ZAGREB, April 8 (Hina) - The Croatian Government on Thursday sent into parliamentary procedure bills necessary for the implementation of pension reform. The bills include a final bill on obligatory and voluntary pension funds and a
bill on pension insurance companies and the payment of pensions based on individual capitalised saving. The pension reform is aimed at establishing a pension system which will consist of three parts: obligatory contributions from wages to the pension fund according to the principle of solidarity among generations; obligatory saving by each employee; and voluntary pension saving. To date, Croatia had a pension system based on the principle of solidarity among generations. Labour and Social Welfare Minister Joso Skara said at today's Government session that the current pension insurance rate, amounting to 21.5 percent, would not be changed. Instead, the rate would be divided between
ZAGREB, April 8 (Hina) - The Croatian Government on Thursday sent
into parliamentary procedure bills necessary for the
implementation of pension reform.
The bills include a final bill on obligatory and voluntary pension
funds and a bill on pension insurance companies and the payment of
pensions based on individual capitalised saving.
The pension reform is aimed at establishing a pension system which
will consist of three parts: obligatory contributions from wages to
the pension fund according to the principle of solidarity among
generations; obligatory saving by each employee; and voluntary
pension saving.
To date, Croatia had a pension system based on the principle of
solidarity among generations.
Labour and Social Welfare Minister Joso Skara said at today's
Government session that the current pension insurance rate,
amounting to 21.5 percent, would not be changed. Instead, the rate
would be divided between two obligatory funds. This means that 16.5
percent of gross earnings would go into the generation solidarity
fund, namely payments would be made at the Croatian Pension
Insurance Bureau (HZMO), while five percent from salaries would be
paid into new funds of obligatory pension saving on the account of
each employee.
Obligatory pension saving funds would be managed by special pension
societies. The bill also regulates the amount of stock capital and
the number of members of these societies.
The bill also includes the establishment of a central register of
members of pension funds which is to see of the payment of
contributions and inform members of their accounts balance.
Those funds would be supervised by an agency for supervision of
pension funds and insurance.
The new pension system would go into force on January 1, 2000. The
law would apply to persons under the age of 40 on the obligatory
basis, while those between 40 and 50 years of age could choose
between the old and the new system.
Deputy Prime Minister Ljerka Mintas-Hodak stressed that the
transition would cost the state about US$357 million. Namely, this
would be the amount of a deficit in the HZMO (generation solidarity
fund), caused by the decrease in the payment of contributions by 5
percent.
The third part of the pension system is a voluntary individual
capitalised saving. According to the bill, which has been forwarded
to the Sabor for the first reading, pension insurance companies
would be established for pension payments on the basis of
capitalised saving.
The pension reform would not change the position of pensioners
today, said Prime Minister Zlatko Matesa. He also pointed to the
significance of effects which would be caused by the reform, such as
the increase of domestic saving and the stock market.
(hina) it jn/rml