Research :: Finished research :: 2016-2020
The analysis of parameters from the social welfare system, pension system and situation in the labour market and EU practice in relation to the Project of the introduction of the national (social) pension

For: The Ministry of Labour and Pension System

Project manager: Predrag BejakoviŠ, Institute of Public Finance

A national or social pension in Croatia is needed for persons who do not fulfil the criteria for regular old-age pension from work and live alone or in households where no one is receiving a pension. The task consisted in preparation of the analysis on the advantages and disadvantages of the system of the social pension. The advantages are related to possibility to reduce poverty by elderly population, to enable administrative simplicity, to alleviate the stigma of poverty and to broaden the coverage of social assistance beneficiaries. Among the disadvantages are the possibility of lowering the rate of activity in the official economy and potentially distorting the equity of the pension system. Determining a fairly high amount of such a pension will most likely adversely affect the relationship with other pensions. This undermines the fairness of the pension system because similar pensions are provided to insured persons who worked for a number of years and/or had regular income and paid contributions and those who did not. The text ends with an estimate of the potential number of users and the necessary financial resources. In defining social pensions, there is a need to bear in mind its positive features, but also possible negative impacts on stronger motivation to work in the unofficial economy and the danger of distorting the equity of the pension system. In the possible adoption of the social pension, it is necessary to set clear criteria, what primarily means to determine the estimated age of potential beneficiaries, to define the income census and to propose the method for mean-test of the income and/or property.

Time: October – December 2018

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