HANFA head: Higher pensions to be based on mandatory, voluntary pension saving

NEWS 20.09.2021 11:04
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Croatian Financial Services Supervisory Agency (HANFA) Management Board chair Ante Zigman has said that compulsory and voluntary pension funds are the only way to increase pensions in the future, announcing new, more risky forms of investment but ruling out investments in cryptocurrencies.

Speaking in an interview with the HRT public broadcaster on Sunday evening, Zigman said that the decision not to abolish the second pension pillar was a good one, adding that the savings in those funds at the end of July 2021 totalled HRK 127.6 billion, and that citizens held an additional HRK 7.3 billion in voluntary pension funds, the so-called third pension pillar.

Alternative forms of investment, greater supervision by HANFA

Asked if pension funds managed the money appropriately and if in the future pensions would increase, Zigman said that there were alternative ways of investing in pension funds and that legislative amendments would probably be introduced to enable other forms of investment in pension funds that would bring higher returns.

He noted that those investments were riskier and would require greater supervision by HANFA.

Asked if pension funds would be able to invest in cryptocurrencies, Zigman said that it would not be possible.

Decision not to abolish second pension pillar good

Zigman stressed that with the current ratio of workers to retirees of 1.23 to 1, there was a loot of room and need for new forms of investment by pension funds.

He noted that the second pension pillar was a guarantee of higher pensions. The European Commission and the World Bank have made analyses that show that the coverage of pensions with contributions to the first pension pillar would be full by 2070, while now it stands at 60%.

“In other words, a combination of mandatory and voluntary pension funds is the only way to have higher pensions in the future,” he said, noting that Croatia’s decision not to abolish the second pension pillar was a good one, ensuring the current large amount of capitalised savings in citizens’ individual accounts.

“I think that abolishing the second pension pillar is out of the question and that it is not possible,” said Zigman.

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