Under the government-sponsored amendments to the pension granting legislation, the early retirement will carry the reduction of pension by 4.08 percent for each year below 65, with the same percentage of incentives for remaining employed for each year over normal retirement age,
Bejakovic says that the current state of affairs in the pension insurance system is hardly sustainable concerning the average retirement age, pension insurance entitlements and also fairness of the existing system.
Croatia's system dependency ratio -- the ratio of insured persons, that is contributors (1.53 million) and the number of those receiving pensions (1.19 million) -- stands at a low 1.28 percent, which is one of the poorest ratios in Europe.
Pension beneficiaries who have been employed for 40 years account for only 11.6 percent of all pension receivers. Those with from 35-39 years in service account for 23.8 percent of pension beneficiaries.
Bejakovic ascribes the current situation to insufficient penalisation for early retirement.
He says that the legislation adopted in 2008 which reduced the maximum reduction of pension from 20.4 percent to 9 percent in the event of early retirement created a paradox: there was a meagre difference in remuneration for full time employment until normal retirement and pensions paid to early retirees. Consequently, those who have gone into early retirement, have paid lower contributions to pension funds but will be able to longer enjoy pensions, Bejakovic writes in his report, explaining that this encouraged an increase in early retirement.
For instance, the number of pension beneficiaries who went into early retirement went up from 22,880 in 1997 to as many as 93,574 early retirees in June 2010.
As a result, the pension system expenditures increased, accounting on the average for 10.8 percent of Croatia's Gross Domestic Product in the 2005-20009 period.
"In the foreseeable time, Croatia will probably have to raise the normal retirement age in accordance with trends in other countries, and efforts should be aimed at having workers employed until completion of required years in service for retirement," the overview's author says, adding that the proposed measures should be a clear sign that working longer pays off.