Monday, 29 April 2019

Labour Minister Blames Opposition for Retirement Age Increase

ZAGREB, April 29, 2019 - Labour and Pension System Minister said on Sunday that launching a petition for a referendum against the statutory pension age of 67 is a democratic right supported by the government, however, this statutory retirement age has been existing in Croatia for five and a half years and was introduced by the government led by the Social Democratic Party (SDP).

"Then (when it was introduced) there were no protests or referendums, and earlier today, we could see the SDP leader Davor Bernardić sign this referendum petition, although he had voted for raising the pension age to 67," the minister told the RTL commercial broadcaster.

"He (Bernardić) recently apologised for that policy (of his party). I believe that it may happen that he will apologise for the entire term of the Milanovic government," said Pavić, referring to the SDP government led by the then SDP leader Zoran Milanović whom Bernardić succeeded at the SDP helm.

"The policy of this government is to invest maximum effort to make pensions higher. We have raised them by 7.45%, and as of 1 July, the lowest pension allowances are going up by 3.13%, we have reinforced the second pillar and settled many issues and preserved the stability of the public finances," the minister said.

Those who have been longer employed have the average pension of 4,500 kuna and we have set the target to enable people to stay longer on the labour market, and they can go into retirement at the age of 60 if they have 41 years of service, Pavić said.

He recalled that in Croatia the average length of the years of service before retirement is 30 years and 2 months as against the average of 35 years in Europe and 37 years in Germany.

Pavić said that credit rating agencies and the European Commission have praised the government's pension reform as good, and reiterated that a success of the unions' referendum against the reform would mean lower pensions and more borrowing.

The Moody's credit rating agency, which on Friday changed Croatia's outlook positive and affirmed its ratings at Ba2, says that "in the medium-term, the pension reform enacted in late 2018 will contribute to the fiscal sustainability of the system while ensuring better pension adequacy."

"The acceleration in the planned increase in the statutory retirement age to 67, coupled with the equalization of retirement age for men and women, will support the decrease in public pension expenditure expected by the European Commission's 2018 Ageing report (-3.8% of GDP in 2070 compared to 2016). The supplement granted to multi-pillar pensioners will help to improve the low pension adequacy," Moody's says.

Three union federations – NHS, SSSH and MHS – early on Saturday morning started collecting signatures for a referendum on changes to the Pension Insurance Act. The union federations want the government to restore the retirement age to 65, to set the age for early retirement at 60, and to reduce penalties for early retirement from 0.3% to 0.2% per month of early retirement, as well as to extend the transitional period for equalising the statutory retirement age for women and men.

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

Sunday, 28 April 2019

Union Leaders Satisfied with Turnout for Referendum Campaign

ZAGREB, April 28, 2019 - The turnout on the first day of the union campaign for a referendum against the planned pension reform was more than good in Zagreb while it was slightly poorer only in eastern Slavonia due to bad weather, union leader Krešimir Sever of the union initiative "67 is too much" said on Saturday.

"We still don't have concrete figures, but judging by reports on the ground, the turnout is more than good," Sever told Hina, expressing confidence that in the next two weeks unions would manage to collect more than 373,568 signatures, which is how many need to be collected for a referendum on restoring the retirement age to 65 years.

Around 300 stalls at 200 locations across the country will be open from today until May 11, for citizens to give their signatures for a referendum against changes to the Pension Insurance Act.

Sever said the sentiments among citizens were more than favourable and that union leaders were more than satisfied.

He claimed that a TV add commissioned by the Labour and Pension System Ministry, which said that a possible success of the referendum would cost the state budget 45 billion kuna, was an additional motive for citizens to want to sign the referendum petition.

"People see through the minister's messages and are commenting on them as they sign the referendum petition. That attempt to scare them was one of the motives for them to sign the referendum petition," said Sever.

By saying that a possible success of the referendum will cost the budget 45 billion kuna and result in a decrease in pensions, the ministry is trying to deceive citizens because in its calculations it takes into account only those parameters that are in the government's favour, said Sever.

He said that according to Eurostat projections, 12 European countries, including Croatia, would have a slight decrease in the share of the pension cost in GDP in the coming decades.

Sever also cited European Commission projections showing that in 2040 Croatia would have a share of the pension cost in GDP of 8.3% (as against the current share of 10.3%) and that in 2070 that share would be 6.8%.

Three union federations early on Saturday morning started collecting signatures for a referendum on planned changes to the Pension Insurance Act to prevent the raising of the retirement age to 67.

The signature collection campaign, to last until May 11, was organised by the NHS, SSSH and MHS union federations.

The union federations want the government to restore the retirement age to 65, to set the age for early retirement at 60, and to reduce penalties for early retirement from 0.3% to 0.2% per month of early retirement.

More referendum news can be found in the Politics section.

Friday, 26 April 2019

Unions Start Collecting Signatures for Retirement Referendum

ZAGREB, April 26, 2019 - Three trade union federations will start collecting signatures for their retirement referendum petition at Friday midnight and as many as 300 movable stands will be set up throughout Croatia in the next two weeks for that purpose.

One of union activists, Robert Brozd, on Friday morning called on the Croatians to give their signatures for this initiative.

An estimated 385,000 signatures will be needed for the petition to be valid.

The three union federations – NHS, SSSH, and MATICA (Association of Croatian Trade Unions) – have launched their "67 is too much" campaign to call the referendum which would bring back the full retirement age to 65 as it was prior to the pension reform. The signature collection campaign will run from April 27 to May 11.

The initiative proposes that an insured person be entitled to old age pension upon reaching 65 years of age and having completed 15 years of qualifying periods and to early age pension with 60 years of age and 35 years of qualifying periods, reducing penalisation for early retirement from 0.3% to 0.2%, and delaying the equation of the required pension age for men and women.

Asked by reporters why they had not launched this initiative when the Social Democratic Party (SDP) proposed the raising the statutory pension age, unionist Ana Miličević Pezelj said that they had not had all the relevant data which they possessed now and that they had expected an improvement of technological and working conditions in the transitional period, which was why the retirement age in Western countries was higher than in Croatia.

"We don't have conditions to raise the retirement age," she added.

The Archdiocese of Zagreb on Thursday stated that it was not able to give permission to three union federations to collect signatures for their retirement referendum petition at the premises owned by this Catholic archdiocese, underlining that it does not take sides with anybody in this case.

Explaining its refusal to permit unionists to collect signatures outside its churches and other buildings it owns, the Archdiocese says that in the processes aimed at achieving goals through referenda, the Church makes its premises available to civic initiatives that have no other possibilities for accomplishment of the values which they and the Church advocate.

On the other hand, trade unions can act within the regulated relations within the political life in Croatia and can in "a regular way and with certain financial support" achieve their objectives, the Archdiocese says.

The archdiocese says that the topic of pension system is definitely extremely important for the Croatian society and believes that the matter should be looked at from a broader framework than the issue of statutory pension age.

More referendum news can be found in the Politics section.

Wednesday, 17 April 2019

Labour Minister says Pension Referendum Could Cost 45 Billion Kuna

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.

Tuesday, 16 April 2019

Trade Unions Ready for Pension Reform Referendum Campaign

ZAGREB, April 16, 2019 - Preparations for a signature gathering campaign by the referendum initiative "67 is too much" are nearing completion and everything will be ready for the launch of the campaign on April 27, leaders of three trade union federations which are organising the campaign told a press conference in Zagreb on Tuesday.

The unions called on the public to support their petition to reinstate the retirement age of 65, reduce penalties for early retirement, prevent the possibility of increasing the qualifying age for an old-age pension to 61, and extend the transition period for equalising the retirement conditions for women and men.

Only one percent of workers take an early retirement of their own free will, 20 percent retire early because of ill health, while most are "disposed of" by their employers because they are too old, said Krešimir Sever, the leader of the Croatian Independent Trade Unions (NHS).

The head of the Federation of Autonomous Trade Unions of Croatia (SSSH), Mladen Novosel, said he was confident they would manage to gather the necessary 380,000 signatures or "possibly even twice as many".

Union leaders called on the citizens not to be afraid to sign the petition and not to fall for "lies" which the Ministry of Labour and Pension System spreads under the dictate of "foreign centres of power" that such changes would harm the system and cut pensions.

Signatures will be gathered at about 300 stalls across the country from April 27 to May 11, and there will also be mobile stalls.

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

Thursday, 4 April 2019

Unions Call on Citizens to Support Pension Referendum Petition

ZAGREB, April 4, 2019 - Unions called on citizens on Thursday to support their "67 is too much" campaign to call a referendum which would bring back the full retirement age to 65 as it was prior to the pension reform.

The signature collection campaign will run from April 27 to May 11. In support of the campaign, union leader Krešimir Sever said that "Croatians have a shorter life expectancy than the EU average, citizens are sicker, working conditions are harder and technology is at a lower level."

Sever was addressing a conference on the pension system organised by the Friedrich Ebert Foundation together with the three union federations that are organising the referendum petition.

Under the incumbent law, anyone who today is younger than 53 will have to work until the age of 67 unless they have a working life of 41 years. The unions want the full retirement age to be brought back to 65 without penalisation and that the Labour Act allow anyone who wishes to work beyond the age of 65 to do so, Sever explained.

"There is no reason for Croatia to raise the full retirement age from 65 to 67. The system will be more relaxed if those who can and wish to do so continue working, while, on the other hand, people who are ill and tired could retire at 65," Sever said.

The conference heard of experiences in some other European countries – Austria has retained 65 as the retirement age while Belgiium has raised that to 67, similarly to Croatia, which resulted in huge dissatisfaction in Belgian society and union protests.

Transition countries are unique in that regard. Slovakia adopted a clear decision in parliament that has cemented the retirement age at 64 while Poland raised it to 67 and then returned it, the unions claim.

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

Wednesday, 20 March 2019

Government Against Retirement Age Referendum

ZAGREB, March 20, 2019 - Labour and Pension System Minister Marko Pavić on Tuesday dismissed trade unions' statement about the pension reform referendum as an attempt to score cheap political points for the forthcoming European Parliament election.

He added that it was an orchestrated attempt by the opposition and trade unions to misinform the Croatian public and destabilise the pension system.

The trade union initiative "67 is too much", which is opposed to the proposed retirement age of 67, announced on Monday that they would be gathering signatures for a referendum on this matter from April 27 to May 11. It said that the referendum question would propose restoring the statutory retirement age to 65 years.

Pavić said that not all future pensioners would have to work until 67 years of age, recalling that the option of working until 67 years was already provided in a law of 2014, and that with the comprehensive pension reform "the government is only accelerating this process to the year 2033."

The minister recalled that there was an institute of the long-term insured which enables those entering the labour market young, such as construction workers and store cashiers, to retire at the age of 60, once having completed 41 years of service. Students attending universities until the age of 24 will be able to retire at the age of 65, while those who did not manage to complete 41 years of service will retire at the age of 67.

Pavić also said that the average pensioner in Croatia had 30 years and two months of service, while the European average was 35 years.

"Annually, Croatia sets aside 40 billion kuna for pensions and is 18 billion kuna short. This figure will keep growing. We are aware that pensions are low but we also have to stabilise the system so we don't leave debts to our children and grandchildren," Pavić said.

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

Saturday, 2 February 2019

Croatian Mandatory Pension Funds Diversifying Investments

ZAGREB, February 2, 2019 - Mandatory pension funds in Croatia have been diversifying their investments, which means that they are turning away from investments in state bonds and turning to other investments, including investments on the Slovenian capital market, the Croatian Financial Services Supervisory Agency (HANFA) said in a press release on Friday.

There are four mandatory pension funds in Croatia – AZ OMF, Raiffeisen OMF, PBZ/CO and Erste Plavi – and their assets are valued at 99.7 billion kuna, HANFA CEO Ante Žigman said, adding that the amount would exceed 100 billion kuna after February wages were paid.

Pension funds have earned almost 30 billion kuna since 2002 (30% of the amount) while 68.5 billion kuna refers to contributions paid by employers, Žigman said, adding that pension funds had made payments in the amount of about 5 billion kuna for people who had retired. He added that the share of pension funds in GDP was around 27%.

HANFA official Tomislav Ridžak said that pension funds were increasingly investing in shares in local companies such as Hrvatski Telekom, INA, Podravka, Atlantic Group, Končar and Adris.

Slovenia's Krka company ranks fourth among the top 10 companies Croatian pension funds invest in. Among those companies is also Slovenia's Nova Ljubljanska Banka.

More news on the pension funds in Croatia cane be found in the Business section.

Saturday, 5 January 2019

Some of the Largest Wind Farms in Croatia Change Owners

The Erste Plavi and PBZ Croatia Osiguranje mandatory pension funds and the Croatia Osiguranje insurance company are the most likely new owners of Dalekovod Professio, a company which manages some of the wind farms in Croatia, according to unofficial information confirmed by several sources, reports Jutarnji List on January 5, 2019.

For a 50 percent stake, through which Dalekovod had a share in the Eko and Velika Popina companies, they will pay 115 million kuna. The remaining 50 percent is owned by Ante Ćurković, a former director of the Croatian Electric Company (HEP), also known as the owner of the best wind farm locations in Croatia, who allegedly has no intention of selling his share.

The transaction has not yet been completed. A stock sale contract has been signed, but before the formal takeover, it is necessary to perform further due diligence and obtain approval of the Supervisory Board. It is very likely that this will be done smoothly and quickly. After the transaction is finalized, a new company should be established, which will have shares in both companies, Eko and Velika Popina.

Pension funds have decided to enter the wind farm industry because they see a good chance of making money there. The company controls two of the best wind farms in Croatia, at the most suitable locations, from which high yields are expected.

“The wind farms provide a predictable revenue stream and good returns to fund members. I think this is a reasonably good investment with little risk. It would be great if this was just one in a series of investments of pension funds in renewable energy sources and I hope there will be more opportunities in that sector,” said a source informed about the situation in Dalekovod.

Dalekovod has now finally got rid of its non-core portfolio, the wind farms for which it was unsuccessfully trying to find a buyer for years. The company even negotiated with HEP and several other potential buyers from Croatia and abroad. However, the transaction has not been realized until now. The pre-bankruptcy proceedings foresaw the sale of the wind farms.

More news on the wind farms in Croatia can be found in our Business section.

Translated from Jutarnji List (reported by Jasmina Trstenjak).

Wednesday, 2 January 2019

Pension Reform Enters into Force

ZAGREB, January 2, 2019 - The pension reform which went into force on January 1 envisages raising the retirement age to 67 as of 2033, penalising early retirement by 0.3% per month, i.e. by 18% for five years, and enabling all pensioners to work four hours a week while keeping their pensions.

Second pillar beneficiaries can choose in which system to exercise their pension - only in the first pillar with a 27% supplement for the period up to 2002, plus 20.25% for payments after that year; or from both mandatory pillars.

Between the two readings in parliament, the pension legislation package went through certain changes – penalisation for early old-age pension was cut from 0.34 to 0.3% monthly; the full retirement age is to be lowered by six months for mothers and women who adopt for every child, which will increase their pensions by about 2%.

In order to reinforce the sustainability of the pension system, the equalisation of old-age retirement for women and men is being stepped up by four months per year. Women are now required to retire with 62.4 years of age until the end of 2026.

As of 1 January 2027, both men and women will be eligible for old-age pension with 65 years of age and 15 years of service for retirement.

As of 1 January 2028, the age for both will be raised by four months per year until 1 January 2033, when both will be eligible for old-age pension with 67 years of age and at least 15 years of service for retirement.

The reform brings change also in the operation of mandatory pension funds with a view to achieving more transparency and control. The reform envisages the appointment of insuree representatives to the funds' supervisory boards as well as the obligation of the funds' management board members to step down from supervisory boards in companies in which they have ownership stakes.

Pension funds can also invest in startups and infrastructure projects, and the reforms also cuts the compensation for running them.

As of January 1, the net monthly minimum wage rises from 2,752 kuna to 3,000 kuna, by 9% in comparison with 2018. According to the government, this is the biggest one-off minimum wage rise since 2008.

More news on Croatia’s pension system can be found in our Business section.

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