pensioner is currently financed by just 1.14 employed persons, Mrsic claims that the system with transfers from the state budget is sustainable with the current number of about 1.4 million employees.

He expects the situation to improve considering improved pension contribution payment compared to previous years, the stable number of pensioners of 1.2 million which will not grow and that the number of employed is expected to grow this year.

According to the latest figures released by the pension insurance agency (HZMO), old age pensions with 40 or more years of seniority amounts to HRK 3,407 or 70% of the average wage, however the average age pension is about one thousand kuna less and amounts to HRK 2,480.

The average Croatian pensioner retires after 30 years of seniority and currently their average age is 71. Figures indicate a declining number of cases of early retirement or retirement for disability.

With curtailment of the number of employees in the pension insurance agency and better cost-cutting in 2014, the HZMO has managed to save around HRK 500 million and all decisions made are geared toward making the system more transparent and cheaper, Mrsic said.

Since January 1, pension allowances for 80,312 beneficiaries eligible pursuant to special regulations, have been divided to determine what portion is financed from the pension fund based on seniority and how much is financed from the state budget.

The 13 categories for these pensions include WWII veterans, former political prisoners, members of the Croatian Academy of Arts and Sciences, parliamentarians and so on and they will receive notifications of the new system of pension allowances.

Mrsic underscored that pension allowances would remain the same and beneficiaries would still receive them regularly. Dividing allowances into two parts has defined that pension payments from the budget will be around HRK 500 million less and these will be financed from pension contributions.

Pensions for Homeland War veterans will be excluded from this decision until July 1 and a parliamentary task force is analysing the effects of that decision.

Mrsic also announced the adoption of a law on professional pensions as well as a minimum pension for veterans.

(Hina) sp

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