Pension System in Croatia
The Croatian pension system is based on three pillars: the mandatory pay-as-you-go (Pillar I), the mandatory funded individual accounts (Pillar II), and voluntary pension savings (Pillar III). The Pension Insurance Act (NN 157/13) governs Pillar I, administered by the Croatian Pension Insurance Institute (HZMO).
Pillar I (HZMO) and Pillar II (mandatory pension funds)
A total of 20% of an employee's gross salary is allocated to pension insurance. Of this, 15% goes to Pillar I (HZMO, solidarity system) and 5% to Pillar II (individual capital account in a mandatory pension fund). Under Pillar I, an old-age pension is earned upon reaching 65 years of age and a minimum of 15 years of insurance. The pension is calculated using a points system: each year of insurance earns points multiplied by the value of the pension point.
Pillar III – voluntary pension insurance
Pillar III consists of voluntary pension funds managed by pension insurance companies. Contributions to Pillar III are tax-advantageous: a deduction of up to €50.40 per month (or €604.80 per year) from the tax base is allowed. Conditions for withdrawal: reaching the age of 50 and at least 5 years of contributions, or retiring.
Early retirement and special cases
Early retirement is possible at age 60 with 35 years of insurance, but with a permanent reduction of 0.34% for each month short of the regular retirement age. Disability pension is granted based on the assessment of the HZMO expert. Survivor's pension is available to widows/widowers and children. Foreign workers who have worked in Croatia may transfer their accrued pension rights to their home country under international social security agreements.
Frequently Asked Questions
Can I change my pension fund in Pillar II?
Yes. Mandatory pension funds (Pillar II) are categorised into categories A, B and C depending on risk. Younger workers are usually placed in category A (higher risk/return), and older workers automatically transition to lower-risk categories. You can choose and change your fund without any fee once a year.
What happens to my Pillar II savings if I die before retirement?
Pillar II assets are inherited. Heirs can transfer the assets to their own pension accounts or withdraw a lump sum under certain conditions. Unlike Pillar I (solidarity-based), Pillar II is an individual capital account.
How much is the minimum pension in Croatia?
The minimum pension in Croatia for a full working life (40 years of service) is set as a percentage of the budget base. The Government periodically adjusts minimum pensions for cost of living. The exact amount is published by HZMO and may change by Government decision.