DEPUTY PRIME MINISTER PRESENTS BILL ON PENSION INSURANCE

( Editorial: --> 7091 ) ZAGREB, Oct 9 (Hina) - The Croatian National Sabor's (Parliament) House of Representatives on Friday opened a debate on a bill on compulsory and optional pension insurance or the so-called second and third columns of the future pension reform. If it is adopted, the proposed bill would come into effect on January 1, 2000. Presenting the bill in the first reading, Deputy Prime Minister Ljerka Mintas-Hodak, said that the bill would regulate compulsory pension insurance on the basis of individual capitalised saving for insurees under the age of 40, while optional insurance would be regulated on the basis of capitalised saving for all citizens. The system of compulsory and optional pension insurance would cover a total of 900,000 employees in Croatia, that is 50 per cent (700,000) of insurees under the age of 40, and 40 per cent (200,000) employees between the age of 40 and 50. Within the system of compulsory individual capitalised saving, insurees would pay 16.5 per cent of the overall insurance rate of 21.5 per cent for pension allowances of current retirees, while five per cent would go into their own accounts in special pension funds. Optional saving for old age would enable citizens to deposit money on their own individual accounts according to their means. The compulsory and optional pension funds would be governed by pension insurance companies, as their founders. The work of these funds and insurance companies would be controlled by the Agency for Supervision. In the period prior to the adoption of the bill, during 1999, one would have to establish all the necessary institutions for the implementation of the bill - from funds and pension insurance companies to the central register and the Supervision Agency. The Legislation Committee and the Committee for Labour, Social Policy and Health have supported the bill. However, by the second reading, the Government should set clearer regulations as regards the management of pension funds and introduce higher fines for those who fail to implement the law as well as submit a simulation plan justifying the adoption of the bill and presenting its advantages. The Government has also been entrusted with drawing-up a bill on pension insurance companies. The lower house continued its session with a debate on the bill. (hina) rml/sp 091234 MET oct 98