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The purchased supplementary pension scheme

WHAT IS A PURCHASED SUPPLEMENTARY PENSION?
 
A PURCHASED SUPPLEMENTARY PENSION is the difference between the amount of pension paid by the Croatian Pension Insurance Administration and the amount that would be payable if the prescribed qualifying period was completed and/or the prescribed retirement age attained; it is determined on the basis of the calculation made by the Croatian Pension Insurance Administration.
 
WHO IS IT INTENDED FOR?
 
THE PURCHASED SUPPLEMENTARY PENSION is intended for employees who meet the requirements for early retirement or old-age pension, as well as for those age-groups of workers that are not covered by the pension reform. It is a life-long severance benefit to compensate for the permanent reduction of pension owing to early retirement.
   
WHEN DOES THE SCHEME APPLY?
 
The Purchased Supplementary Pension Scheme is applied in companies undergoing restructuring and rationalisation processes, accompanied by inevitable staff reductions. The most frequently affected category of workers are employees facing retirement. Some employers use this scheme as part of their "regular retirement regimes", which are not aimed at reducing staff.
 
HOW IS THE SCHEME IMPLEMENTED?
 
Upon assessment of the financial justifiability of the scheme, the employer offers an employee to retire under the scheme. The employee then independently decides on the termination of his/her employment by consent and retirement with the purchase of supplementary pension.
 
THE CONTRIBUTION FOR THE PURCHASE OF SUPPLEMENTARY PENSION is made to Royal međugeneracijska solidarnost d.d. exclusively by employers on behalf of their employees, which means than an employee cannot purchase his/her own supplementary pension. As a way to avoid threatening his/her company's financial liquidity, the employer is not obliged to make the contribution as a one-off payment, but can pay it in monthly instalments (up to 36 instalments). Moreover, pursuant to the Income Tax Act, the amount of the contribution for the purchase of supplementary pension is fully exempt from tax. Upon termination of his/her employment, the former employee immediately starts to receive his/her supplementary (company) pension from the Royal međugeneracijska solidarnost d.d., together with the pension granted by the CPIA. The PURCHASED PENSION is actually a supplement to the pension paid by the Croatian Pension Insurance Administration, and it incorporates many of its features, e.g.:
 
·          it is  realised at the same time as the CPIA pension
  • it is paid out as a life-long monthly benefit
  • it is indexed twice in a year by the same percentage
  • it includes the entitlement to survivors' pensions after the beneficiary's death.
 
THE PURCHASED SUPPLEMENTARY PENSION SCHEME HAS BEEN ACCEPTED BY ALL SOCIAL PARTNERS
The Purchased Supplementary Pension Scheme has been successfully implemented for 20 years in more than 250 business entities in Croatia.
Several thousands of beneficiaries receive their purchased supplementary pensions on a regular basis and without delay.

Having proved to be a financially and socially acceptable model to provide for surplus labour in the specific economic environment of Croatia, the scheme has been awarded the quality mark "AUTHENTIC CROATIAN" and has acquired the title "Original Croatian Type of Severance Compensation".
 
The scheme is in line with strategic goals of the Government of the Republic of Croatia to achieve long-term social welfare and to provide incentives for economic growth, because providing for the eldest employees creates opportunities for new employment.
The Economic and Social Council has also recognised the general public interest in the implementation of the Purchased Supplementary Pension Scheme rating it as "a specific type of severance compensation and a model for resolving social problems of employees facing retirement".
 
The stated characteristics distinguish purchased supplementary pension from other types of pension benefits, as well as from life insurance and annuity insurance schemes currently emerging on the Croatian market.
 
Due to its pronounced social character, the purchased supplementary pension enjoys a special tax treatment, which is proved by a license and numerous awards granted to this scheme.
 
For further information on this scheme, feel free to contact us.
 
 
 
NAJNOVIJE VIJESTI
            O DOKUPU MIROVINE NA HTV-u
Dokup mirovine je doživotna otpremnina, odnosno dodatni mjesečni prihod uz mirovinu iz Hrvatskog zavoda za mirovinsko osiguranje. Namijenjen je zaposlenicima s ispunjenim uvjetima za prijevremenu starosnu ili starosnu mirovinu koji će u sporazumu s poslodavcem, unatoč ranijem umirovljenju i manjem stažu, ostvariti tzv. punu mirovinu. Dokupljena mirovina odgovara razlici između starosne ili prijevremene starosne mirovine ostvarene sukladno Zakonu o mirovinskom osiguranju i mirovine koja bi bila ostvarena da je navršena određena starosna dob i/ili navršen određeni mirovinski staž.