Abstract
After the collapse of the former Yugoslavia, Croatia inherited a ‘premature’ socialist pay-as-you-go pension system. It has undergone many reforms: one systemic reform (from 1998 to 2002, which resulted in the establishment of the three-pillar pension system), and several parametric reforms, the last one encompassing all three parts of the pension system (2013–2016). The existing pension system of unfunded pensions at the beginning of 2002 was replaced by a combined system of unfunded and funded pensions. Thenceforth, the pension system was based on the three pillars: (a) the 1st pillar is an obligatory public pension system, based on inter-generational solidarity; (b) the 2nd pillar is an obligatory funded pension system, based on individual capitalized savings; and (c) the 3th is a voluntary pension insurance system based on individual capitalized savings for those who want to pay even more retirement insurance against the risks of old age. The purpose of the chapter is to provide an analysis of the policy-making process and reform of the Croatian pension system, focusing on its sustainability and adequacy.
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Notes
- 1.
Parametric reforms are aimed at maintaining the basic structure of the existing system while attempting, through changes in the various main parameters of the system, to reduce the budgetary cost of ageing and/or to increase the incentives to work for older workers. These basic parameters include, for example, prolongation of the legal retirement age, increase of the contribution rate and the lowering of replacement rate.
- 2.
Adequacy of the pension system means providing people with income in old age that allows them a decent living standard and protects them from poverty.
- 3.
Net prospective Theoretical Replacement Rates—TRR (the share of an average pension in an average salary) at average earnings for Croatia is 40.2%; while for Belgium it is 74.7%; for Bulgaria 50.9%; for France 59.8%; for Germany 67.6%; Hungary 81.9%; for Italy 70.2%. Countries with lower TRR than Croatia: Ireland 38.4%; Poland 37.7% and UK 35.9%. (Source: European Union 2015: 27, Table 2: Prospective TRRs for the different core cases (net, average earnings) and underlying standard pensionable ages—SPA).
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Bejaković, P. (2019). The Croatian Pension System and Challenges of Pension Policy. In: Petak, Z., Kotarski, K. (eds) Policy-Making at the European Periphery. New Perspectives on South-East Europe. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-73582-5_12
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