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COMPULSORY PENSION INSURANCE

Compulsory pension insurance in the Republic of Croatia includes insurance on the basis of generational solidarity (I pillar) and insurance on the basis of individual capitalized savings (II pillar).

Pension insurance based on generational solidarity is part of the pension insurance system in which insured persons, based on principles of reciprocity and solidarity, are entitled to rights in case of old age, reduction of work ability, partial or total loss of working ability and physical impairment, and members of their family are entitled to rights in the event of death of the insured, or beneficiary’s rights.

The Croatian Pension Insurance Institute (HZMO) is the competent institution for exercising the right exclusively from pension insurance on the basis of generational solidarity (I pillar).

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Pension insurance based on individual capitalized savings (II pillar) ensures the same circle of persons who have the status of insured persons in the I pillar, but on the day of the beginning of the application of the II pillar (on 1 January 2002) or at the time of entry into insurance (employment or self-employment or on a different basis) were under 40 years of age, as well as persons which were older than 40, and younger than 50 in 2002, if they opted for such insurance. Persons who reached the age of 50 on 1 January 2002, were insured only in the I pillar.

The Central Register of Insured Persons (REGOS) is the competent institution for insurance on the basis of individual capitalized savings (II pillar).

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Financing

Compulsory pension insurance is financed by contributions of insured persons, employers and the state budget at the rate of 20% from the salary or the insurance basis. For insurees insured in both pillars, a contribution of 15% is paid for the I pillar and 5% for the II pillar, and for insurees who are insured only in the first pillar, all 20% of contributions is paid into the first pillar.

The Ministry of Finance or the Tax Administration are responsible for collecting these contributions.

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Insured persons – I pillar

Pension insurance based on generational solidarity provides compulsory insurance to all working persons on different grounds, such as employment, professional or other business activity or other activities, trades, craft enterprises, etc.

Persons compulsorily insured in I pillar are:

  • Workers, clerks and employees and persons equalized to them by virtue of special regulations, employed in the Republic of Croatia,
  • Persons elected or appointed to permanent offices in certain state government bodies, units of local government and self-government, provided they receive salaries for their work,
  • Persons receiving vocational training according to the regulation governing employment relations,
  • Persons employed by foreign organizations with seat in the Republic of Croatia who do not enjoy diplomatic immunity, foreign natural persons with residence in the Republic of Croatia, or with foreign diplomatic missions or consular posts or other international agencies or representatives with seat in the Republic of Croatia who enjoy diplomatic immunity, or who are in personal service of foreign citizens, unless otherwise provided by European Union regulations on coordination of social security systems or international agreement on social security,
  • Workers posted abroad who perform jobs in another country for an employer based in the Republic of Croatia and persons who work in diplomatic missions or consular offices of the Republic of Croatia abroad,
  • Seasonal workers in agriculture, according to the regulation governing the labour market,
  • Unemployed persons are compulsorily insured under the conditions and for the duration determined by the regulation governing the labour market,
  • Persons providing assistance and care for Croatian war veterans from the Homeland War and who receive compensation for this work according to the regulation governing the rights of Croatian veterans,
  • Persons who are employed by an employer who is established in a Member State where the EU regulations on the coordination of the social security system are applied and has no registered company or subsidiary in the Republic of Croatia to which, in accordance with the EU regulations on coordination of the social system security, legislation of the Republic of Croatia is applied,
  • Craftsmen who are properly registered,
  • Self-employed persons who, in accordance with special regulations, follow their professional activity,
  • Top sportsmen, unless they are compulsorily insured on another basis,
  • Persons who are based on self-employment in agriculture and forestry considered taxpayers of income or profit tax
  • Persons performing an activity whose performance does not require the issuance of approval or registration, but which is characterized by independence, permanence and intention to generate income or profit, making such persons based on such activity taxpayers of income or profit tax, unless they are compulsorily insured on another basis,
  • Persons performing crafts activity or secondary occupation under the law governing crafts, if they are not compulsorily insured on another basis, or if they are not beneficiaries of a pension, except for beneficiaries of a disability pension due to partial loss of working capacity or professional incapacity for work,
  • Persons who perform agricultural and forestry activity as their sole or main occupation and are entered in the register of agricultural family farms or the register of forest owners as holders and members of agricultural family farms or forest owners and members of their household,
  • Persons registered in the Register of Farmers,
  • Members of management boards and executive directors of trading companies, liquidators and managers of cooperatives, if they are not compulsory insured on a different basis and unless otherwise provided by a special regulation,
  • Priests and other clerical officers of religious communities entered in register of religious communities kept by the ministry responsible for their administration, unless they are compulsorily insured on another basis,
  • Parent who performs parental duties during the child’s first year, provided he is not compulsorily insured on another basis and that the child is a Croatian citizen and that parents and the child both have their place of residence in the Republic of Croatia,
  • Parent caregiver or a caregiver according to welfare regulations during the term of this status,
  • A foster parent who performs standard foster care and a foster parent who is a specialized foster care provider,
  • Persons employed abroad by international organizations and foreign employers, who are not compulsorily insured according to foreign regulations to which international agreements on social security apply, or who are not compulsorily insured according to European Union regulations on coordination of social security systems,
  • Persons employed in EU institutions, who are not compulsorily insured according to EU regulations,
  • Persons employed in the Republic of Croatia with employers based abroad without a registered subsidiary in the Republic of Croatia,
  • Members of ship crew in international navigation and sailors on waterways whose employer, shipowner or company is a national or foreign legal person, unless otherwise provided by European Union regulations on coordination of social security systems or international agreement on social security,
  • Persons who generate other income according to regulations on income tax, for which contributions for pension insurance are collected under regulations on compulsory insurance contributions (other income).

The status of insured person is determined on the basis of an application for insurance. The application may be submitted by:

  • The employer of the insured person or the payer of contributions, or
  • The insured person, when he or she is the payer of contributions for pension insurance.

A person for which the payer of contributions does not submit an application or cancellation of insurance, may request from the Croatian Pension Insurance Institute (hereinafter: the Institute) to issue a decision on the recognition or termination of the status of insured person.

 The application is submitted to the regional service / local office / branch office of the Institute, which is competent according to the employer’s registered office or its branch office (for employees), i.e. according to the place of residence or business activity, and the deadline for the submission of application is at the earliest 8 days before commencement of work and at the latest just before commencement of work with the employer.

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As of 1 January 2014, all employers, or other mandatory applicants, with more than 3 insured persons are required to submit applications electronically. E-applications are web applications that allow users to register/cancel the pension insurance, applications for change of status during insurance, applications for commencement/termination of business activities of the contribution payer, as well as changes in the data of the contribution payer.

More information on e-applications

Employers whose registered office is located in other Member States of the EU – insured persons application in the Croatian Pension Insurance Institute

Any employer whose head office is located in a Member State of the European Union (EU), without a registered subsidiary or company in the Republic of Croatia, is obliged to apply for the pension insurance for a worker employed in the territory of the Republic of Croatia if the social security legislation of the Republic of Croatia applies to such worker.

The procedure of registering of these employers is performed in such a way that the Ministry of Finance of the Republic of Croatia – Tax Administration assigns a Personal Identification Number (OIB) to an employer from EU Member State who, in accordance with Article 21 paragraph 1 of the Regulation 987/2009, has to fulfil all obligations prescribed by the relevant legislation for its employees (insurance application and contribution payments) as if it he or she had a registered office or place of business in the competent Member State.

The above-mentioned employers are equal with employers from the Republic of Croatia and are obliged to submit a request for OIB assignment in accordance with the provisions of the Personal Identification Number Act and implementing regulations issued under this Act.

When registering the first insured person, the employer / insured person submits an employment contract or a certificate of a signed employment contract, a certificate issued by the Ministry of Finance – Tax Administration on the OIB granted to the employer. In case the employment contract is not concluded in Croatian, a certified translation of the contract, or the certificate of signed employment contract, must be enclosed.

Completed, certified and signed application for the commencement of insurance for persons in the Republic of Croatia may also be submitted by the employer or by an authorized representative/employee.

When this application is submitted by an authorized person / employee instead of the employer, the signed documentation must be accompanied by a signed power of attorney, i.e. a written agreement between the employee and the employer.

The application for the commencement of insurance (Form M-1P) and application for the termination of insurance (Form M-2P) are used to register and unregister the worker from the pension insurance. The regional organisational unit of the Institute is responsible for receiving applications and cancellations from the register, depending on the place of residence of the insured person.

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QUESTIONS AND ANSWERS

1. Can a pension beneficiary work and receive pension at the same time?

Pension beneficiaries, except for disability pension beneficiaries due to complete loss of working capacity, i.e. previous general incapacity for work, may work up to half the working hours of a full-time position while simultaneously receiving the pension in the full amount, regardless of the regulation under which they exercised the right to a pension.

Disability pension beneficiaries due to complete loss of working capacity (general incapacity for work) may receive their full pension if they are employed to work for less than 3.5 hours a day (this provision of the Pension Insurance Act for disability pension beneficiaries due to complete loss of working capacity enters into force on January 1, 2026, i.e. pensions will be suspended for the said pension beneficiaries who are employed before December 31, 2025).

Half of the pension amount is paid to the beneficiary of an old-age pension, old-age pension for a long-term insured person, early retirement pension, survivors’ pension or a part of the survivors’ pension who, after reaching the age of 65, is employed full-time while exercising their right to the pension, i.e. works more than half the working hours of a full-time position or starts performing an activity which requires insurance (the deferred application takes effect from 1 January 2026).

The same option of receiving half the pension amount is also provided to craftsmen, persons performing professional self-employment, parents caretakers, caretakers under social welfare regulations, foster parents and persons providing care and assistance to Croatian war veterans from the Homeland War, and they are entitled to 50% of the pension amount without the termination of their activity, i.e. without the termination of compulsory insurance, provided that they have reached the age of 65 (the deferred application takes effect from 1 January 2026).

In addition, employment exceeding half-time hours is permitted for pension beneficiaries governed by special regulations concerning active military personnel, police officers, demining employees and professional firefighters, who may receive the pension amount in full with employment not exceeding half-time hours permitted, or half the pension amount with employment exceeding half-time hours, regardless of age. Likewise, all pension beneficiaries are allowed to perform seasonal jobs in agriculture, perform other activities and earn other income, e.g., through a service contract, without suspension or reduction of the pension.

2. How to enter into the insurance system?

The right to pension insurance is determined by the recognition of the status of insured person. The status of insured person is determined by the Institute on the basis of an application for insurance.

Submission of applications

The application is filed by:

  • The employer of the insured, or a payer of the contribution or
  • The insured person, when they are payers of pension insurance contribution

The application is filed with the branch service/office/subsidiary of the Institute, with jurisdiction according to the employer’s registered office or its subsidiary (for employees), i.e. place of residence or performance of activities/postal offices of Hrvatska pošta, and the deadline for applying for insurance is earliest 8 days before commencement of work, and latest before the commencement of work with the employer (concluding employment contract, commencement of self-employment, etc.).

Termination of insurance

The status of insured person ceases with the termination of the circumstances on the basis of which a person has acquired the said status.

3. To whom the pension will not be established as basic or pension from both pillars?

– For insured persons under 55 years of age or persons insured for a period shorter than 10 years in the compulsory pension insurance based on individual capitalized savings with the occurrence of complete loss of working capacity, a disability pension is determined as if the insured person was insured only under compulsory pension insurance on the basis of generational solidarity.

– For persons insured in compulsory pension insurance on the basis of individual capitalized pension savings, which is recognized and/or determined according to special regulations, pension is determined as if they had been insured only in compulsory pension insurance on the basis of generational solidarity.

– For family members of deceased insured persons under 55 years of age or insured for a period shorter than 10 years in the compulsory pension insurance based on individual capitalized savings, a survivors’ pension is determined for the overall qualifying period of the deceased insured person as if the insured person was insured only within the compulsory pension insurance based on generational solidarity.

-Insured persons who, in the process of exercising the right to an old-age or early retirement pension, have opted, by their statement to the Central Registry of Insured Persons, for the realization of a pension from Pillar I.

– a person insured in compulsory pension insurance on the basis of individual capitalized savings who has suffered a partial loss of working capacity under a general or special regulation, or occupational incapacity for work with the right to a disability pension under a special regulation, or who acquires the right to a temporary disability pension, may exercise the right to a pension only in compulsory pension insurance based on generational solidarity, and the funds of capitalized contributions remain in the personal account of the fund member until he or she acquires the right to an early old-age, old-age or disability pension due to a complete loss of working capacity.

– an insured person who exercises the right to a pension according to a special regulation governing the rights to pension insurance of active military personnel, police officers and authorized officials or whose pension is determined in accordance with the regulation, and who has not made the choice to remain in the compulsory pension insurance of individual capitalized savings by 31 October 2015, is entitled to a pension as if he had been insured only in the compulsory pension insurance based on generational solidarity.

4. Am I obligated to submit applications to the Croatian Pension Insurance Institute electronically?

Obliged persons with more than three employees are required to submit applications electronically from 1 January 2014.

5. The insured person is employed since 3 July 2013 in the Republic of Croatia. Previous insurance periods (years of service) of 7 years have been acquired in the Republic of Austria. Where and how can the said period of employment abroad be recorded for the purpose of exercising certain rights on the basis of existing employment?

Until 30 June 2013, the competent branch office of the Service entered the data on employment abroad (due to record keeping) in accordance with Article 14 of the Ordinance on employment booklets (Official Gazette no. 14/96). Since the provisions of the Ordinance on employment booklets are no longer applicable since the date of Croatia’s accession to the European Union, the Service ceased with entering the data on employment abroad into the said booklet.

At his or her request, the insured person will be issued a special certificate of insurance periods completed abroad, in accordance with the valid documentation of foreign holders available to the Service or presented to the Service by the insured person. If such documentation does not exist, the insured person will be instructed to initiate the procedure for determining the periods of insurance completed abroad and his or her certificate may be issued after the procedure has been carried out.

6. A person is unemployed, has an employment booklet in paper form and wants to know how to "get" an e-employment booklet?

Employment booklet is still a public document for proving the working-legal status of a person until 30 June 2013. The term “e-employment booklet” refers to certain structured data in electronic form, represented on the certificates and electronic records, related to labour and legal status of the insured person, and does not refer to physical data bearer (card etc.). Certificates or electronic records represent the labour and legal status of insured persons.

A person who wants to obtain the electronic record must have a username and password to access his/her personal data on the web site of the Service where electronic submission of applications is provided.

Application for the assignment of the username and password can be filed at any branch office of the Service or at the Central Office of the Service in Zagreb. Applications can be submitted only in person.

7. How will electronic records of workers in pension insurance be kept? Does the company have to fill in some documentation or request with information on employees and send it to pension insurance? How do we register and unregister our employees?

The Institute keeps the main register of employed persons in pension insurance, in accordance with the provisions of the Pension Insurance Act, on the basis of applications submitted by the employer. No documentation or request is required. Employers are still required to register employees on prescribed applications and there are no changes in that part of the procedure.

8. Preliminary determination of foreign insurance periods: I am 63 years old and employed in Croatia. So far, I have a total of 28 years of service, of which 10 are completed in Bosnia and Herzegovina. What do I need to do to get the right to an old-age pension in Croatia at the age of 65?

The Republic of Croatia has concluded a Social Security Agreement with Bosnia and Herzegovina, which enables the acquisition of pension rights by adding up the insurance periods one has completed in both Contracting States. Since you have completed 10 years of insurance in Bosnia and Herzegovina, and you will be entitled to an old-age pension in the Republic of Croatia after 2 years have passed (when you reach the age of 65), please contact the branch office of the Institute, according to your place of residence, and submit an application for a preliminary determination of your qualifying period completed in Bosnia and Herzegovina in order to obtain your pension rights as quickly as possible after you satisfy the prescribed conditions. The application form is available in the regional services, offices, branch offices of the Institute and on the Institute’s web site.

9. What happens with the pension after the death of the beneficiary? What must a person do whose father died, since the late father was the beneficiary of the Croatian pension insurance?

You need to provide your father’s death certificate to the Institute’s competent branch office which paid his pension. After the conducted inheritance proceeding, you need to provide a legally valid decision on the inheritance, which must state that you claim due and unpaid amount of the pension. The insured person, or statutory successor, is entitled to a pension for the entire month in which the insured person died.

10. Should the pension beneficiary (and which pension) go to control checks?

Mandatory control examinations that were carried out no later than three years from the date of the determined partial or complete loss of working capacity have been abolished by the new Pension Insurance Act; however, the same Act provides for the possibility of conducting an extraordinary control examination for beneficiaries of disability pension and compensation for physical damage.

In the process of supervision and control referred to in Article 134 of the Pension Insurance Act, the Ministry responsible for the pension system may perform an extraordinary ex officio control examination for the rights determined on the basis of a reduction in working capacity with remaining working capacity, partial or complete loss of working capacity, physical impairment or complete loss of working capacity of a family member of the insured person, on which it makes a finding and opinion. An extraordinary control examination shall determine whether the finding and opinion on which the final decision on the right is based was lawfully made and correct, based on the regulations in force at the time when the right was acquired. Based on the findings and opinions of the ministry (findings and opinions are issued by the expert examiner – reviewer, or the council of expert examiners – reviewers), the regional organizational unit of the Institute issues a decision. The Institute may suspend the payment of pensions and other benefits from pension insurance if the beneficiary of the benefit does not respond to an extraordinary control examination due to an unjustified reason. In that case, the Institute suspends the payment of pension or cash benefits from the pension insurance from the first day of the following month after the adoption of the decision on the suspension of payment. The payment of the suspended benefit will be re-established from the first day of the following month after taking the action necessary for further payment (after performing an extraordinary control examination).

An extraordinary control examination may be requested in the process of supervision and control of actions or resolutions in administrative matters in which a decision was made without the possibility of an appeal or an administrative dispute. Supervision and control may be carried out only once, within five years from the date when the decision on the right to financial benefits from pension insurance was delivered to the party.

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