The Allianz Group on Thursday presented its latest Allianz Global Pension Report in which it examines pension systems around the world according to the Allianz Pension Indicator (API), first by analysing countries' demographic and fiscal prerequisites and then their pension systems based on sustainability and adequacy.
The API is based on three pillars and takes into account 30 parametres, rating countries on a scale of 1 to 7, with 1 being the best.
Croatia is ranked 46th with a grade of 4.1.
As many countries in its region, Croatia is faced with a swiftly ageing population. By 2050, the share of the elderly economically inactive population will rise to 55%, Allianz estimates.
In that context, the poor sustainability grade of 4.1 is quite understandable, the analysis says, singling out the retirement age as a weakness of the system because it does not keep up with the increasing life expectancy. The demographic factor in the formula for calculating pensions could also make the system more stable, Allianz says.
The 3.7 grade given to the adequacy of Croatia's pension system is in line with the global average, Allianz notes.
The factors which could be worked on to improve the system include the coverage-contribution ratios, private savings and the possibility of hiring seniors. In light of the coming demographic change, pension reform fatigue is the last thing Croatia can afford, Allianz says.
In the first API pillar, the starting point that combines demographic changes and the public financial situation, Croatia has the grade 4.7 and Sweden, for example, 3.4.