Who should be a member of the second pillar?

All persons who for the first time acquire the status of insured persons after 1 January 2002 (on the basis of employment, other income – “royalties”, self-employment, remuneration etc.) and are less than 40 years old are mandatory members of the II pillar of pension insurance.

Within one month from the date of acquisition of the status of insured person, such persons should choose a compulsory pension fund (hereinafter OMF) at any branch of the Croatian Financial Agency (FINA). The insured person submits an application to the compulsory pension fund (or a change of OMF) based on a valid identification document that has a photo (ID, passport, driver’s license) and Personal Identification Number (OIB).

From April 26, 2019, a new electronic service: Mandatory Pension Fund (registration / change) is available.

OMF registration / change

The service includes the registration or change of mandatory pension company and mandatory pension fund category through the Internet (credential level 4).

If they do not select the compulsory pension fund (hereinafter OMF) within that time period, Regos will, in accordance with the regulations, assign them to one of the existing OMFs (category B until October 1, 2019, and category A on wards). Upon registration (personal choice or official schedule), the opening of the personal account of OMF member is initiated.

When registering the OMF at Regos counter at FINA offices, you should request an ePASS to monitor the balance on your personal account, and request and receive electronic documents issued by Regos via Internet.

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20% of funds from the insured person’s gross salary (from the basis for contributions calculation) goes to pension insurance each month, in a way that 15% of the funds are paid to the Croatian Pension Insurance Institute (I pillar) and 5% to the personal account of the insured person in the compulsory pension fund (II pillar).

Regos allocates the collected contributions funds in the amount of 5% of gross salary for compulsory pension insurance based on individual capitalized savings to the compulsory pension fund (OMF). If a member of the OMF ceases to pay contributions to the pension fund, he or she remains a full member of the OMF to which he or she had paid contributions. An insured person can only be the member of one OMF and may have only one account in the fund.

The system is completely transparent because the insured person at any time knows how much funds he or she has on his or her personal pension account in the OMF.

THERE ARE CURRENTLY FOUR PENSION COMPANIES THAT MANAGE MANDATORY PENSION FUNDS

PBZ CROATIA OSIGURANJE d.d. – Company engaged in managing mandatory pension funds

Allianz ZB d.o.o. – Company engaged in managing mandatory pension funds

Raiffeisen – Raiffeisen Mandatory and Voluntary Pension Fund Management Company,dlc

ERSTE d.o.o. – Company engaged in managing mandatory pension funds.

 

Regarding the investment strategy and portfolio structure, there are three categories (A, B and C) of  pension funds, and those categories are managed by the same pension company. Investment risk is the lowest in the C category and highest in the A category.

Various categories of mandatory pension funds also differ according to the age of the insured person, i.e. the reference day. According to Article 93 of the Mandatory Pension Funds Act, the insured person may be a member of the A category pension fund if he or she has 10 or more years to the reference date. An insured person may be a member of the B category pension fund if he or she has five or more years to the reference day.

Regos will of its own motion assign the insured persons who have less than five years to the reference date to the C category mandatory pension fund within the same pension company.

CHARACTERISTICS OF FUND CATEGORIES BASED ON THE LEVEL OF INVESTMENT RISK AND EXPECTED RETURNS

A category – high risk category – fund assets are invested into shares that are related to other types of financial assets(e.g. state or corporate bonds) and have higher expected returns over a longer period. The members of this fund can be persons with at least 10 years until meeting the age requirements for an old-age pension;

B category – moderate risk category – this category has a moderate investment strategy with long-term moderate returns. It is intended for employees with five or more years until meeting the age requirements for an old-person pension;

C category – lowest risk category – this category has the lower expected returns over a longer period, as assets are invested exclusively in low-risk investments (e.g. fixed-term deposits or bonds). It is intended for employees who have less than five years until meeting the age requirements for an old-age pension.

CHANGE OF FUNDS/CHANGE OF CATEGORY

Members of mandatory pension funds may change their fund at any Financial Agency office in the same way that they applied for a mandatory pension fund. The outgoing benefit when changing the mandatory pension fund is calculated according to the provisions of the Mandatory Pension Fund Act:

  • In the first year of membership – 0.8 % of the amount in the member’s personal account
  • In the second year of membership – 0.4 % of the amount in the member’s personal account
  • In the third year of membership – 0.2 % of the amount in the member’s personal account.

After three years of continuous membership in the same mandatory pension fund, the member can change the fund free of charge.

A member of the Fund may annually change the fund’s category only within the same pension company in the calendar month in which he or she was born .

A member of the obligatory pension fund may move to a pension fund managed by another pension company if more than 14 days have passed since the previous change of the pension fund. It can be done regardless whether the previous change resulted from changing the category of a pension fund managed by the same pension company or changing the pension fund managed by another pension company.