The evasion of retirement insurance contributions in Croatia

Abstract

The aim of this paper is to investigate the evasion of retirement insurance contributions in Croatia. This problem can be connected to the weakness of the administration and the inefficacy of the competent bodies, to high rates of contributions and a general lack of trust in the public pension system based on intergenerational solidarity. One of the most important determinants of evasion is the benefit deriving from the insurance, that is, the relation between the contributions and the pension. Insured persons who have worked their whole lives and have reached old-age pensions have an unfavourable ratio of contributions paid in and amount of pension received, because funds for pensions have been redistributed to several other categories. After a brief explanation of the pension reform, we draw attention to certain legislative inconsistencies connected with retirement insurance. The paper closes with a proposal for possible measures for the improvement of collection.