Experts against suspension of 2nd pension pillar

Prominent economic and legal experts have raised their voice against a plan to freeze the payment of contributions into the second pension insurance pillar, as suggested by an elected deputy of the Bridge party, Ivan Lovrinovic, explaining that the proposal outlined by Professor Lovrinovic in an interview with a local newspaper would be a short-term measure that would only seemingly stabilise the state budget but would fail to reduce the budget deficit.

"To suspend the payment of contributions into the second pillar and re-direct the funds from that pillar into the state budget is a short-term book-keeping operation that would only seemingly stabilise the budget. It would however, impose new obligations on the state budget in the coming years, regarding the payment of higher pensions from the state budget to future pension recipients. The result (of the suspension) would be contrary to what is needed for the permanent stabilisation of the budget and the reduction of the public debt, and that is, the permanent reduction of expenditure pressures on the budget," said the 12 signatories of an open letter.

Some of the 12 opponents of Lovrinovic's idea are former finance minister Martina Dalic, and Sandra Svaljek, Zeljko Potocnjak, Maruska Vizek, Predrag Bejakovic and so on.

They insist that the the freezing of contributions into the second pillar would pretend to give a solution for scaling down the deficit, however. "the total deficit would remain unchanged".

They also warn that the suspension of the second pension insurance pillar may lead to a further increase in the labour price since this measure would require higher contributions into the pension insurance, and consequently increase the tax burden on the younger generations.

The renowned experts suggest that the performance of the second pension insurance pillar might be enhanced through the cost-cutting and improvement of relations between the structure of investments and risks, while avoiding any threat to the basic concept of the pension reform, which they said is one of the few successful reforms conducted in Croatia in the past 15 years.

They also urge the Croatian Democratic Union leader Tomislav Karamarko, Bridge leader Bozo Petrov and Prime Minister-designate Tihomir Oreskovic to present their opinion on Lovrinovic's ideas.

Last update: Tue, 19/01/2016 - 13:56

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