ZAGREB (Reuters) - Croatia backed down on changes to its pension system on Friday as parliament reinstated a retirement age of 65 after leading trade unions staged protests against a rise to 67.
Like many European countries, Croatia has an aging
population, and parliament approved a government proposal in December to raise the retirement age to 67 from 2033 instead of 2038 as previously planned, for both men and women. It also aimed to trim pensions for people who retire early.[nL8N1YC205]
The move, meant to ensure the sustainability of the pension system, was praised by rating agencies and the European Commission.
However, three top trade unions collected more than 700,000 signatures to force a referendum on the retirement age. Rather than call a vote, Croatia’s government backed down. [nL5N26A24T]
Labour Minister Josip Aladrovic told parliament that the government would seek legal ways to allow those people who want to be able to work until the age of 68 to do so.
The changes also cut an annual pension reduction level to 2.4% from 3.6% for each year of early retirement.
Croatia’s public pension scheme costs more than 40 billion kuna ($5.98 billion) a year, but that cannot be covered by worker contributions and the budget has to finance about 17 billion kuna from taxes annually to cover the shortfall.
Reporting by Igor Ilic; Editing by Alexander Smith