Labour Minister says Pension Referendum Could Cost 45 Billion Kuna

By 17 April 2019

ZAGREB, April 17, 2019 - Labour and Pension System Minister Marko Pavić said on Wednesday that a union referendum against the pension reform could cost the state 45 billion kuna in the period until 2040, which union leader Krešimir Sever described as an "indecent spin" aimed at scaring people and making the planned union campaign for the collection of signatures for a referendum on the matter fail.

Addressing reporters after a meeting in the government offices, where representatives of trade unions and employers were informed of the national reform plan, Pavić commented on a union campaign scheduled to start on April 27 and last until May 11 to collect signatures for a referendum petition whereby unions want to restore the retirement age to 65 years, reduce the penalisation of early retirement, prevent the raising of the age for age pension to 61 years, and prolong the transitional period for the equation of retirement conditions for men and women.

"According to our calculations, if the referendum succeeds, it will cost the state budget 45 billion kuna in the period until 2040, which can result in lower pensions or new borrowing that could burden our children and grandchildren, namely a 5% drop in pensions and loans in the amount of 45 billion kuna," said Pavić.

His claims were dismissed by NHS leader Krešimir Sever who described Pavić's calculations as an indecent spin.

"What we have been proposing has nothing to do with borrowing or with the collapse of the pension system, that system functioned also when workers retired at 65," the unionist said.

"Reasonable economists say that the number of years of service alone does not mean that the pension system will be sustainable, and a large number of workers will not be able to work until they are 67. They will opt for early retirement and will be penalised for that, with two fewer years of service meaning a 7.2% drop in the pension allowance," said Sever.

If a worker were to work until 67 and collect many years of service during that period, that would be rewarded with a very small increase in the pension allowance, Sever added.

Extending years of service will cause more harm to workers and pensioners than it will benefit the state. The government is trying to scare people and discourage them from supporting the referendum because it knows that it lacks arguments, said Sever.

More news about the referendum can be found in the Politics section.