Government Further Explains Pension Reform and Tax Cuts

By 3 July 2018

ZAGREB, July 3, 2018 - The relevant cabinet ministers presented outlines of the pension reform plan and the second phase of the tax reform to the leadership of the ruling Croatian Democratic Union (HDZ) party on Monday evening, Prime Minister and HDZ leader Andrej Plenković told the press after a three-hour meeting of the HDZ presidency and national council.

He said that the ideas presented were received well and that he expected further public consultation and debate on the best and viable solutions. He added that Labour and Pension System Minister Marko Pavić would inform the coalition partners of the pension reform at a meeting on Tuesday after some of them criticised the proposal.

"I believe their views will be much more affirmative than some of their initial comments," the prime minister said, adding that he expected a joint discussion on the substance and details of the pension reform.

"The purpose of the pension reform is to ensure long-term sustainability of the pension system, adequate pensions and the equal position of present and future pensions, to increase the average pension in relation to the average wage as is the case in the EU, address the situation where a lot more people are going into some form of early retirement than old-age retirement, and try to reduce their number. I also think that this reform will benefit future pensioners and ensure sustainability of our pension system," Plenković said.

He said that the pension reform proposal was being prepared for public consultation and that it was not about dismantling the second pension pillar. "It is important that we sensitise the public that the present pensioners have absolutely no reason to feel threatened about their pension. On the contrary, future pensioners will know where their contributions go, what their pension will be and they will be given a choice. The second pension pillar is not being dismantled. The labour and pension system minister has explained all these details to the HDZ leadership and he will explain them to the coalition partners tomorrow," the prime minister said.

Plenkovic said he was pleased with what had been agreed at a meeting of the Council for Demographic Revitalisation, which was also attended by President Kolinda Grabar-Kitarović, adding that the aim was to take sustainable and financially affordable demographic measures to reverse the negative demographic trends.

"I think it was a very good discussion. The ideas of the government and the president are very close. It is important that what we are doing passes assessment of fiscal effect, and the fact that the president immediately signed the Child Benefit Act, which extended this entitlement to another 150,000 children, shows how committed we all are to enabling families to decide on having more children," the prime minister said.

Asked if a settlement would be reached for the indebted Agrokor food and retail conglomerate, he said that according to information from the company's administration he said he believed the necessary majority would be reached. "It is very important that this process is completed within the legal time frame and with the support of as many creditors as possible," Plenković said.