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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.

They are:

  • Workers, officials and employees together with the persons employed in the Republic of Croatia who are specified as their equals in accordance with special regulations,
  • Persons selected or appointed to posts in public authorities, local authorities and regional authorities, if they receiving salary for their work,
  • Persons who undergo on-the-job training for work in accordance with special regulations,
  • Persons employed with international organisations with their seat in the Republic of Croatia who do not enjoy diplomatic immunity (foreign representative offices, international organisations and institutions), with international natural persons with the residence or seat in the Republic of Croatia or in diplomatic missions and consulates of foreign countries and international organisations or representative offices with the seat in the Republic of Croatia who enjoy diplomatic immunity, or persons privately employed with foreign nationals, provided that the EU directives on coordination of the social security system or international social security agreements do not specify otherwise,
  • Third-country nationals and stateless persons employed in the Republic of Croatia, provided that the EU legislation on coordination of the social security system or international social security agreements do not specify otherwise,
  • Posted workers who perform tasks for the employer with the seat in the Republic of Croatia and persons working in diplomatic missions or consulates of the Republic of Croatia abroad,
  • Seasonal workers in agriculture, according to the regulation governing the labour market,
  • The unemployed persons must be insured under the terms and during the period set forth in the employment regulations,
  • Persons who provide assistance and care to the Croatian Homeland War veterans and who receive remuneration for that work in accordance with special regulations,
  • Persons who are employed by an employer whose registered office is in a member state in which the regulations of the European Union on the coordination of the social security system are applied, and who do not have a registered company or branch in the Republic of Croatia and who, in accordance with the legal regulations of the European Union on the coordination of the social security system, applies the legislation of the Republic of Croatia,
  • Craftsmen, entered in the appropriate register,
  • Persons who carry out their professional activities independently in accordance with special regulations, such as lawyers, private health workers, artists, journalists, teachers, proof-readers, interpreters, midwives, representatives of nursing homes, natural persons whose professional activities include counselling and home assistance and care service and others,
  • Top athletes, if they do not have the compulsory insurance coverage on some other grounds,
  • Persons who are subject to income tax or profit tax on the basis of their self-employment in agriculture and forestry,
  • Persons who carry out activities that may be performed without the issued approval or registration, but can be considered as self-employment and durable, and are carried out with the intention of generating income or profit, and if they do not have the compulsory insurance coverage on some other grounds,
  • Persons who conduct household industry or a sideline in accordance with the Crafts Act, when they are not insured on some other basis and are not pension beneficiaries, except disability pension beneficiaries due to a partial loss of work capacity,
  • Persons who conduct agricultural and forestry-related activities as their only or main job, and are entered in the relevant registry as holders or members of family farms or in the relevant registry of forest owner as holders of members of family farms, i.e. forest owners and members of their family households,
  • Persons who are entered in the Farmers’ Registry
  • Members of boards of management and executive officers of companies, liquidators and managers of cooperatives if they do not have the compulsory insurance coverage on some other grounds,
  • Priests and other religious officials of a religious community that is registered in the records of religious communities kept by the ministry competent for the administration tasks, provided they do not have the compulsory insurance coverage on some other grounds,
  • At their personal request, the compulsory insurance coverage is provided for a parent who has parental responsibilities for a child during the first year of the child’s life, provided that the child is a Croatian national and provided that both the child and the parent have residence in the Republic of Croatia,
  • A parent as a family caregiver of a child with disability or of a disabled person in accordance with the social welfare regulations while such status is active,
  • A foster-parent who provides standard foster-care and a foster-parent who is specialised in foster care for children,
  • At their personal request, the compulsory insurance coverage is provided to the Croatian nationals employed abroad with international organisations and foreign employers, when they do not have the compulsory insurance coverage in accordance with the international regulations to which the international social security agreement refers and if they do not have the compulsory insurance coverage in accordance with the regulations of the European Union on coordination of the social security system,
  • At their personal request, the compulsory insurance coverage is provided to persons employed in the EU institutions, when they do not have the compulsory insurance coverage in accordance with the EU regulations,
  • Persons employed in the Republic of Croatia with the employers having their seat abroad, who do not have a registered branch-office in the Republic of Croatia,
  • Crew members of a ship engaged in international voyages, whose employer, ship-owner or company is either a national or foreign legal person, provided that the EU directives on coordination of the social security system or international social security agreements do not specify otherwise,
  • Persons who generate other income in accordance with income tax regulations and to which income a pension insurance contribution is paid in accordance with regulations on the 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?

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:

  • An old-age pension beneficiary or long term old-age pensioner who acquired their old-age pension and, immediately after retirement, continued to work up to half of the full time based on amended employment contracts, or gets employed up to half of the full time,
  • A beneficiary of early retirement who is employed up to half of the full time during the use of the right,
  • Beneficiaries of disability pension due to occupational disability to work, acquired under the previous Pension Insurance Act,
  • Beneficiaries of disability pension due to a partial loss of working capacity achieved according to the Pension Insurance Act,
  • Beneficiaries of an old-age pension acquired under special regulations on pension insurance rights of active military persons, police officers and authorised officials, under prior regulations on pension and disability insurance rights of military insurees, on service in the Armed Forces of the Republic of Croatia, on the rights of internal affairs employees, on the rights of persons employed in enforcing sanctions imposed for criminal offenses, economic offenses and misdemeanours, or under a regulation on special pension insurance rights of employees in demining operations, or under a regulation on rights of professional firefighters, who is employed in a part-time job (not exceeding half the working hours of a full-time position) while exercising their pension rights, and using 100% of the pension;
  • Beneficiaries of an old-age pension acquired under special regulations on pension insurance rights of active military persons, police officers and authorised officials, under prior regulations on pension and disability insurance rights of military insurees, on service in the Armed Forces of the Republic of Croatia, on the rights of internal affairs employees, on the rights of persons employed in enforcing sanctions imposed for criminal offenses, economic offenses and misdemeanours, or under a regulation on special pension insurance rights of employees in demining operations, or under a regulation on rights of professional firefighters, who is employed in a full-time job while exercising their pension rights, and using 50% of the pension;
  • Croatian Homeland War veterans, age pension beneficiaries who have reached retirement age and continue to work up to half of full-time or who are employed up to half of full-time during the exercise of their rights
  • Beneficiaries who perform seasonal work in agriculture according to the regulation regulating the labor market and other regulations regulating this issue in a different way, which expressly stipulate that the payment of the pension is not suspended,
  • Beneficiaries who receive other income or perform other activity (Article 17 of the Act, e.g. under the service contract)
  • Beneficiaries of a survivors’ pension or a part of a survivors’ pension who are employed in a part-time job (not exceeding half the working hours of a full-time position) while exercising the right to a survivors’ pension;
  • Beneficiaries of a disability pension due to professional or general incapacity for work under a special regulation governing the rights of Croatian Homeland War veterans and their family members, who, according to that regulation, are not obliged to be insured under pension insurance while acting as a manager of a cooperative, nor is their pension insurance redefined on that basis when they act as a cooperative manager without salary and compensation.

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 the person insured in compulsory pension insurance based on individual capitalized savings old-age pension and early old-age pension, disability pension due to general incapacity for work, disability pension due to total loss of working capacity or family pension after the death of the insured person under more favourable conditions than the conditions established by this Act, it is determined that the insured person was only insured under 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 with a pension supplement.

– The member of the mandatory pension fund with the professional work incapacity and with the right to a disability pension in accordance with a special regulation, or with a partial loss of work capacity with the right to a disability pension in accordance with a special regulation. The member exercises the right to a pension only in the compulsory pension insurance based on the generational solidarity, and the funds of the capitalised contributions remain on the personal account of the member until the rights are exercised to an early old-age pension, old-age pension or disability pension due to a total loss of work capacity.

–To an insured person who exercises pension insurance rights under a special regulation for more favourable conditions governing the pension insurance rights of active military personnel, police officers and authorized officials, or whose pension is determined according to that regulation, and who has not made the choice to remain in the compulsory pension insurance of individual capitalized savings within 30 days from the date of entry into force of the Act on Compulsory Pension Funds (Official Gazette, No 19/2014). He/she is entitled to a disability pension due to professional or general incapacity for work, i.e. an old-age or early old-age pension according to a special regulation, as if he/she was insured only in the mandatory pension insurance of generational solidarity.

– A member of the mandatory pension fund who suffers a partial loss of work capacity with the right to a disability pension or right to an early disability pension. The member may exercise their right to such pension only in the compulsory pension insurance based on the generational solidarity, and the total capitalised contributions on the personal account will be transferred to the state budget by means of the Central Register of the Insured Persons as of the date of exercising the right to pension.

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 at regional offices and 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?

The beneficiary of a disability pension is subject to a control check within 3 years of the stated reduction in working capacity, partial or total loss of working capacity as stated in the decision of the Croatian Institute for Pension Insurance. 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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