HANFA issues work authorisation to the Croatian Pension Insurance Company

Published: 16 July 2020

HANFA Board today granted authorisation to conduct business to the Croatian Pension Insurance Company (Hrvatsko mirovinsko osiguravajuće društvo), 100% owned by the Croatian Pension Insurance Institute.

This is the second pension insurance company in Croatia, and it will pay out pensions on the basis of savings from mandatory and voluntary pension funds. It will also be able to perform other activities related to pension insurance with the prior approval or authorisation issued by HANFA.

In the same Decision, HANFA issued work authorisations to members of the Board of the Croatian Pension Insurance Company - Renata Gecan Milek and Blaženka Križanac, for a five-year term.

The Croatian Pension Insurance Company will commence its operations with the share capital of HRK 23.1 million and it expects the gradual growth of assets as early as this year and profits in the coming years. In its business expectations it envisages a significant increase in the number of insured persons from the second pension pillar who will be eligible for payment of pensions.

The new pension insurance company is an important change in the pension system because in Croatia, after 17 years, we are moving from the current payment framework through the sole company to several companies. This offers insured persons who had savings in mandatory and voluntary pension funds the option of choosing the company with which they will sign a pension contract and which will be optimal in its offers and remuneration model and amount.

Competitiveness among pension insurance companies provides better risk distribution, which ensures long-term stability of the pension system, which grows on the basis of individual capitalised savings. The increasing number of citizens who will receive a pension particularly from the second pillar opens the opportunity for an even greater interest in establishing new companies in the coming years.

This trend is already being illustrated by the business data of the only pension insurance company so far that reflect demographic trends. At the end of March 2020, total assets of the pension insurance company increased by 61.5% and profits by 181.75% compared to the same period last year, mainly due to an increase in income from remittances of pension companies due to a 46% increase in beneficiaries and mandatory pension insurance contracts, where 86% of the total assets covering technical provisions of the existing pension insurance company are invested in government bonds. In the structure of pensions paid by the pension insurance company, individual old-age pensions are dominant.