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Recent Developments in Croatia's Pension Insurance: Investment Challenges and Opportunities

This report outlines recent developments in Croatia's pension insurance landscape, focusing on the 2nd and 3rd pillars established since 2002. It highlights the basic structure, current statistics, and legal changes affecting mandatory and voluntary funds. Key updates include a decrease in the minimum number of members required, adjustments to management fees, and liberalized investment limits, allowing for derivatives and other financial instruments. The document also emphasizes the role of ongoing government support and potential growth in occupational funds.

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Recent Developments in Croatia's Pension Insurance: Investment Challenges and Opportunities

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  1. Croatia – recent developments

  2. New Investment Challenges in Pension InsuranceCroatia – recent developmentsSofia April 15 2004Toni Luksic

  3. Croatia – recent developments Contents • Basic information & statistics • Description of the system • Current statistics • Legal changes

  4. Croatia – recent developments Basic information • 3 pillar system – World bank model • 2nd & 3rd pillar started in 2002 • DC system - 5% of gross salary • Central register of members • Avoided initial registration problems • Lower operational costs for Management companies • Stable contributions flow into mandatory funds

  5. Croatia – recent developments Statistics - 2nd pillar31 March 2004 • 4 mandatory funds • 1.102.435 members • Net assets HRK mil 5.214 about 695 million EUR • Rate of return between 7,19% and 8,05% p. a.

  6. Croatia – recent developments Mandatory pension funds investment structure

  7. Croatia – recent developments Statistics - 3rd pillar • Allows for open and occupational funds • 4 funds (open) operational: • cca 11,000 members • Net assets HRK mil. 38,6 • 1 occupational fund started operating in March 2004 • Product with high potential: • Income tax break • Government subsidy

  8. Croatia – recent developments Legal changes • Fine-tuning of mandatory part • Major changes in voluntary part

  9. Croatia – recent developments Changes for mandatory funds • Decreased min. number of members • Decreased exit fee • Success fee abandoned: • Increased management fee to max. 1.2%

  10. Croatia – recent developments Changes for voluntary funds • Separated accumulation and benefits phase • Min. number of members decreased • Liberalized investment limits

  11. Croatia – recent developments Recent changes of investment restrictions and investment criteria • Derivatives (up to 30% of assets) • Futures • Options • Currency forward and swap • Structured bonds • Internal procedures must be approved by Hagena

  12. Croatia – recent developments Contact info Agency for Supervision of Pension Funds and Insurances - Hagena Gajeva 5, 10000 Zagreb, Croatia Tel. +385 1 4891 888 Fax. + 385 1 4891 878 E-mail: info@hagena.hr www hagena.hr

  13. Croatia – recent developments Thank you!!!!

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