engleski

Demographic changes in the context of the Croatian pension system

In recent decades, the Croatian pension system has undergone numerous reforms and changes, but its functioning is still characterized by insufficient revenues, relatively high contributions, and relatively low pensions. Moreover, the pension level is often perceived as so low that it does not allow beneficiaries to earn a decent living. The dissatisfaction stems from the fact that among today's pension recipients there is a prevailing view that they have taken care of themselves during their working lives by paying contributions into the pension system, which is a consequence of not understanding how the inherited system of generational solidarity works. Therefore, it seemed reasonable to investigate possible economic policy measures to mitigate the effects of an aging population. Most of the studies dealing with the pension system in Croatia refer to the analysis of the capitalized savings in the second and third pillars of the pension system, as well as to the prediction of the future development of funding problems in the first pillar or the intergenerational solidarity. Our contribution is to complement the existing literature by showing the ways to eliminate the negative consequences of population aging in order to promote demographic renewal and the possible increase of pension income. The empirical findings support the need for policy measures aimed at mitigating the effects of population aging. These policies can take the form of active labour market policies or legal reforms that delay retirement by penalizing early retirement and providing stricter eligibility criteria and incentives for employment above the threshold age (Žokalj 2017). In this study, we propose some measures for active employment policies aimed at increasing labour force participation and employment rates to reduce the high burden of demographic change in Croatia. We also present some novelties in legislative reforms aimed at preventing early retirement and increasing labour force participation by subsidizing employers who hire citizens older than 65, but most importantly, economic policies that promote demographic renewal. This paper provides insights into the composition and comparative relevance of the demographic effects that explain the difficulties in the functioning of the Croatian pension system. The unfavourable situation of the pension system, with its declining revenues, will put additional pressure on pension expenditures, which must be reflected both in the level of pensions and in the search for other sources of revenue. For all these reasons, a radical or profound change in the functioning of the Croatian pension system is needed. There are a number of possible solutions for a permanent increase in labour productivity and post-retirement employment opportunities. Nevertheless, an active, innovative and long-term approach by a number of institutions can mitigate or even reverse the detrimental impact of demographic trends on the system of intergenerational solidarity in Croatia.

demography changes, pension system, age dependency ratio, Croatia

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