Ivan Serdar : We make significant steps to improve the pension system

From January 1st, the Amendments to the Pension Insurance Act provide better social security and reduce the risk of poverty for particularly vulnerable categories of low-income pensioners.

Operating as a public service for citizens, HZMO’s activity covers the implementation of mandatory pension insurance based on generational solidarity, procedures for granting entitlements to child benefits and national benefits for the elderly, explains Mr Ivan Serdar, for Diplomacy&Commerce. HZMO is also in charge of implementing the decisions of the Government of the Republic of Croatia on the payment of a one-time cash benefit to beneficiaries of child benefit and pension beneficiaries as part of a package of measures to mitigate the consequences caused by the COVID-19 epidemic, to mitigate the increase in the cost of living and energy prices, which i there were six in the past two years. An average of approximately 697,000 pensioners were covered by these measures, and HRK 1,855,062,400.00 and EUR 13,590.80 have been paid for this purpose so far. Also, approximately 125,000 beneficiaries of the child benefit for approximately 240,000 children are included, for which HRK 121,421,700.00 and EUR 1,619.11 have been paid so far.

  1. Last year was marked by one hundred years of pension insurance in the Republic of Croatia, what did the new century bring?
    The year behind us was an opportunity to celebrate one hundred years of pension insurance in Croatia and, based on the traditional values represented by this institution, highlight the goals and direction for the development of the pension system. Along with the adaptation of the business and financial system to the introduction of euro, this year will be filled with activities aimed at a direct implementation of the Act on Amendments to the Pension Insurance Act and an information campaign on the occasion. Also, HZMO continuously works to improve the quality of its services by investing in IT technologies, increasing the number of e-Services, better connecting with other stakeholders in the process of exercising rights from pension insurance, increasing the level of transparency, and ensuring the right to access information. Despite challenging times, we are continuously recording growth in the number of insured persons. For example, in January, we recorded over 1.6 million insured persons, which is the largest number since 2008, and this is an incentive for the system to develop more efficient business processes that will lead to the removal of administrative obstacles to the economy. Our goal is to implement the most modern tools and software solutions that will make the system more efficient, and on the other hand, enable timely detection and prevetion of possible abuses. The business model dominated by paper documentation and a bureaucratic approach to the user must change. Therefore, the focus is on creating a system of as much digitization as possible.
    2. How does HZMO adapt to requirements of modern business and public service provision? What challenges do you face concerning changes in the labour market?
    HZMO has a clear vision of transformation into a modern public institution with the use of modern technology and computerization, which guarantees legality, up-to dateness and quality of business. Digitization has made it possible for our users to exercise their rights HZMO pays pension benefits abroad for over 160 thousand beneficiaries in more than 50 countries more quickly. In 2023, we will focus on the further development of e-Services and the improvement of the user experience. HZMO leads in the number of available e-Services for citizens and the business sector. We have enabled online submission of almost all requests and the issuance of almost all certificates from our scope of work, and at the beginning of this year we also introduced two new e Services: registration and de-registration data, with which employers can electronically submit a request to display the registration and de-registration data for their employees and services related to the issuance of portable document A1. It is a certificate valid throughout the EU as a proof of the legislation that applies to a posted person. Also, it proves that such person is not obliged to pay contributions in other Member States where such person is posted to work. Which enables the submission of applications for exercising various rights from pension insurance, child benefit and national benefit for the elderly. Upgrading its level of digitalisation and further transformation of HZMO will be achieved through the implementation of ongoing projects- eHZMO and eArhiva. Development and implementation of a modular IT system for supporting HZMO’s main processes have been planned within the eHZMO project as the demanding and extensive activity, along with the introduction of a new ERP system. The investment is financed through the 2021 – 2026 National Recovery and Resilience Plan, and the value of the investment is EUR 17,081,504.01/ HRK 128,700,592. New IT solutions, partially established on artificial intelligence, will enable users to e-communicate with HZMO for most services. Also, after the end of the project, consolidation of business will allow a more proactive approach to users and the availability of services, regardless of working hours. Considering that HZMO continuously takes care of more than 1.6 million insured persons, more than 1.2 million pension beneficiaries and more than 120 thousand beneficiaries of child benefit, reliance on ITC is a necessity.
    3. The Act on Amendments to the Pension Insurance Act entered into force on January 1st, 2023, as well as the new model of survivors’ pensions, which caused great public interest. Can you tell us what are the news for citizens and how HZMO implements them?
    All survivors’ pensions were increased by 10 percent, and the lowest pensions by 3 percent. This increase in pension income covers approximately 500.000 pensioners. Also, the pensions of those receiving survivors’ pensions increased by 33.18 euros (HRK 250.00) on average. A significant step forward in the pension system of generational solidarity is the possibility of using two pensions – the personal one and part of the survivors’ pension of the deceased spouse/common-law partner in the amount of 27 percent. Enabling the cumulation of a part of survivors’ pension with the personal pension is a targeted measure of the Government of the Republic of Croatia, which aims to protect pensioners with lower pension incomes. This novelty is of particular importance at the point in life when a person lost a spouse/common-law partner or life partner, as a prevention of the risk of poverty. For those beneficiaries, the pension will increase by an average of 67.69 euros, or 510.00 HRK. In addition to the increase in pension amounts for beneficiaries of survivors’ pension and those with the lowest pensions, this pension reform also included an increase in the starting factor for two categories of pensioners – beneficiaries of oldage pension and the old-age pension for long-term insured persons for each month of longer stay on the labour market after reaching the pension eligibility by age. We are witnessing changes and new dynamics in the labour market. From the HZMO perspective, what is particularly interesting is the change since the 2019 pension reform, through the continuous encouragement of longer participation on the labour market and the expansion of the circle of retirees who can work up to half the full time and receive a pension without suspension of their payments. At the end of January, 23,365 pensioners were using this option. As of this year, it is possible to receive an old-age pension in the full amount in case of full-time or half-time employment of military insured persons, police officers, judicial police officers and professional fire-fighters.
    4. As a public institution whose operations entirely focus on users, how do you communicate with numerous users of your services?
    Information from our field of activity is often intended for a large number of citizens throughout the Republic of Croatia. We are particularly proud of the work of our Infocenter, where HZMO workers are available to all citizens at every working day by phone and via webform and they respond to all individual inquiries of our users in the shortest possible time. In 2022, more than 66,000 phone inquiries and more than 25,000 e-mail inquiries were processed through Infocentar. We are aware of the importance and scope of digital communication channels and we communicate with users via social networks. There is also communication and support related to digital services, such as HZMO Lana, e-Services (e-Usluge) for employers through which we provide employers with business support in fulfilling their obligations such as registration and  de registration of insurance, notification about the change in status occurred during insurance, notification of the commencement/cessation of operation of contribution payers, as well as changes in their data. In the event of particularly important news and changes for users, we also conduct various media campaigns, and here I must emphasize the importance of good cooperation with the media. The power of direct communication with users is unquestionable. Thus, on the occasion of the legal changes related to the new model of survivors’ pensions, in January, we held presentations in more than 40 nursing homes throughout the Republic of Croatia, to which the reactions were extremely positive.
  2. 5.You are also responsible for the implementation of EU regulations and international agreements on security. What type of services does HZMO provide to citizens of the Republic of Croatia who are accumulating or have accumulated part of their pensionable service abroad? In the segment of pensions, HZMO has cooperation and coordination with 40 countries, of which it applies EU regulations to 30 countries, bilateral social security agreements to nine countries and the Protocol on Coordination of Social Security to the United Kingdom. Since June 2019, HZMO has been participating in the Electronic Exchange of Social Security Information System (EESSI) among the Member States of the EU, the European Economic Area and the Swiss Confederation. As for the application of EU regulations, HZMO is not only a competent institution and a liaison body in the sector of pensions, but also in the sector of family benefits, i.e. child benefits, and determination of applicable legislation. In order to ensure the freedom of movement of labour force within the EU and prevent workers from remaining uncovered by the social security system, HZMO issues about 80 thousand A1 certificates on average per year.
  3. 6. What do you see as the main challenge in HZMO operations?
    It is precisely the concept of digitization and centralization, because such concept is necessary to improve processes for better internal efficiency and effectiveness and the quality of services to users. The challenge is also turning HZMO in the direction of administration restructuring, as well as new public management by the application of various tools, standards and methods for measuring quality in public administration. The most well-known norm is ISO 9001, which applies as a quality standard for both the private and the public sector. Process measuring is important because it is the only way to guarantee the management quality, with an emphasis on reforms and improvements. This is why we need to rise awareness of the importance of their introduction into the public administration system, which we will work on in the future. The fact that we received the Certificate according to the international norm ISO/IEC 27001:2013 for the Information Security Management System (ISMS) in February 2020 also shows that we are heading in the right direction. Data security for almost 3 million users – insured persons, pension and child benefit beneficiaries, which HZMO disposes of monthly, represents a valuable information asset that needs to be protected and secured in accordance with current legal regulations in the field of information security and personal data protection.