Zagreb, 28 February 2010 – Each month Croatia needs 2.9 billion kuna for pensions. After the workers pay all pension contributions the state still lacks 1.4 billion kuna which are covered from the budget what makes pensions the largest consumers of the budget. Therefore, pensions are among priority items to rationalize.

Each large wave of dismissals, such as the one existing in Croatia now because of the crisis, results in the increase of the number of early retirements. Employers are forcing thousands of people to retire by giving them severance pays and “buying off” their years of service, say trade unionists and add that those people could work for another five or ten years and instead of receiving money from the pension system, they could pay to this system. When employers offer such a plan, workers must be aware that due to five years of retiring earlier they will receive reduced pension till the rest of their lives. Croatia Retired Persons’ Party has calculated that due to early retirement at the age of 56 women loose about 560 kuna and men at the age of 60 about 630 kuna a month.

Trade unions see the solution of this problem in cancelling the so called privileged pensions.

- We are not reinventing the wheel. We only ask to implement the Slovenian model in which all pensions are calculated according to the Act on Pension Insurance. Miners and asbestos workers would be exceptions because their wages were low and their work very difficult, says Ana Knežević, UATUC President and gives her strongest argument for cancelling privileged pensions: homeland war veterans which are one of the privileged categories have average pension larger than 2800 kuna and average years of service of eight and a half years while the average pension in Croatia is 2166 kuna! There are 13 categories of privileged pensions in Croatian pension system with 181,224 users. More than 720 million kuna a month is allocated for their pensions. 

The average privileged pension is 3981 kuna whereas the average pension is 2166 kuna, or 54 percent less! The ratio between average and privileged pension is even more scandalous: one monthly pension of an MP equals three monthly pensions of a retired person. This is the reason why trade unions are not satisfied with this part of the pension system which has nothing to do with payment of contributions for pension insurance.

The Ministry of Economy, Labour and Entrepreneurship does not yet think about cancelling any of the privileged categories. They are convinced that the problem of pensions should be solved through employment.

- In Croatia one pension is covered by 1.28 wages. This is a very unfavourable ratio and when this is corrected the amount of money allocated from the budget to cover the pensions will also be automatically reduced. All Government’s measures are directed to this aim: to maintain existing jobs and open new ones, says the Minister of Employment, Labour and Entrepreneurship Đuro Popijač and warns that the problem was created when workers, still at working age and with few years of service, chose early retirement instead of unemployment.

Trade unions admit that new employment would somewhat solve the situation with pensions but warn that no employment can fully cover the amount of privileged pensions which does not follow the payment of pension insurance contributions.