Social Institutions Support Programme

Transcription

1 Social Institutions Support Programme Format For reporting on the present state and future of social security in the countries participating in the SISP Local project officer: Mihovil Rismondo 1

2 1. Introduction: concept and sources of social security Croatian social security system is mostly insurance based, with the exception of family benefits (children allowance, doplatak za djecu) and the social care (assistance, socijalna skrb) schemes which are universal, assistance based and means tested. Three main insurance-based schemes may be identified: Pension insurance (mirovinsko osiguranje), which covers risks of old-age, invalidity, employment injury and occupational disease, and death, is divided in three pillars; the first and the second are mandatory the first is pay-as-you-go (intergeneration solidarity) insurance, the second is mandatory insurance based on individual capitalized savings; the third pillar is voluntary insurance based on individual capitalized savings. Health insurance (zdravstveno osiguranje), covers the risk of temporary incapacity for work due to sickness or maternity and health care (covers also employment injury and occupational disease); Unemployment insurance (osiguranje za sluaj nezaposlenosti), which covers the risk of unemployment, also promotes employment and the rehabilitation process of unemployed persons disabled at work. The main principles of the three schemes mentioned are that these are general, public and compulsory schemes covering the insured persons based on contributions paid by employees, employers and self-employed persons and financed partly by the State. They are based upon solidarity of members (except the second pillar pension funded insurance). There are no special occupational schemes. The principle of solidarity applies between members but the pension insurance scheme recognizes some special categories of insured persons (persons engaged in arduous and unhealthy jobs, parliamentary deputies, military officers and judicial officials, Croatian defenders engaged in Homeland War) who are covered by special regulations under the general pension scheme. Two main social security schemes may be identified: Social care (assistance, need) scheme encompasses both social services and benefits in cash; Family benefit scheme encompasses children allowance scheme, day care state subsidies and tax relief scheme based on the number of children raised by the taxpayer. These two are universal schemes covering all Croatian citizens, financed from the State Budget and based on the assistance principle (means tested). The Croatian Constitution proclaims Croatia as a social state (Article 1), based on social justice (Article 3) and promotes, among all human rights, the right to social security (Article 14), on equal base for all persons insured or living in Croatia, irrespective of gender, race or nationality. It provides for legal and collective agreements regulation of the right to social security and social insurance of employed persons and their family members (Article 56). It also provides for the legal regulation of the rights relating to giving birth, maternity and childcare. The State specially provides for unemployed and disabled persons (Article 57). Health care is guaranteed to every person 2

3 according to law (Article 58). The State is providing the protection of children, youth and maternity (Article 62). 2. Administrative organization The overall social security system is institutionally organized and implemented at the national level by state bodies. In accordance with each of the separate laws, the representatives of workers and employers are actively involved in the work of Management Boards of particular bodies, funds and other institutions, such as the Croatian Pension Insurance Institute (Hrvatski zavod za mirovinsko osiguranje), the Croatian Health Insurance Institute (Hrvatski zavod za zdravstveno osiguranje), Croatian Employment Institute (Hrvatski zavod za zapošljavanje), the Fund for Occupational Rehabilitation and Employment of Disabled Persons (Fond za profesionalnu rehabilitaciju i zapošljavanje invalidnih osoba) Pension Insurance 2.1.i. First Pillar: General and legal supervision - the Ministry of Economy, Labour and Entrepreneurship and the Ministry of Finance are competent. The Ministry of Economy, Labour and Entrepreneurship (Ministarstvo gospodarstva, rada I poduzetništva) - Directorate for Labour and Labour Market (Uprava za rad I tržište rada) and Directorate for Pension and Invalidity Insurance (Uprava za mirovinsko i invalidsko osiguranje) - performs administrative and other tasks in the field of employment and labour market, and pension and invalidity insurance. It provides for legal regulation of employment and work, labour market and pension and invalidity insurance. This Ministry also monitors, analyses and examines social and other trends, elaborates opinions about the actual legal positions, participates in negotiations with other countries in the field of social security agreements. It supervises the implementation of laws and other legal regulations, the general acts and instructions for the work of the competent Institutes in so far as it relates to the implementation of employment policy and pension insurance. The Ministry of Finance (Ministarstvo financija) performs administrative and other tasks related to analyses and forecasts of macroeconomic trends on the basis of which fiscal policy is formulated and the State Budget drafted, preparation of the basis for financing public needs and drafting the State Budget and extra-budgetary funds, as well as local budgets, budget consolidation, drafting proposals for financing public needs of units of local government and self-government, execution of the State Budget, budgetary controls, tax system and tax policy, supervision and inspection in the field of taxes, customs and other public revenues, organization of chance and entertainment games, and other tasks prescribed by the Act on the Structure and Scope of Work of Ministries and Government Administration Organizations and in accordance with the Decree of the Structure of the Ministry of Finance. Organization and management of the first pillar pension insurance: Croatian Pension Insurance Institute is a public institution and has the status of a legal person with public authority in respect of supervising the collection of contributions and giving pension 3

4 insurance decisions. It submits reports on its work to the Ministry of Economy, Labour and Entrepreneurship, as well as to the Croatian State Parliament, to insured persons and to pension insurance beneficiaries, for at least once a year. The Statute of the Institute was delivered by the Management Board, subject to approval of the Croatian State Parliament. The Management Board has 13 members appointed by the Government for the period of four years: 4 members at the proposal of Minister of Labour, 3 members at the proposal of insured persons associations, 3 members at the proposal of pension beneficiaries associations and 3 members at the proposal of employers associations. The Government appoints director and his assistants. Administrative activities are performed by the administrative service of the Pension Insurance Institute that consists of one central unit and of several local units. Tax authorities collect all kinds of social security contributions. Guarantee in case of non-liquidity: State Budget. 2.1.ii. Second Pillar: General supervision: Ministry of Economy, Labour and Entrepreneurship and Ministry of Finance. Legal Supervision: the Agency for the Supervision of Pension Funds and Insurance. Organization and management: During the current phase of contribution payment Pension Companies establish and manage the Pension Funds as their assets. Pension Companies do not handle the individual accounts of the insured persons - the contributions are paid to Pension Funds through the mediator organization Central Registry of Affiliates that handles the second pillar individual accounts of the insured. Currently there are 5 Pension Funds registered. Pension companies are private profitable companies, but the regulations for their functioning are very severe, for the purpose of security and stability. The phase of the acquisition of pensions will start in some 5-10 years, along with the start of payment of the first 2 nd pillar benefits. Insured persons will conclude individual contracts with a Pension Insurance Company they choose, and will transfer the funds saved from the Pension Fund to the Pension Insurance Company. The contract will define the type of pension payment. Administrative activities: Central Registry, Pension Companies, Pension Insurance Companies. Procedure is defined by the Law and the contract concluded between the insured person and the Pension Insurance Company. Guarantee in case of non-liquidity: State Budget. 2.1.iii. Third pillar: General supervision: Ministry of Economy, Labour and Entrepreneurship and Ministry of Finance. Legal Supervision: the Agency for the Supervision of Pension Funds and Insurance. Organization and management is the same as for the second pillar. There exist 4 Voluntary Funds in Croatia, because development of the capital market is rather slow and there is rather weak interest for voluntary insurance Health Insurance 4

5 General supervision: Ministry of Health and Social Welfare (Ministarstvo zdravstva i socijalne skrbi). Under the Act on the Structure and Scope of Work of Ministries and Government Administration Organizations, the Ministry performs administrative and other tasks in the field of social welfare and social policy system, special security of families where relations between family members, and especially the spouses, have been disrupted, security of children and adults under guardianship, co-ordination of monitoring the commitments taken on under international conventions on the security of the interests and rights of children, security of disabled persons, and also administrative and other tasks related to the health care and health insurance system, monitors and improves the health situation and health needs of the population. Croatian Health Insurance Institute (Hrvatski zavod za zdravstveno osiguranje) is competent for the implementation of the basic insurance. It also implements the additional insurance, but from the year of 2004 the private insurance companies were also included in the implementation of the additional insurance. Administration: Croatian Health Insurance Institute through one Central Directory, 20 District Services and 87 Regional Services. Croatian Health Insurance Institute is governed by the Managing Council appointed by the Government and consisted from representatives of medical profession, of the insured and employers. The Statute of the Institute that is given by Managing Council, is subject to the approval of the Government. The Institute is managed by the Director General and his Deputy who are nominated by Minister of Health and Social Care and appointed by the Government. The Director General nominates 6 Assistants who are appointed also by the Government and 2.2. Work injury and occupational diseases schemes Croatia does not have a special work injuries and occupational diseases scheme. These entitlements are regulated under general programs for pension and disability insurance and under general sickness insurance and medical care scheme. The main characteristics of work injury benefits are that they are granted under more favorable conditions and in higher amounts than the rest of benefits. Disability pension benefits are financed by general contributions for pension and disability insurance. According to the legislation applicable up to the end of 2001, the health insurance benefits in case of work injuries and occupational diseases were financed by the employer who was liable to insure himself against that risk at a private or state owned insurance company. From 1 January 2002, the Health Insurance Institute has and manages a special fund aimed to finance work injury and occupational disease benefits. The funds aimed to cover the consequences resulting from work injuries or occupational diseases are financed by the special contribution rate (0,50%) calculated from the same base as the regular contribution for basic health insurance. These funds are separately managed on a special bank account. The Health Insurance Act provides for the possibility of increasing, decreasing or even the suspension of the contribution liability of employers, depending on the statistics and other data on the frequency of the events of work injuries and occupational diseases at every individual employee Unemployment insurance General supervision: Ministry of Economy, Labour and Entrepreneurship. 5

6 Croatian Employment Institute is the public governmental institution. It has Central Service, 22 District Services and 92 Local Services. The Croatian Employment Institute (Hrvatski zavod za zapošljavanje) is managed by the Management Committee of tripartite composition appointed by the Government: 3 members are delegated by the Minister of Economy, Labour and Entrepreneurship, 3 are employers representatives and 3 members represent Trade Unions. Director general is delegated by the Minister of Economy, Labour and Entrepreneurship and appointed by the Government. As part of its activities, the Croatian Employment Bureau makes decisions about the rights of unemployed persons, makes payments of benefits under the rulings that have been issued, monitors, analyses and examines economic, social and other trends, employment, hiring and unemployment, and their interaction, on the basis of which it proposes the measure for the employment promotion, keeps records on unemployed persons, mediates in employment between employers and job seekers, monitors the situation regarding vacancies, filling these vacancies, collaborates with employers, performs the tasks related to employment of Croatian citizens in foreign countries and the exercise of their rights, issues work permits to foreign citizens and stateless persons in order that they may work in the Republic of Croatia, and other tasks in accordance with the Institute s Statute. Fund for Occupational Rehabilitation and Employment of Disabled Persons (Fond za profesionalnu rehabilitaciju I zapošljavanje invalidnih osoba) is a public institution competent for the development and improvement of occupational rehabilitation and employment of disabled persons. It is also competent for financing and co-financing of institutions and work centers for disabled persons, co-financing programs for maintaining the level of employment of disabled persons, and other tasks provided for the Fund's Statute. The Croatian Health Insurance Institute runs the Register of disabled persons. Institutions for occupational rehabilitation are Working Centers and Security Workshops Family Benefits (Children Allowance) General supervision: Ministry of Family, Croatian Defenders and Intergeneration Solidarity (Ministarstvo obitelji, hrvatskih branitelja I meugeneracijske solidarnosti). This Ministry performs professional and administrative tasks relating to the care for family well-being, implementation of pro-natal population policies, children allowance, fostering the establishment of counseling and family centers and co-ordination of their activities. It also performs administrative and other tasks relating to the legal position, making decisions on legal position and other issues affecting disabled Homeland War veterans and peace-time disabled military persons, demobilized veterans and members of their families and families of killed, deceased, interned or missing Homeland War veterans, except for those for whom other ministries and government administration organizations are responsible. Administrative activities (Children Allowance): Croatian Pension Insurance Institute Need General supervision: Ministry of Health and Social Welfare. Public governmental institutions: Social Welfare Centers (centri za socijalnu skrb), homes for children without adequate parental care, homes for physically and mentally impaired persons, homes for 6

7 children and youth with behavior disorders, homes for mentally ill adults. Social welfare activities are also carried out by religious communities, associations (NGOs) and by the administration bodies of local and regional self-government units.welfare centers are linked to local municipalities by the obligatory co-operation in the local level and the welfare centers are responsible directly to Ministry. 3. Personal scope of application 3.1. Pension Insurance First Pillar (Pay- as- you- go) Employees and other persons deemed as such: salaried civil servants, full time volunteers and apprentices after schooling (regardless of whether they receive salary), unemployed persons according to employment laws and regulations, top sportsmen, clergy, members of management boards of trading companies, parents until the child attains 1 year; persons insured under specific circumstances only in case of disability or physical damage. Croatian citizens employed in the territory of Croatia at foreign diplomatic or consular missions or in personal service of foreign citizens. Foreign citizens and stateless persons employed in Croatia. Subject to a claim: Croatian citizens employed abroad or on board of foreign vessel who are not compulsorily insured under a social security agreement applied between Croatia and the host country, as self-contributors. Self-employed persons - craftsmen, caterers, carriers, merchants and similar; selfemployed persons who follow professional activity; and self-employed farmers if the agriculture or forestry is their only or main activity. Persons who earn occasionally based on temporary service contract, regardless of being employed, unemployed or in receipt of pension. Second Pillar (Fully Funded Insurance) Persons insured under the first pillar are additionally compulsorily insured in the second pillar. These are the newly insured after 2002, or those under age 40 in 2002 who were already insured in the first pillar (also persons between ages 40 and 50 in 2002 who opted to be compulsorily insured in the second pillar). Persons who were insured in the first pillar and older than 50 in 2002 or between ages 40 and 50 in 2002 who did not choose the second pillar insurance - remained subject only to the first pillar insurance Health Insurance Basic compulsory insurance for both cash sickness benefits and medical care: employed persons in all sorts of activities, public services and governmental bodies, persons employed abroad by foreign employer if they are not covered under that foreign country s health insurance scheme, self-employed persons who follow the occupational or agricultural activity or who are engaged in forestry; full - time apprentices if wage or salary earners including persons working as volunteers; military servicemen; persons who are sent by their employer to attend vocational training or postgraduate study abroad. Basic compulsory insurance in case of medical care only: farmers, pensioners (also beneficiaries of pensions paid from abroad) and persons entitled to occupational 7

8 rehabilitation, unemployed persons registered with the Croatian Employment Institute, persons up to 18 and after only while in regular education, up to 26 years of age the latest, after that period only if full-time student (covered from State Budget); disabled war veterans, dependents of the person insured, disabled persons without resources for subsistence, and self-contributors. Voluntary and supplementary insurance a additional insurancediadditional insurance based on the contract between the person already compulsorily insured under the basic insurance and the agency competent for the application of the additional insurance (the competent agency is the Croatian Health Insurance Institute, but from the year of 2004 the insurance companies also provide for the additional insurance). Additional insurance covers the difference between the actual price of services and the part remunerated by the Croatian Health Insurance Institute under the basic compulsory insurance or for provision of wider scope of benefits than that granted under the basic compulsory insurance. The Health Insurance Act stipulates the basic insurance health standard, under which some benefits are entirely covered by the Croatian Health Insurance Institute, and some are covered partly (from 85% to 25%, respectively). The difference to the actual price of partly covered benefits is borne by the additional insurance, but in case that a person is not covered by the additional insurance (no contract concluded), such difference in price is borne by the insured persons by themselves (unless exempt from paying that difference according to the basic insurance regulations: children until age 18, some categories of disabled persons, Homeland War veterans under special conditions, the poor under the means test, the unemployed if registered in the proper terms, family members of persons employed abroad if not comprised by the foreign country insurance, persons engaged in public work, voluntary fire-brigades, in rescuing the lives and property and in similar special occasions, those entitled to the compensation allowance for physical damage from the Pension Insurance scheme). Private health insurance, as a kind of voluntary health insurance, is established by the contract between an insurance company and an individual. This contract covers wider scope of entitlement than those provided under the basic health insurance or higher standard of services, as well as special entitlements that are not covered by the basic health insurance Unemployment Insurance Unemployed persons capable of work, aged 15-65, registered with the Croatian Employment Institute, who are not proprietors or 51% majority proprietors of an enterprise or any other legal person or agricultural estate; who are not engaged in selfemployment activity; and who are not regular scholars of students Family benefits Children allowance: eligible are parents (including foster-parents, tutors, stepparents, grandparents) who are Croatian citizens resident in Croatia (for at least 3 years prior to the claim), of children whom they effectively support and who live with them in the same household, until the child attains the age of 15, or after that date if in regular secondary schooling, or if handicapped. Unless otherwise provided by the international agreement, parents of children being Croatian citizens who reside abroad, or being 8

9 foreign citizens or stateless persons who reside in Croatia are not entitled to children allowance. Parents being foreign citizens having the permit for permanent settlement in Croatia are eligible Need All Croatian Citizens and stateless persons in need residing in Croatia are entitled to cash benefits under the means test. 4. Risks and benefits 4.1. Old age and survivirship The first pillar pay-as-you-go scheme is regulated by Act on Pension Insurance, Official Gazette No 102/98, 127/00, 59/01, 109/01, 147/02, 117/03, 30/04 and 177/04. The second pillar compulsory insurance and the third pillar voluntary insurance are regulated by Act on Compulsory and Voluntary Pension Funds, Official Gazette No 44/99, 63/00,103/03 and 177/04, and Act on Pension Insurance Companies and Pensions Payment Based Upon the Individual Capitalization, Official Gazette No 106/99 and 63/00). First Pillar Pensions The acquisition of all first pillar pensions depends, besides the age conditions, on qualifying (mostly insurance) periods completed, except of benefits acquired on the basis of occupational injury or disease, for which it is sufficient to have the insurance status at the time of contingency. There are no means tested benefits nor benefits conditional upon the residence or citizenship. There is a protection of beneficiaries provided in the form of minimum pension and the restriction in the form of maximum pension. Old-age Old-age pension (starosna mirovina): Age requirement - 65 (men) or 60 (women) and 15 years of qualifying periods. No maximum qualifying period. Transitional period from the year of 1999 to 2007 for introducing the new conditions instead the old ones which were defined by the legislation applicable until 31 December by adding six months of age to the age of 60 (men) or 55 (women) until the age 65 (men) and 60 (women) and by decreasing parallelly the minimum qualifying period condition from 20 to 15 years, six months per calendar year. Introduction of the age condition for the previously provided maximum qualifying period of 40 years (men) or 35 years (women), starting with 55 (men) and 50 (women) in 1999 and ending with 60 (men) or 55 (women) in 2007, after which the full qualification period will be cancelled. The amount of the first pillar regular old-age pension depends on the level of wages earned in calendar year of employment, as put in relation to average wage of all employed persons, and on the length of qualifying periods completed. Pensions are defined in monthly rate. Value point equals 1 if the insured person has earned the annual salary/wage equal to the average salary/wage of all employed persons in the same calendar year. Earnings are taken into account from 1 January 1970, and for insurance periods completed by 31 December 1969 the average points are taken. Related to the work history period, the transitional period from the year of 2000 to 2009 is applied starting with ten most 9

10 favorable earnings years in 1999, adding 3 earning years per every calendar year from 2000 to 2009, so that in the year of 2009 the average value points will be determined on the basis of 40 years of insurance, and after that year on the basis of the full insurance period completed, which means that the most favorable earnings period will be cancelled by then. Actual value of pension is included in the pension formula. It is determined by the Management Board of the Pension Insurance Institute on 1 January and on 1 July of every year on the basis of the statistical data, in the form of the adjustment rate based on change in average gross wage/salary of all employees in the preceding half year period as compared to the half year period before it. It is used both for the adjustment of pensions in the process of their calculation to the day of the beginning of the entitlement, and for the indexation of already acquired pensions and other pension benefits. Anticipatory pension (prijevremena starosna mirovina): Age 60 and 35 years of qualifying periods (men), or age 55 and 30 years of qualifying periods (women). Transitional period from 1999 to by adding six months of age per calendar year in relation to qualifying conditions under the legislation applicable until 31 December 1998 (Old legislation: age 55 and 35 years of pensionable periods men or age 50 and 30 years of pensionable periods - women). The amount is reduced for 0.34% for every calendar month of anticipation (4.08% for 1 year or 20.4% for maximum of 5 years of anticipation). Survivorship Survivors pension (obiteljska mirovina). Survivors pension is granted to eligible survivors after the death of the insured (employed or self-employed person) or after the death of a pension beneficiary. It is provided if the deceased person was a pension or occupational rehabilitation beneficiary, or an insured person who has completed at least 5 years of insurance or 10 years of qualifying periods, or who has met the disability pension requirements in respect of the length of qualifying periods completed. If the death is a consequence of work injury or occupational disease no minimum qualifying period is required. Eligible survivors are the following family members: spouse (widow or widower) aged 50 1, or caring for children entitled to survivors pension, or disabled; widow or widower aged at least 45 at the time of contingency acquires the entitlement upon reaching 50 years of age. Divorced spouse is also eligible under the same conditions as the spouse, under the condition that he/she is entitled to alimony. Children are eligible for survivors pension until the age of 15 without any further conditions, but after that age - until 18 if unemployed, until the age of 26 if in regular education. Disabled children are entitled while the disability exists, even for lifetime. Persons deemed as children: marital, extramarital and adopted children of the deceased person; but stepchildren, grandchildren and other children (brothers and sisters of the deceased) only if supported by the 1 Transitional period for widows whose spouse died before 31 December 1998 (before the introduction of the new legislation) and who attained the age of 40 before his death: from 2002 to 2008, starting with age 47 in 2002 and adding 6 months of age per year until age 50 in 2008 (introduced by the Act on Amendments and Supplements of the Act on Pension Insurance («Official Gazette» no 147/02). 10

11 deceased. Parents of the deceased person are also eligible if they were supported by the deceased. The base for survivors pension is the hypothetical old-age or invalidity pension if the deceased person was insured at the time of contingency (employed or self-employed). The amount of such survivors pension base is determined on the basis of at least 21 years of qualifying period if the deceased person actually completed a shorter qualifying period 2. Survivors pension after the death of pension beneficiary is determined from the monthly amount of pension payable in the month in which the death occurred. The final amount depends on the number of eligible persons - from 0.7 for one family member to 1.0 for four or more family members. Survivors pension for double orphans: pension factor is applied to summarized pensions of both deceased parents. Pension benefits are paid in monthly rate, retroactively for the preceding month. Except for occupational invalidity pension and the compensation allowance for physical damage, pension benefits are not payable to beneficiaries during their engagement in employment or self-employment activity. All benefits are payable abroad under the terms of actual reciprocity or in accordance with international social security agreements, and no payment or benefit level restrictions are applied. Minimum pension (najniža mirovina).pension beneficiary is entitled to minimum pension if his/her regularly determined pension (old-age, invalidity or survivors) is lower than the amount of minimum pension. It is defined in a value per year and multiplied by the number of years of the qualifying period completed. For qualifying period up to 30 years it amounts 0.825% of the average gross salary of all employees in the year of 1998 indexed up to the day of the entitlement. For qualifying period exceeding 30 years it amounts % of the average gross salary of all employees in the year of 1998 indexed up to the day of the entitlement. It is adjusted in the same way as all other pension benefits. Persons who are not eligible: beneficiaries of the occupational invalidity pension while in employment or self-employment. Maximum pension (najviša mirovina). It is regulated by a special law that complements the Pension Insurance Act. The limitation refers only to the amount of the average value point (the ratio between the person s actual and national average salary/wage) defined by the law per year of the qualifying period completed. In this way the amount of the maximum pension of beneficiaries who have earned fairly high salaries/wages would be lower to those who have completed less qualifying periods than to those with more qualifying periods completed. First pillar basic pension (old-age and anticipatory pension). In the first pillar the basic pension is the alternative for the regular pension for persons who will be parallelly entitled to the second pillar pension. So the basic pension will be granted from the first 2 If the survivors pension is assessed after the death of an employed or self-employed person (and not after the pension beneficiary) we have to calculate a hypothetical old-age or invalidity pension, depending of the age of the deceased insured person, which would represent the base for calculation of the survivors pension. For persons who died before completing the minimum of 21 year of qualifying period, such a hypothetical old-age or invalidity pension has to be based on the insurance period of at least 21 years, it is the minimum period defined by the law. Survivors pension is then assessed depending on the number of eligible persons (see bellow). 11

12 pillar only to persons who would be insured in both pillars. Those who will remain insured only in the first pillar will be entitled only to the regular pension. Persons insured in both pillars will be entitled to basic pension on the basis of qualifying periods completed in the first pillar after the introduction of the second pillar insurance, from which the second part of the pension will be payable at the same time, based on the additional contribution paid for the same periods of insurance 3. As the second pillar will produce the earliest benefits in some 5-10 years, the first basic pensions will appear at that time. Invalidity and survivors pension after the insured person s death will not be determined in the amount of basic pension but in the amount of the regular pension on the basis of full insurance period - as though all the contributions have been paid only to the first pillar, and the contributions paid to additional compulsory pension insurance for old age will be transferred to the Pension Insurance Institute. Exceptionally, if the first pillar basic invalidity or survivors pension, when aggregated to the second pillar additional invalidity or survivors pension, would result in an amount more favorable than the amount of the sole regular pension, only the first pillar payable pension will be the basic pension and not the regular pension, and the person will be parallelly entitled to the respective amount of the second pillar invalidity or survivors pension only if the insured person would complete quite a long individual savings period under the second pillar insurance before the day of disability or death. Basic pension = 0.25% of national average gross salary of all employed persons in the preceding year for every year of qualifying period completed after the introduction of the second pillar insurance % of actual value of pension for personal points realized after the introduction of the second pillar insurance. Second Pillar Pensions. Persons insured in both the first and the second pillar will be entitled to the second pillar pension (old-age or anticipatory age pension as a rule, invalidity or survivor s pension exceptionally) from the day on which a person would satisfy the first pillar pension requirements. The second pillar pension will be defined depending on the sum of funds saved (annuities with interests, augmented for the return rate), and the actuarial rules (unisex tables of life expectancy) Incapacity to work Temporary incapacity to work Legislation: Health Insurance Act, Official Gazette No 94/01, 88/02, 149/02, 117/03, 30/04) and health care (177/04, Health Care Act, Official Gazette No 121/03). Cash benefit entitlement (including maternity benefit) is granted to insured persons (see coverage for cash sickness benefit) during the sick or maternity leave, from the moment of contingency until the temporary incapacity for work lasts, under certain restrictions based on the list of diseases and the related maximum time of the sick-leave. 3 It is not possible to have the basic pension without the second pillar pension, because the latter is the compensation for the difference between the regular pension and the basic pension, which is much lower than the regular pension. 12

13 Temporary incapacity for work (privremena nesposobnost za rad) may occur because of the work related and non-work related injury or disease, medical treatment, medical examination, hospitalization; isolation of carriers of an infection; escort of a patient who is sent to medical treatment or medical examination in a nearest place; nursing ill spouse or a child; pregnancy and maternity leave (maternity benefit) until the child is 6 months; additional maternity leave until child is 1 year old, respectively 3 years old in case of twins, third and following children; adoption leave; part-time work until baby attains the age of three, as the case may be. The sick-leave is opened by a designated doctor in a primary health care institution and it lasts until the doctor of primary health care declares a person capable of work, but the period of sick-leave may not exceed the maximum duration determined by the list of diseases and the maximum period of the sick-leave as related to each kind of an injury or desease. It may be prolonged based on the decision of the specially appointed Medical Commission until the person concerned is expected to be cured, but after the maximum of six months (plus two months necessary for the Croatian Pension Insurance Institute to give the decision on invalidity pension) the designated doctor submits the claim for invalidity pension at the Croatian Pension Insurance Institute. If authorized medical specialists of the Croatian Pension Insurance Institute assess, and based on such an assessment the competent Croatian Pension Insurance Institute gives the decision, that the person concerned needs to be additionally cured, the person s sick- leave may be prolonged for the additional period of six months, and the procedure described may be repeated. Once the Croatian Pension Insurance Institute gives the positive decision on the entitlement to invalidity pension, the sick-leave is cancelled and the person becomes the invalidity pension beneficiary. Sick leave may be granted also for nursing of family members living in the same household with the insured person: for nursing of child under the age of 7 up to 12 working days; for nursing of child aged 7-18, and for nursing the spouse up to 6 working days. Exceptionally, it can be prolonged due to specific circumstances. Other entitlements: reimbursement of costs incurred in connection with health protection, the newborn child assistance and the funeral grant. These entitlements are no longer considered to be the basic insurance rights. They will continue to be provided by the Croatian Health Insurance Institute temporarily, until being separately regulated by other special provisions. Cash benefit assessment (naknada za bolovanje). Cash benefit replaces earnings for all days of the sick-leave. Minimum 70% from sickness benefit base; maximum 100% from the base, but under the restriction of the maximum benefit proscribed by the Croatian Health Insurance Institute Decision. Always in the amount of 100% during: sick-leave due to work injury or occupational disease; sick-leave caused by wound, injury or illness being the direct consequence of the participation in the Homeland War; sickleave due to sickness or complications that result form pregnancy and childbirth; obligatory and additional maternity leave and part time work until the child attains 1 year of age (3 years of age in case of twins, third or more children); time of nursing a sick 13

14 child under the age of 3 years; sick-leave due to transplantation of tissues and organs to other persons. Sickness benefit base is the average wage received in 6 months preceding the month of contingency. If the sickness benefit is paid for a period longer than three months, the base is adjusted for wage changes at the same employer, if the increase is higher than 5%. Period of receipt of sickness benefit may not exceed the consecutive period of 6 months. Employer bears the cost of the benefit for the first 42 days of the sick-leave; after that the cash benefit is covered by the Croatian Health Insurance Institute maximum to the period prescribed for the respective individual category of disease, and also during the two months after the termination of that period, and during that latter period the assessment of working ability must be made by the authorized body of the Pension Insurance Institute. The sick-leave due to work injury or occupational disease is treated in the same way - the entitlements consequent to the work injury or occupational disease have been returned within the framework of the basic health insurance system. Receipt of maternity cash benefit is limited to: obligatory maternity leave until child attains 6 months (may begin 45, but has to begin 28 days before estimated delivery); additional maternity leave - the period from the expiry of the obligatory leave until child attains the age of 1 year for the first and the second child; for twins, third or more children until the children attain the age of Long term benefits Invalidity pensions Legislation: Act on Pension Insurance, Official Gazette No 102/98, 127/00, 59/01, 109/01, 147/02, 117/03, 30/04 and 177/04.) Disability (occupational/partial or total) is defined as a permanent reduction or loss of the ability to work, caused by a non-work related injury or disease, or by a work related injury or disease. There is no special work injury scheme - the benefits based upon the work injury or occupational disease is granted from the first pillar general pension scheme under more favorable conditions. Work Injury or Occupational Disease (higher benefits than for non-work related injury or disease, no qualifying period required) Occupational Disability Occupational rehabilitation with wage compensation (under age 50) or Occupational invalidity pension (partial pension) (after age 50 or before Total Disability Full invalidity pension (amount based on minimum of 40 hypothetical years of qualifying period) Permanent Disability Non-work related Injury or Disease (minimum 1/3 of working life covered with qualifying periods) Occupational Disability Occupational rehabilitation with wage compensation (under age 50) or Occupational invalidity pension (partial pension) (after age 50 or Total Disability Full invalidity pension (amount based on actually completed qualifying period, age lower than 65 ) (before age 30 1 year of qualifying period regardless of working life coverage) 14

15 that age if the reduced ability to work is not likely to be improved by occupational rehabilitation) before that age if the reduced ability to work is not likely to be improved by occupational rehabilitation) Occupational disability (profesionalna nesposobnost za rad) is permanent reduction of the capacity to work for more than one half (51%) as compared to physically and mentally healthy person of the same or similar education and capacity, caused by changes in health that can not be cured. Residual ability to work entitlements: occupational rehabilitation or invalidity pension for occupational disability. Total disability (opa invalidnost) - permanent loss of the ability to work due to changes in health that cannot be cured. Total disability entitlement: full invalidity pension. The disability is assessed by authorized medical experts. The control cheque is to be undertaken for at least every 4 years. Residual ability to work entitlements (preostala radna sposobnost) occupational rehabilitation and salary compensation (under age 50) until the employment in another adequate job, or during an unemployment period of 12 months after the completion of occupational rehabilitation (24 months if the disability is caused by work injury or occupational disease). Salary compensation is assessed in the amount of invalidity pension for occupational disability, but in the amount of full invalidity pension for total disability based on the hypothetical period of at least 40 years of qualifying period if the occupational disability is caused by work injury or occupational disease. Invalidity pension for occupational disability (invalidska mirovina zbog profesionalne nesposobnosti za rad) (after age 50) is assessed in higher amount if the disabled person is unemployed (80% from the full invalidity pension), in decreased amount if he/she is employed (half of the pension for the unemployed); in higher amount if the disability was caused by work injury or occupational disease, amount also depending on the fact whether the disabled worker is employed (half of the pension for employed disabled persons. Invalidity pension (invalidska mirovina zbog ope nesposobnosti za rad): granted on the basis of the total and permanent loss of the ability to work because of the incurable changes in health occurring prior to age 65 (men and women). The insured person must have the insurance coverage during at least 1/3 of working life period (more favorable conditions for persons under the age of 30 or 35). Insured persons disabled before age 30 1 year of qualifying period is required for the entitlement to invalidity pension. The insured periods requirement for the entitlement to invalidity pension of insured persons disabled before age 35 those with higher degree of education need at least 2 years of coverage and those with the university degree of education need at least 1 year of coverage. Working life period - the full number of years between age 20 (23 for persons with post-secondary qualifications, 26 for persons with university qualifications) and the day of disability. 15

16 Invalidity pension due to work injury or occupational disease - the entitlement is not conditional upon the length of qualifying periods completed. The amount of pension is calculated in the same way as the old age pension except that the degree of disability is included in the pension formula, as well as some hypothetical period of insurance is added (a respective part of the potential full working life period). Invalidity pension awarded on the basis of work injury or occupational disease is determined on the basis of the hypothetical period of insurance of at least 40 years of qualifying periods, if the actually completed insurance period is less than 40 years, or on the basis of the actually completed insurance period if longer than 40 years. The same applies to survivors pension if the death of insured person was the consequence of occupational injury or disease. Compensation allowance for physical damage (novana naknada zbog tjelesnog ošteenja). Physical damage is defined as the loss or a serious injury of an organ or a body part, regardless of the fact whether it led to disability or not. The entitlement to compensational allowance may be acquired if the physical damage of at least 30% is the consequence of work injury or occupational disease. The list of physical damages is the integral part of the Act on Physical Damages List, The entitlement is acquired in course of the insurance (employment or self-employment) and utilized for lifetime; it does not depend on qualifying periods completed. The allowance amount depends on the degree of physical damage, according to which it is assessed in percentage from the base. The base is determined by general enactment of the Pension Insurance Institute Unemployment Legislation: Act on Employment Mediation and Entitlements during Unemployment, Official Gazette No 32/02, 86/02 and 114/03). Rights of disabled people to occupational rehabilitation and employment (legislation: Act on Occupational Rehabilitation and Employment of Disabled Persons, Official Gazette No143/02 and 33/05). Unemployment benefit entitlement: previous consecutive employment period of 9 months within the last 24 months; registration with the Croatian Employment Institute. Persons whose employment stopped as the consequence of his/her willful misconduct or by agreement are not entitled to such benefit. Subject to previous period of employment completed, the duration of the entitlement is defined from 78 to 390 days. Unemployed persons who have previously completed 35 years (men) or 30 years of employment periods (women), maintain the entitlement until the engagement in new employment or until the other canceling condition arises. Transitional period from 2002 to 2007 is applied, raising the employment condition for one year per year from previously provided conditions of 30 employment years (men) and 25 years (women) (e.g., in 2005 the employment period applied is 28 years for women and 33 years for men. Duration of benefit is extended: to women during pregnancy and for the period until the child attains one year, if this entitlements does not coincide with another similar entitlement from another scheme; during temporary incapacity for work up to 3 months. Unemployment benefit assessment (novana naknada za nezaposlenost): benefit base - the last tree months average wage/salary; 80% from the base during the first 78 days, 16

17 60% during the rest of the entitlement period. Minimum HRK maximum HRK monthly. Unemployment assistance (pomo za zapošljavanje): unemployed persons who undergo vocational training program and who are not eligible for unemployment benefit are entitled to unemployment assistance. It amounts HRK monthly. Entitlement to pension insurance (pravo na mirovinsko osiguranje). Unemployed persons, who are entitled to unemployment benefit and satisfy the retirement age condition, are entitled to be insured under the pension scheme until the completion of qualifying periods for the retirement, but not longer than 5 years. Also, unemployed mother is entitled to pension insurance until her child attains one year, if her employment stopped after the delivery but before the child attained one year. Other entitlements (ostala davanja): reimbursement of vocational training expenses (naknada troškova obrazovanja), lump-sum assistance (jednokratna pomo) (to persons employed out of their place of residence by mediation of Employment Institute), reimbursement of traveling and removal costs (naknada troškova putovanja I preseljenja) (also in case of employment out of the regular place of residence), children s allowance (doplatak za djecu). Rights of disabled persons to occupational rehabilitation and employmen 4 t. Act on Occupational Rehabilitation and Employment of Disabled Persons contains the provisions about the following rights of disabled persons: - Right to occupational rehabilitation (pravo na profesionalnu rehabilitaciju), and - Right to employment and work under the general and special conditions provided (pravo na rad pod opim I zaštienim uvjetima). Disabled person is defined as a physically and mentally impaired person, with permanent or at least 12-month reduction of ability to satisfy his/her basic living needs. The reduction of work capacity is assessed in relation to non-disabled person of equal or similar age, equal or similar education, equal or similar work conditions, in equal or similar skilled work, if the reduction is permanent or temporary, in the duration of at least 12 months, reduction of possibility to qualify for work, as related to the ability to work and participate in the labour market under the general conditions Health care Maternity benefit (naknada za majinstvo): until the child attains six months - minimum 1,600 HRK to maximum of 4,250 HRK monthly; after that, until child attains one year, maximum 2,500 HRK, and from age 1 until age 3 it is 1,600 HRK. Unemployed mothers HRK during the entire maternity leave. New-born child assistance (pomo za novoroene): HRK (lump-sum payment). Funeral grant (naknada pogrebnih troškova): HRK (lump-sum payment). 4 Rights of disabled persons to occupational rehabilitation and employment are subbranch of the unemployment insurance. 17