Tuesday, 24 September 2019

Plenković Says Pension Reform Stays, Only Two Important Nuances Different

ZAGREB, September 24, 2019 - Prime Minister Andrej Plenković said on Monday that it was very important that the pension reform would be carried on, with only two important nuances being different - the statutory retirement age and penalisation for early retirement per year of service, namely the restoration of the statutory retirement age from 67 to 65 and reduction of penalisation for early retirement from 0.3% to 0.2%.

After opening the Croatian Post's New Sorting Centre in Velika Gorica on Monday evening, the prime minister answered a number of questions from the press, including one on changes to the pension reform.

He recalled that the laws on pension insurance and labour and five sector laws regulating the retirement age, one of which referred to demands by the "67 is too much" initiative and the other provided for the possibility of employees agreeing with their employers to work until 68, were put to public consultation today.

The laws will be under public consultation for the next 15 days, the government will discuss them in mid-October, they will receive one reading in the parliament and be adopted, and they will go into force on 1 January 2020, he said.

He said that it was important that during the term of his government, pensions had gone up 11.5%, the minimum pension was 15% higher, and that nobody would be discriminated against with the introduction of the possibility to stay on the labour market until 68.

In two years' time, we will assess the total financial effect, he added.

Plenković noted that Croatians had to be aware of European trends because the average life expectancy in the EU was 80, which, he said, would soon be the life expectancy in Croatia as well, and that one had to take that fact into account.

He said that the regulation under which the issue of one's retirement would be based on an agreement between workers and employers was very good and that employers would eventually be satisfied as well.

"I don't see any problem there, I don't think it is realistic that someone will misuse that possibility to go on sick leave for three years after turning 65, I don't believe that will happen," he said.

More news about pension system in Croatia can be found in the Business section.

Monday, 23 September 2019

Employers Opposed to People Working After 65

ZAGREB, September 23, 2019 - President of the Independent Croatian Trade Union Krešimir Sever on Monday said that employers are opposed to workers staying in the workforce longer and want 65 to be the age when work-life ends.

Dissenting opinions have appeared, with the unions and government on one side, and employers on the other. Employers want the retirement age to remain at 65 and for them to be able to negotiate with employees who wish to work longer, Sever said after a meeting between representatives of the unions and employers with the government regarding amendments to labour legislation which currently defines the retirement age at 65.

Employers want room to get rid of workers when they wish so that they can attract pension recipients to earn extra money when working. Currently more than 14,000 pensioners are still working that way. Employers are not in favour of enabling workers to decide whether they wish to remain longer in full-time work with all rights regarding labour relations, Sever said.

There have still not been any calculations made regarding how much amendments would cost in the event he pension insurance allows full retirement at the age of 65.

"It is still not possible at the moment to conduct a due diligence analysis of the impact of the regulations however I think that there is no need for anyone to say anymore that that will cost 45 billion kuna which is what the government was saying just to intimidate the people," Sever added.

He said that the government had on several occasions acted in favour of employers and now the labour-pension legislation is moving toward some sort of balance.

When observed overall, however, there is still a lot that goes in favour of employers such as various non-taxable contributions and other things they were offered in the preceding period and now it is necessary to do a lot more in favour of employees so that a balance can be established, said Sever.

During the meeting on Monday morning amendments for six labour-pension laws were discussed.

More news about pension system can be found in the Business section.

Friday, 20 September 2019

Plenković Praises Pension Reform Despite Referendum Setback

ZAGREB, September 20, 2019 - Prime Minister Andrej Plenković said during a visit to the northern Adriatic city of Rijeka on Thursday that the government's acceptance of the proposals by the "67 is too much" referendum initiative was an important decision, noting that the pension reform had already had positive effects.

Asked by the press if the government had capitulated to the unions, Plenković said that the government had announced an important decision at its meeting today and that it would submit to the parliament amendments to the Pension Insurance Act as proposed by the "67 is too much" initiative.

"The pension reform is good and positive, it is an important structural reform. During our term in office, pensions have increased by 11 percent, and by nearly 15 percent for low-income citizens. As of January 1 this year, some of the people who have retired could return to the labour market, and data shows that as many as 13,500 people have returned to the labour market. This is a message that there are people who want to work even after they turn 65," the PM said.

He noted that the retirement age of 67, provided for under the present law, was introduced by the SDP government. "I don't remember anyone organising any demonstrations or referendums at the time."

"Our message was that we heard the message of 700,000 citizens, that in these amendments we will deal with what primarily the three union federations see as problematic, and that at the same time we will amend the Labour Act and several other acts that cover special professions to allow those who so wish to work after they turn 65," Plenković said.

"In that regard, I think we have achieved the right balance and closed this issue, and that this reform, which has been assessed by experts from the European Commission and credit rating agencies as very good, ... will resolve the concerns raised," he added.

Asked if Regional Development Minister Marko Pavić, who had claimed while serving as Labour and Pension System Minister that abandoning the pension reform would cost 40 billion kuna (5.4 billion euro), should resign, Plenković said that it should be borne in mind that at that time a projection of financial sustainability over the next 20 years was being made and that amendments to other laws would make it possible for some of the people to work after 65 years of age, which would considerably reduce the costs.

"We will try to keep this fiscal effect as low as possible," the PM said, adding that Pavić had already taken the helm of another government department.

More news on the pension system can be found in the Politics section.

Thursday, 19 September 2019

Government’s Capitulation of Pension Reform Will Not Jeopardise Public Finances

ZAGREB, September 19, 2019 - Finance Minister Zdravko Marić on Thursday said that the acceptance of demands set by the "67 is too much" initiative would not jeopardise public finances and that the payment of pension allowances was safe.

If the union demands are met, pension payment will be safe, Marić said after the cabinet meeting at which Prime Minster Andrej Plenković announced that the demands for which unions had collected the signatures of more than 700,000 citizens, would be upheld.

Citizens signed a petition to call a referendum against raising the pension eligibility age from 65 to 67 but also against stricter penalties for early retirement.

Former labour minister Marko Pavić in the spring warned that that would cost the government 45 billion kuna by 2040.

Marić, however, recalled that those forecasts were made for long term and for the sustainability of the system in the next 40 or 50 years.

Amendments to the pension act will not have any impact in the short term, over the next two or three years, he explained.

Marić announced a new set of laws that in addition to the pension act will also deal with labour legislation that will allow people to continue working after 65 if they wish.

Health Minister Milan Kujundžić said that the government's decision to accept the demands by the "67 is too much" initiative was a sign of respecting citizens' wishes for a referendum and reality and that it was not a sign of political weakness.

"That is not political weakness of the government but a sign of maturity and courage," Kujundžić said after the cabinet meeting.

Labour and Pension System Minister Josip Aladrović said on that the government had accepted the will of more than 700,000 citizens who had signed the "67 is too much" referendum initiative because the pension system can remain sustainable and adequate and ensure inter-generational equality even if the initiative's demands are met.

"We have accepted the will of 700,000 citizens. We realised that our claims of the sustainability, adequacy and inter-generational equality can remain even if the demands of the referendum initiative are upheld, namely to accept the articles of the law as formulated by the unions," Aladrović told reporters after the cabinet meeting on Thursday.

He announced that at the same time amendments to labour legislation would be put forward, which he believes will achieve the objectives that the government hoped for, and that is for people to remain on the labour market longer and for higher pension allowances.

Asked why the government hadn't done this before but now, he said that that part of the law that the "67 is too much" initiative referred to was adopted by the SDP-led government.

"That part of the law was insignificantly changed. However, citizens expressed their will. We respect the will of the people and have accepted their demands. In that way we are retaining our objectives that we communicated at the beginning of the pension reform. Among other things, we expect the system to remain sustainable, stable and that pension allowances will be adequate," he said.

Aladrovic said that his predecessor Marko Pavić should not suffer any consequences for scaring the public by saying that the union demands would cost the pension system 45 billion kuna (6 billion euro).

MP Mirando Mrsić (Democrats) on Thursday called out former Labour and Pension System Minister and incumbent Regional Development and EU Funds Minister Marko Pavić to step down because he had consciously misled the public about the sustainability of the pension system.

"Today's move by the government is proof that Pavić consciously misled citizens and spent our money to finance a campaign that attempted to prove to citizens that our pension system would cave in if we don't save 40 billion kuna," Mrsić said in parliament on behalf of the HSS and Democrats group while commenting on the government's decision to accept the demands set by the "67 is too much" initiative for a referendum on the pension reform.

Mrsić underscored that millions of kuna had been spent on the campaign that Pavić, as the then minister, organised to convince citizens that if the union demands were met that would lead to "lower pensions, indebt our children and destabilise the pension system."

"Millions of kuna were thrown to the wind just to save Plenković's and Pavić's hides," Mrsić said and added that he expected Pavić to resign before the end of the day.

Mrsić asked incumbent labour minister Josip Aladrović why he raised his hand to uphold the demands by the "67 is too much" initiative today when until recently he considered the union demands would be destabilising.

He added that the pension system would not cave in because of the retirement age being 65 or 67 but rather due to the inflation of privileged pensions and suggested that the unions should insist on the referendum.

More news about the pension system can be found in the Business section.

Thursday, 19 September 2019

Government to Accept All Demands Pension Referendum Initiative

ZAGREB, September 19, 2019 - Prime Minister Andrej Plenković on Thursday said that the government had decided to uphold all the proposals put forward by the "67 is too much" initiative and that it would be forwarding a bill to parliament to amend the Pension Insurance Act and return the age pension eligibility to 65 and that it would propose amendments to the Labour Act that will enable people to continue working if they wish after they turn 65.

The government will send a bill to parliament for amendments to the Pension Insurance Act. We will uphold all the proposals by the referendum initiative and amend certain aspects of the Pension Insurance Act and forward it to parliament, Plenković said at the cabinet meeting on Thursday without making mention of union demands for a referendum to be held regarding their demands.

He recalled that during the spring the government was confronted with activities by the "67 is too much" civil initiative and after the signature collection campaign it was established that more than 700,000 citizens had signed the petition for a referendum on the pension act.

The government, Plenković said, heard the message by Croatian citizens even though it considers that remaining longer in the workforce and being eligible for a pension later is not an objective circumstance that is specific to Croatia but to others, it is a fact that some people wish to work after they turn 65.

That has been shown by the 13,500 pensioners who returned to the labour market and there are more of them in various branches, he underscored.

"Hence, in addition to a bill on amendments to the Pension Insurance Act and, respecting the will of citizens, we will also propose amendments to the Labour Act and other laws that regulate the status of certain categories in such a way that people who wish to work after the age of 65 can do so," he said.

That will create a balance between the fundamental objective of the civil initiative and union demands and those citizens who supported the initiative with their signatures while at the same time providing the possibility for citizens who wish to remain in the workforce to do so, Plenković believes.

"The amendments will positively impact employment and the revenue and expenditure side of the state budget and the amount of pension allowances for future beneficiaries. We will be expanding the labour market and creating new opportunities on that market and we are listening to the message of 700,000 people but also offering a chance for all those who wish to work longer and remain on the labour market," he underlined.

He recalled that his government had embarked on a comprehensive pension reform so that the pension system can be adapted to demographic challenges and changes on the labour market and economic circumstances.

After Prime Minister Andrej Plenković announced on Thursday that the government had decided to uphold all the demands by the "67 is too much" union initiative and forwarded amendments to the Pension Insurance Act to parliament, MP Peđa Grbin (SDP) and Nikola Grmoja (MOST) said that the government had capitulated.

"This is the Croatian Democratic Union (HDZ) government's capitulation because it has realised that its proposal was bad and detrimental for citizens and that it would be defeated and that it is better to give in than to bash your head against a brick wall," Grbin said.

Naturally, we are pleased that the government has done that, Grbin said, because its proposal would have been disastrous for pensioners and citizens.

Asked to comment on the unions' insistence to conduct the referendum, Grbin said that if the referendum question is "Do you want a law like that to be adopted," and if parliament adopts it in the meantime then the referendum question is pointless.

In his comment of the government's decision, Grmoja said that "this was the only possible move considering the large number of signatures - admitting defeat and accepting the union demands." He believes that it seems to him that everything is possible in an election year despite the government's claims, and that the pension system won't cave in after all.

Goran Aleksić of the SNAGA party does not think that Plenković's announcement is a pre-election trick. "Why would we go to a referendum if this is simpler. I would do that too if I were Plenković," said Aleksić.

More referendum news can be found in the Politics section.

Monday, 16 September 2019

Unions for Calling Pension Reform Referendum

ZAGREB, September 16, 2019 - Leaders of three union federations asked parliament on Monday to call a referendum against the pension reform, otherwise they would call on citizens to take to the streets to ensure that the will of the 750,000 referendum petition signatories is honoured.

SSSH leader Mladen Novosel told reporters outside parliament that they submitted the signatures more than three months ago and that, aside from the Public Administration Ministry's confirmation that enough signatures had been collected, there had been no word from the government or parliament about the next steps.

The unions expect parliament to set the referendum date by the end of this month, he said. If the referendum question is sent to the Constitutional Court for assessment, there is a 30-day deadline and possibly another 30 days for the Court to reply to parliament, Novosel said, adding that the unions would ask the Court to reply as soon as possible.

Novosel said there would be no more negotiations or agreements on the referendum, adding that the referendum must be held because the will of the people must be honoured.

NHS leader Krešimir Sever said the referendum must be called as soon as possible, telling those in power not to force the unions into political waters as they did not want to engage in politics.

He said those in power had pushed the unions into collecting signatures for the referendum during the European Parliament election campaign.

There is still enough time to call the referendum during October so that the presidential and parliamentary elections can be held in a relaxed manner, said Sever.

MHS leader Vilim Ribić reiterated that the unions would not meet with Labour and Pension System Minister Josip Aladrović until the referendum was called.

The 750,000 signatures collected is equal to the number of votes thanks to which the HDZ is the ruling party, so I don't think someone can toy with that, he said.

He said it was important to hold the referendum as a sign of democratic culture, calling on Prime Minister Andrej Plenković, who he said decided whether parliament would send the referendum question to the Constitutional Court, to decide "in line with democratic, civilised and cultural standards" and call the referendum.

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

Monday, 9 September 2019

Minister: Money Managed by Pension Funds Has to Boost GDP Growth

ZAGREB, September 9, 2019 - Economy Minister Darko Horvat has underscored that liquid funds managed by compulsory pension funds (OMF) are supposed to primarily boost Croatia's GDP growth, adding that that the government can immediately present some 30 projects for OMFs to invest in.

Horvat was addressing a business conference "Investment challenges for pension funds" organised by the Jutarnji List daily and the Alliance of Associations of Pension and Insurance Management Funds (UMFO) in Zagreb on Monday, and on that occasion, he wondered how projects should be prepared for funds to invest in them.

As an example, he mentioned the Rimac Automobili company which is "seeking 100 million euro."

"The basic question is why not provide 100 million euro to Rimac from pension funds if we know that the yield, I am certain, will be greater than depositing those funds into the banking system," Horvat wondered.

He called on pension funds for talks on cooperation, saying that the government today can present some 30 prepared investments that pension funds can choose to invest in.

Labour and Pension System Minister Josip Aladrović underlined that compulsory pension funds have more than 107 billion kuna at their disposal.

He added that OMFs have almost two million members.

In the context of an exceptionally low level of activity by members to select a compulsory pension fund, Aladrović warned of a low level of financial and pension literacy.

CEO of the Croatian Financial Service Supervisory Agency, Ante Žigman, said that currently OMFs can invest 30 billion kuna in shares, which he considers to be a huge potential.

He too commented on the example of Rimac Automobili and explained that a company has to be listed on a stock market anywhere in the world for OMFs to be able to invest in it.

Mario Staroselčić of the AZ pension fund explained that OMFs had invested more than 10 billion kuna in local companies and that the main precondition to invest in a company is that it is listed on a stock market which brings transparency and security.

More economic news can be found in the Business section.

Wednesday, 4 September 2019

Croatia Set to Introduce National Pension Allowance

ZAGREB, September 4, 2019 - A task force led by the Labour and Pension System Ministry is conducting an analysis aimed at preparing the ground for introducing a national pension allowance, the Večernji List (VL) daily reported on Wednesday.

The task force has recently sent invitations to social workers, academicians and pension associations to join it in efforts to prepare a framework for the application of the national pension allowance.

Labour and Pension Minister Josip Aldrović was quoted by the daily newspaper as saying that the task force is expected to outline qualifying criteria for eligibility.

Some experts advise that the term permanent social welfare allowance should replace the term national pension as that allowance is actually a social welfare benefit.

The legislative framework is to be elaborated in 2020, and the allocation of this social benefit is likely to start in 2021.

Persons eligible for this allowance in form of a state pension will be senior citizens with no steady financial income, and currently experts are discussing whether the starting age for receiving the state pension will be 65 or 67.

The number of potential beneficiaries depends on the criteria for eligibility. According to some estimates there can be between 85,000 and 40,000 users of this social welfare benefit.

The introduction of a national pension allowance for elderly citizens in need is one of the pre-election promises of the ruling Croatian Democratic Union (HDZ).

More news about pensions in Croatia can be found in the Politics section.

Thursday, 29 August 2019

Sufficient Number of Signatures Collected for "67 is Too Much" Referendum

ZAGREB, August 29, 2019 - The union initiative against raising retirement age, called "67 is too much" has collected a sufficient number of signatures for a referendum to be called about the Pension Act, the Public Administration Ministry advised at a cabinet meeting on Thursday.

The government endorsed the report submitted by the ministry regarding the signature collection procedure and forwarded the report into parliamentary procedure.

The initiative collected almost twice the number of signatures required to call a referendum. The ministry determined that 708,713 valid signatures had been collected.

In order for a pension eligibility conditions referendum to be called, it was necessary to collect at least 373,568 signatures (10% of the total electorate), while the unions have said that they have counted more than 700,000 signatures.

An examination of the number and validity of signatures on a sample of 49,962 voters determined that there are 708,713 valid signatures, state-secretary in the Administration Ministry, Darko Nekić said today.

Parliament now has to decide whether it will call the referendum or whether it will request the Constitutional Court to check the constitutionality of the referendum question.

Signatures were collected for two weeks this spring for a petition for restoring the statutory retirement age from 67 to 65.

More news about referendums in Croatia can be found in the Politics section.

Tuesday, 27 August 2019

Jutarnji List Daily Points to Record High Pension Costs

ZAGREB, August 27, 2019 - This year Croatia will spend a record high 40.1 billion kuna for pensions, according to Finance Ministry and Croatian Pension Insurance Institute (HZMO) data, Jutarnji List daily says in Tuesday's issue.

The amount is 1.2 billion kuna higher than last year, the paper adds.

When one compares the total pension outlays with the number of insurees, i.e. employees who paid pension insurance in the first six months of this year, it turns out that each employee will pay 26,022 kuna this year to keep the pension system stable.

Although the number of employees, according to HZMO data, is higher than in recent years, contributions per insuree are rising considerably, by some 500 kuna from last year. Although the pension system is not financed through employee contributions alone, such data show how the system's costs are rising, Jutarnji List days.

Although outlays for pensions are rising by the year, their GDP share has been decreasing in recent years owing to faster economic growth. According to HZMO data, the highest expenditure-to-GDP ratio was recorded in 2015, when it stood at 11.4%, as against 10.3% in 2018.

Nonetheless, both domestic and foreign analysts have been warning that Croatia's pension system is nearing the breaking point. The payment of pensions is not in question nor is it expected to be in the near future, but the ageing population and mass emigration will make the payments harder, Jutarnji List says.

More news about pensions in Croatia can be found in the Business section.

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