Croatian trade unions oppose pension reform

Trade unions oppose the proposed by Labor and Pension System Minister Marko Pavic pension reform. The Association of Independent Trade Unions of Croatia, the Independent Croatian Trade Unions and the Croatian Workers’ Trade Union Association are to submit an open letter to the government today, local Vecernji List daily writes. In particular, they seek the cancellation of the increase of the statutory retirement age to 67 years instead of the current 65 years and maintaining the current conditions for eligibility for pension and for early retirement. They support the right to choose a more favorable option between the first and the second pillars of the pension system and consider that, given the fact that only 3% of the top wage-earners will benefit from the second pillar, a serious consideration as to whether the second pillar should be retained should be given.

Recall that the Pensioners’ Party has called on Pavic to wise up or resign after he proposed that HRK 40bn be transferred from the second pension pillar to the government budget to help balance present and future pensions. Previously Pavic has rejected the allegations that the proposed pension reform would result in nationalization of the second pension pillar noting that it would be preserved with pensioner to be able to decide whether they want to keep their pension savings in the mandatory pension fund or transfer them to the Croatian Pension Insurance Institute HZMO. The reform also envisages increasing the current, 5% allocation to the second pension pillar by 0.5pps as of 2020 and by another 0.5pps as of 2022, which would result in the allocation for that pension pillar amounting to 6%. Another change is raising the statutory retirement age in order to increase the average number of years of service (currently at 30) and to encourage workers to remain on the labour market longer so as to ensure the pension system’s sustainability and pension’s adequacy.

The legal package on the pension reform is to be delivered to the government on Sep 6 following consultations and public discussion process.

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