CMS Expert Guide to Pensions in Croatia

Croatia has a three-pillar pension system. The first pillar is the basic state pension scheme, based on a pay-as-you-go system in which those currently working fund the benefits of those who have retired. The second pillar comprises supplementary pension plans funded by individual savings. The third pillar consists of voluntary pension savings.

Within the third pillar, there are two main types of pension provision: 

1. open private voluntary pension funds which are open to any individual who wants to participate; and (b) closed private voluntary pension funds which are only open to employees of certain employers, or members of particular unions or associations. The benefits they provide are in the form of defined contribution benefits.
2. closed private voluntary pension funds which are only open to employees of certain employers, or members of particular unions or associations. The benefits they provide are in the form of defined contribution benefits. open private voluntary pension funds which are open to any individual who wants to participate; and (b) closed private voluntary pension funds which are only open to employees of certain employers, or members of particular unions or associations. The benefits they provide are in the form of defined contribution benefits.

All employees must participate in the first and second pillars. Participation in third pillar arrangements is voluntary.

The basic pension plan is administered by the state. Pension fund companies can establish supplementary second pillar pension plans. Voluntary third-pillar funds are established by employers, unions and associations to benefit employees and members, and are operated by pension fund companies.

All pension plans must be operated by a pension fund company. There are strict rules governing who can incorporate such companies and stringent conditions for doing so.

There is a mandatory level of contributions for the basic and supplementary pension plans. However, there is no mandatory level of contributions for voluntary schemes.

Contributions to the basic and supplementary plans are deducted from employees’ salary and transferred to the pension fund by the employer. Contributions to open voluntary pension plans are paid personally by the member, while contributions to closed voluntary pension plans are paid by the sponsors.

7. What age are benefits taken?

Benefits from the basic and supplementary pension plans can normally be taken at age 65 for men and, currently (in 2025), at age 63 years and 9 months for women. The prescribed retirement age for women is progressively increasing by three months per year and will reach 65 by 2030.

Benefits from voluntary pension plans can normally be taken at age 55.

The costs of open private voluntary pension plans are borne by their members. The costs of closed private voluntary pension plans are borne by their sponsors.

There are no special registration requirements for tax purposes.

No tax is paid on contributions to the basic and supplementary pension plans i.e. they decrease the tax base for salary calculation. Individual’s contributions to voluntary pension plans are not subject to personal income tax (“PIT”) and are not tax deductible. Employer contributions to a voluntary pension plan are not subject to PIT up to EUR 67 per month, max. EUR 804 per year.

No. 

12. Are benefits taxed?

Pensions paid from the mandatory first and second pillar up to EUR 600 are not taxed. Pensions above EUR 600 and up to EUR 5,000 per month are subject to PIT at a rate of 15% - 23%, depending on the retiree’s place of residence. A portion of pensions exceeding EUR 5,000 is taxed at a rate of 25% - 33%.  

Benefits from voluntary (third pillar) pension plan are not taxed. 

Employer contributions to the employee’s voluntary pension plan are tax deductible for employer up to EUR 804 per year.

For the total amount of contributions paid in one year to the voluntary pension plan, insured person is granted a state incentive of 15%, but only up to a maximum amount of EUR 99.54.

Contributions to the mandatory first and second pillars are limited on an annual or monthly basis, depending on the pillar and the type of income.
Pensions from the first and second pillars are limited (calculation depends on the type of pension and other factors).

The pension fund companies are controlled by the Croatian Financial Services Supervisory Agency (HANFA). Financial books and documents of the pension fund companies must be made available for inspection by HANFA at all times. In case of a serious breach that has not been remedied, HANFA can deprive a pension fund company of its licence.

Pension fund companies have a duty to provide HANFA with a variety of information, including details of their financial operations, investments and shareholders at least once a year.

There is an obligation to submit regular reports to HANFA, along with a general requirement for pension fund companies to maintain liquidity. In addition, there are specific requirements for these companies to hold minimum capital as a safeguard against insolvency. If bankruptcy proceedings were initiated against a pension fund company, it would lose its authorisation to operate.

At a general level, direct and indirect discrimination is prohibited in employment relationships and contracts of employment. More specifically, closed private voluntary pension plans may be open either to all employees of a particular employer or to a specific professional group (e.g. engineers). Membership in a closed private voluntary pension plan cannot be a condition for union membership or employment. Additionally, discrimination within closed private pension plans on the basis of gender is prohibited.

There are no statutory provisions restricting the rights of early leavers to their pension benefits. Early leavers from open private voluntary pension plans can take their rights after age 55. Exceptionally, the rights can be exercised prior to age 55 in case of death or permanent disability / loss of legal capacity. The rights of early leavers from closed private voluntary pension funds can be exercised in accordance with their rules and law.

In the case of obligatory second pillar pension funds, the pension company must not offer any benefits to a union or another employee representative in order for them to persuade or demand from their members to join a specific fund.

In case of closed private voluntary funds, all employees who are members of a union sponsoring the fund must be able to join the fund. Also, joining the fund must not be a condition for the union membership.

Works councils or union representatives could have a right to be advised on implementing, changing or withdrawing a pension scheme.

A pension company from another EU Member State may manage a closed-end fund sponsored by one or more sponsors from the Republic of Croatia, without authorization required by HANFA, but it must comply with provisions of the labour and social security legislation of the Republic of Croatia.

There are no restrictions on switching private voluntary pension funds, apart from any set out in their rules. In the case of obligatory second pillar pension funds, switching can be accompanied by the payment of an exit fee, which can be up to (a) 0.8% of the aggregate savings in the first year of membership; (b) 0.4% of the aggregate savings in the second year of membership; and (c) 0.2% of the aggregate savings in the third year of membership. After three years of uninterrupted membership in the supplementary pension plan, switching must be free.