All persons under the age of 40 who, for the first time after 1 January 2002, acquire the status of insured persons in the pension insurance (either on the basis of employment and self-employment or other income, etc.) must select their compulsory pension fund within six months from the date of acquiring their status of insured person. Those persons need to select their compulsory pension fund at any branch office of the Croatian Financial Agency (
FINA). An insured person submits an application to the compulsory pension fund based on a valid identification document that has a photo (ID card, passport, driver's license) and Personal Identification Number (OIB). If an insured person fails to select his or her compulsory pension fund within the prescribed time period, REGOS will
ex officio assign one of the existing B category compulsory pension funds to such person. Upon registration (personal choice or official schedule), the opening of the personal account of the compulsory pension fund’s member is initiated. An insured person can only be the member of one compulsory pension fund and may have only one personal account in the compulsory pension fund.
According to the
Act on Compulsory Pension Funds (“Official Gazette”, no. 19/2014), a compulsory pension fund is established by a pension company that manages such fund on its behalf and for the joint account of pension fund members.
There are currently four pension companies that manage compulsory pension funds, namely:
- PBZ CROATIA OSIGURANJE d.d. for compulsory pension funds management,
- Allianz ZB d.o.o. company for compulsory pension funds management,
- Raiffeisen company for compulsory and voluntary pension funds management d.d. and
- ERSTE d.o.o. - company for compulsory pension funds management.
Compulsory pension fund, considering investment strategy and portfolio structure, may fall under category A, B or C, and the said categories are managed by the same pension company. The investment risk should be the lowest in category C funds, and the largest in category A funds.
Compulsory pension funds of different categories also differ according to membership limits regarding age, i.e. the reference date. The reference date is the date of meeting the age requirements for the acquisition of the right to an old-age pension under the Pension Insurance Act. According to Article 93 of the Act on Compulsory Pension Funds, an insured person may be a member of category A pension fund if he or she lacks 10 or more years until the reference date. An insured person may be a member of category B pension fund if he or she lacks five or more years until the reference date.
Insured persons who lack less than five years until the reference date will be assigned to category C compulsory pension funds within the same pension company by REGOS
ex ufficio.
Members of compulsory pension funds may change their fund at a counter in any FINA branch office in the same way as when applying for compulsory pension fund. The following fee is charged when changing the compulsory pension fund, according to the provisions of the Act on Compulsory Pension Funds:
- In the first year of membership the fee amounts to 0.8% of the amount in the member's personal account,
- In the second year of membership the fee amounts to 0.4% of the amount in the member's personal account,
- In the third year of membership the fee amounts to 0.2% of the amount in the member's personal account.
After three years of continuous membership in the same compulsory pension fund, change of the fund is free of charge.
A member of the compulsory pension fund may change the fund's category once every three years, in the year when he or she completes years of age that are divisible by three (e.g. when he or she is 30 years old, 33 years old, etc.) in the calendar month in which he or she is born (for example, persons who reach 33 years of age on 15 January may change their fund during that month).
A member of the compulsory pension fund may transfer to a pension fund managed by another pension company if more than 14 days have passed since the previous change of the pension fund, regardless of whether the previous change resulted from the change of pension fund with regard to the category managed by the same pension company or the change of pension fund managed by another pension company.
When applying to a compulsory pension fund at REGOS counter in any FINA branch office, insured persons may request an
e-Pass to monitor the balance and turnover on their personal accounts and request and receive electronic documents issued by REGOS via Internet.
Characteristics of fund categories by investment risk and expected returns:
Category A - risky category because the fund assets are exposed to shares in relation to other types of financial assets (e.g. government bonds or corporate bonds) and with higher returns expected over a longer period. Members of this fund may be persons who lack at least 10 years until they meet the age requirements for acquiring the right to an old-age pension
Category B - moderate risk category characterized by a more moderate investment strategy with long-term moderate returns. This category is intended for employees who lack five or more years until they meet the age requirements for acquiring the right to an old-age pension
Category C - category with the lowest risk and lower expected returns over a longer period since assets are invested exclusively through low-risk investments (e.g. time deposits or bonds). This category is intended for employees who lack less than five years before they meet the age requirements for acquiring the right to an old-age pension.
