In January 2000, the Pension and Disability Insurance Act, ZPIZ-1, came into force in Slovenia. This revision of the pension legislation has resulted in a gradual decrease of pensions under compulsory insurance. The decrease applies to both existing pension beneficiaries as well as all future beneficiaries. The concern for one’s own social security in the period after retirement has, with the implementation of three-pillar pension system, primarily become the matter of the individual.

Ageing of the population

With respect to the ageing of population, Slovenia shares in the fate of the majority of developed countries around the world. This, in turn, is the result of prolonged life expectancy and the lower or even negative birth rate. The ratio between the number of employees and the number of pensioners has been tipped in the favour of the latter and the trend is set to carry on into the future, only perhaps at a slightly reduced pace.

According to statistics, there were 100,000 pensioners in Slovenia in 1960, while today there are over 500,000. If this trend continues, the number of pensioners may grow to as much as 690,000 in 2025. At the same time, the number of employees, i.e. the payers into the compulsory pension insurance system, is falling. In 2000, there were 790,000 of such payers and according to some indicators their number may fall to 690,000 by the year 2025.

Key changes

Pensions from the compulsory pension and disability insurance (I. pillar), which is carried out according to the supplementary allowance system, will gradually become lower in the future.The fact that for numerous individuals pension annuities under compulsory insurance alone will not guarantee an appropriate level of social security in the years after retirement is becoming a very realistic threat. To offset this, the law laid out tax incentive supplementary pension insurance (II. pillar), which is based on the capital principle (during active life an individual is expected to set aside assets, which are paid out after retirement).Thus, supplementary pension insurance is becoming a very welcome, if not an essential solution indeed of the problems in connection with low pension annuities from compulsory insurance.

Measures introduced in the pension reform:

• The pension base is gradually falling (before the reform it was 85%, and is now falling to 72.5%).
• The required age for retirement is gradually rising.
• The number of years for the calculation of the pension base is gradually rising (before the revision of the law an average of 10 best successive years was applied, this is to rise to an average of 18 years).
• The ratio between the highest and the lowest pension cannot exceed 1 : 4.
• Changes in the adjusting of pensions.

All listed measures present a significant decrease of pensions especially for all future pensioners.