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 ensured only in the I pillar, all 20% of contributions is paid into that 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.

This includes:

  • Employed persons and persons with equal status (persons assigned to certain duties, etc.),
  • Persons who are on compulsory vocational training after completing their education,
  • Persons completing a professional training to work without establishing a working relationship,
  • Self-employed persons (craftsmen, trade individuals, lawyers, notaries, etc.)
  • Farmers,
  • Other groups of persons (caretakers of Croatian disabled war veterans, parents – caretakers, members of management boards, top athletes, etc.) and others.

An unemployed parent who performs parental duties during the first year of the child’s life also has compulsory insurance, at his or her personal request.

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

Payment of pension is suspended to a pension beneficiary who gets employed or engages in business activity on the basis of which pension insurance obligation is required. Exceptionally, pension is not suspended to:

  • Old-age pension beneficiaries who acquired their old-age pensions and, immediately after retirement, continued to work up to half of the full time based on amended employment contracts,
  • Old-age pension beneficiaries who acquired their old-age pensions and get employed up to half of the full time while using their pension rights,
  • Beneficiaries of disability pension due to occupational disability to work, acquired under the previous Pension Insurance Act,
  • Beneficiaries of disability pension due to partial loss or working capacity,
  • Beneficiaries who perform seasonal jobs in agriculture under the regulations on incentives for employment and other regulations regulating this matter in a different manner, which explicitly stipulate that pensions of such beneficiaries will not be suspended,
  • Beneficiaries who receive other income or perform other activity (Article 17 of the Act).

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

Application for insurance is submitted by the contributions payer, or the insured person when he or she is the payer of contributions. A person for which the payer of contributions does not submit an application or cancellation of insurance, may request from the Institute to issue a decision on the recognition or termination of the status of insured person.

If an insured person from Articles 10, 11, 12 and 13 of the Pension Insurance Act  does not file an application for insurance within 30 days from the date of the insurance obligation, the Institute shall ex officio issue a decision on the recognition of the status of insured person.

If the Institute does not recognize the status of insured person on the basis of an application for insurance, or if it recognizes the said status on a different basis, it shall issue an appropriate decision.

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, and the status of insured persons from Articles 11 and 13 of the  Pension Insurance Act  also ceases when they acquire the right to pension.

– 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 insured persons in the compulsory pension insurance based on individual capitalized savings, an old-age pension and early retirement pension, realised under more favourable terms than the conditions established by this Act, are determined as if the insured person was insured only within the compulsory pension insurance based on 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.

Obliged persons with more than three employees are required to submit applications electronically from 1 January 2014. In the transitional period, which lasted until March 2014, applications in paper form could be submitted at the Institute to enable the payers enough time to register into the e-applications system.

The acquired professional qualifications and skills are recorded at the Croatian Employment Service when a person registers there. The acquired professional qualifications can also be registered at the Croatian Employment Service in a way that the relevant documentation (diploma, certificate, etc.) is provided to the regional office of the Service.

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.

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.

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.

The Republic of Croatia has signed an agreement on social insurance with Bosnia and Herzegovina. 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 at regional offices and branch offices of the Institute and on the Institute’s web site.

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 month in which the insured person died.

This provision obliges an authorized expert, or an expert body and an authorized senior expert of the Institute, to establish a control check of insured persons within 3 years from the date of determined reduced working capacity, partial or complete loss of working capacity, which is mandatory as stated in the decision on the recognition of rights. The purpose of control checks is to examine the health and work ability of insured persons, and all beneficiaries of the acquired disability pension due to physical impairment are subject to such checks. Next control check may be determined during each control check. In case of insured persons whose reduced working capacity, partial or complete loss of working capacity was determined on the basis of medical documentation delivered by a foreign pension insurance holder who has not established the obligation of control checks of disability pension beneficiary, it can be determined that the said beneficiary is not subject to such control checks.

The Ministry responsible for the pension system and the Institute’s Centre for Medical Examination, during the procedure of supervision and control, may carry out control check ex officio related to the rights established on the basis of reduced working capacity or partial or complete loss of working capacity, physical impairment or complete loss of working capacity, of family members during the use of these rights, and express its findings and opinions. In the event that a beneficiary does not respond to a control check, without any justified reasons (illness, death of a family member, journey that cannot be postponed and other justified reasons), the payment of the pension or cash receipts from pension insurance will be suspended, and shall be re-established on the first day of the next month after the month in which the check was performed, but no longer than 12 months retroactively.

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