Good Finance Croatian Pension System

For the first time, we have more retirees than workers

The Minister of Labor and the Pension System, Mr Mrsić , appeared to be following the information provided by bloggers and commentators on the air, and mentioned at the conference on a “Healthy and secure future – how to secure it” the completely uncertain and unsustainable state of the existing pension system.

The current ratio of workers to retirees has sadly fallen below

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More specifically, the minister realized that Croatia needed as many as 2.5 million workers to pay off the existing mass of pensions effectively. The minister also touched on the long-standing unsustainable ratio of almost 1: 1 workers and pensioners.

Mrsic handles the figure of 1.2: 1 in favor of workers, and the latest statistics from the Pension Insurance Institute say that this ratio is 1.15: 1 at the moment.

However, for objective reasons it is necessary to demolish this image. The current ratio of workers to retirees has sadly fallen below 1: 1. It is 0.88: 1.

Therefore, for the first time, Croatia has more retirees than workers.

Private and public sector

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Specifically, politicians always talk about the ratio of “workers” and “retirees” because it is convenient for them, and they do not differentiate between private sector workers and public sector workers. The difference, as far as pensions are concerned, is huge.

In the statistical reports published by the HZMO, it is not possible to accurately decompose insureds into budgetary and extra-budgetary ones .

In order for a government employee to be in a position to pay his or her pension contribution, the budget from which he or she is paid must first earn an income equal to each other.

If there were no money in the state budget, that state employee would not be able to pay his pension contribution, apart from receiving a salary. The aforementioned state budget obligations must be met by private sector employees who make up a set of real taxpayers.

Tax liabilities

Government employees, of course, also pay income tax, but in order for them to be able to fulfill this obligation, it must be preceded by the taxation of extra-budgetary users.

The same applies to VAT or any other legal obligation of this kind, including contributions to the pension system.

Government employees do not pay taxes and contributions effectively, and the calculation of those items they find on their payroll is merely an accounting formality.

Direct payment

In other words, they are the point of classification in the flow of money from the state budget to the HZMO account, and even without the presentation of these formal values ​​on the payment list, this transfer would have exactly the same outcome had it been done directly.

When the number of state employees (budget beneficiaries) is subtracted from the total number of insured persons in the pension system, we get the number of real taxpayers, which follows this much less favorable ratio, which was 0.96: 1 already in 2010 (included with state employees was 1. 23: 1), in 2011, 0.93: 1 (1.20: 1 with them), and in March 2014 it fell to the mentioned 0.88: 1 (with 1.15: 1).

In the years of economic growth, which would have been until 2008, the number of insured persons grew slightly faster than the number of pensioners.

 

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