Mandatory Pension Insurance based on Individual Capitalised Savings
Obvezno mirovinsko osiguranje na temelju individualne kapitalizirane štednje
Coverage
Mandatory insurance
- Persons insured in the public mandatorypension insurance based on generational solidarity (exception: persons above the age of 40 in 2002 or at the time of acquiring insuree status).
Opting in
- Persons between the age of 40 and 50 in 2002 or at the time of acquiring insuree status have the option of opting into the scheme.
Opting out
- Insured persons have the possibility of opting out of the scheme at the end of the accumulation phase (i.e. just before claiming retirement benefits) by transferring the accumulated savings to the ‘Pension Insurance Institute’; in this case, pension payments equal those of ‘single-tier pensioners’.
Financing
General finances
- Fully funded scheme with individual retirement accounts financed by contributions and capital revenues (investment returns).
Contribution rates
- Fixed share of monthly gross earnings (5%) paid by the employee.
- In case of self-employment, contributions are paid by the self-employed on the basis of a prescribed ‘pension insurance base’.
- For persons working on a service contract or author’s contract, contribution rates are halved (2.5%).
- For workers in arduous and hazardous jobs, additional contributions are paid by the employer.
Taxation of contribution payments
- Contributions are tax-exempt.
Administration
- The ‘Ministry of Labour and Pension System’ is the general competent authority that is in charge of legislative proposals and the general supervision of the functioning and implementation of all parts of the pension system.
- The ‘Central Registry of Affiliates’ (REGOS) keeps record of the personal accounts and is responsible for the transfer of paid contributions to the chosen mandatory pension fund.
- Pension companies manage the accumulation phase through operating mandatory pension funds; pension insurance companies manage the payout phase.
- The ‘Croatian Financial Services Supervisory Agency’ (HANFA) regulates licences, supervises business operations and investments, and sanctions pension companies and pension insurance companies.
Qualifying Conditions
- Pension payments are linked to the fulfilment of qualifying conditions and the entitlement to pension benefits of the mandatory pension insurance based on generational solidarity.
Benefits
Pension payments
- Accumulated capital through contribution payments and investment yields, minus administrative costs and costs/fees of pension provider.
- Defined contribution pension commitment.
- (Early) life-long annuity paid monthly (using unisex mortality tables); option of partial lump sum payment in the amount of 15% of accumulated savings.
- Life-time benefits can be paid either as individual benefit or joint benefit for spouses.
- Benefits can be paid for a guaranteed period (min. 5 years from the day of pension entitlement): if person dies within the guaranteed period, the ‘named beneficiary’ continues to receive benefits until the expiry of the guaranteed period.
Taxation and social security contributions
- Pension benefits are subject to income tax, but under preferential treatment: tax obligation based on pensions is reduced by 50%.
- Pension benefits are often exempt from health insurance contributions; pension benefits higher than the average wage are subject to health insurance contributions, but at a reduced rate (3% compared to regular rate of 16.5%).
- Earnings received by working pensioners are subject to compulsory social security contributions (i.e. pension and health insurance contributions).
Coverage
Financing
Administration
Qualifying Conditions
Benefits
Mandatory insurance
- Persons insured in the public mandatorypension insurance based on generational solidarity (exception: persons above the age of 40 in 2002 or at the time of acquiring insuree status).
Opting in
- Persons between the age of 40 and 50 in 2002 or at the time of acquiring insuree status have the option of opting into the scheme.
Opting out
- Insured persons have the possibility of opting out of the scheme at the end of the accumulation phase (i.e. just before claiming retirement benefits) by transferring the accumulated savings to the ‘Pension Insurance Institute’; in this case, pension payments equal those of ‘single-tier pensioners’.
General finances
- Fully funded scheme with individual retirement accounts financed by contributions and capital revenues (investment returns).
Contribution rates
- Fixed share of monthly gross earnings (5%) paid by the employee.
- In case of self-employment, contributions are paid by the self-employed on the basis of a prescribed ‘pension insurance base’.
- For persons working on a service contract or author’s contract, contribution rates are halved (2.5%).
- For workers in arduous and hazardous jobs, additional contributions are paid by the employer.
Taxation of contribution payments
- Contributions are tax-exempt.
- The ‘Ministry of Labour and Pension System’ is the general competent authority that is in charge of legislative proposals and the general supervision of the functioning and implementation of all parts of the pension system.
- The ‘Central Registry of Affiliates’ (REGOS) keeps record of the personal accounts and is responsible for the transfer of paid contributions to the chosen mandatory pension fund.
- Pension companies manage the accumulation phase through operating mandatory pension funds; pension insurance companies manage the payout phase.
- The ‘Croatian Financial Services Supervisory Agency’ (HANFA) regulates licences, supervises business operations and investments, and sanctions pension companies and pension insurance companies.
- Pension payments are linked to the fulfilment of qualifying conditions and the entitlement to pension benefits of the mandatory pension insurance based on generational solidarity.
Pension payments
- Accumulated capital through contribution payments and investment yields, minus administrative costs and costs/fees of pension provider.
- Defined contribution pension commitment.
- (Early) life-long annuity paid monthly (using unisex mortality tables); option of partial lump sum payment in the amount of 15% of accumulated savings.
- Life-time benefits can be paid either as individual benefit or joint benefit for spouses.
- Benefits can be paid for a guaranteed period (min. 5 years from the day of pension entitlement): if person dies within the guaranteed period, the ‘named beneficiary’ continues to receive benefits until the expiry of the guaranteed period.
Taxation and social security contributions
- Pension benefits are subject to income tax, but under preferential treatment: tax obligation based on pensions is reduced by 50%.
- Pension benefits are often exempt from health insurance contributions; pension benefits higher than the average wage are subject to health insurance contributions, but at a reduced rate (3% compared to regular rate of 16.5%).
- Earnings received by working pensioners are subject to compulsory social security contributions (i.e. pension and health insurance contributions).
Legal Basis: Act on Compulsory Pension Funds (Zakon o obveznim mirovinskom fondovima, Narodne novine 19/14, 93/15, 64/18, 115/18, 58/20); Act on Pension Insurance Companies (Zakon o mirovinskim osiguravajućim društvima, Narodne novine 22/14, 29/18, 115/18).