Schneider S. M., Petrova T., Becker U. (eds.), Pension Maps: Visualising the Institutional Structure of Old Age Security in Europe and Beyond, 2nd ed., Munich: MPISOC, 2021.
The Slovenian Old Age Security System in 2020
The first act exclusively addressing old age social security in Slovenia entered into force in 1937 after the disintegration of the Austro-Hungarian Empire and the establishment of the Kingdom of Yugoslavia. Throughout Yugoslav history, including its development from a Kingdom to a Socialist Republic and Federation and up until its disintegration in 1991, competences in the field of social security seemingly shifted back and forth between the Federation and the individual republics. Responsibilities for social security were decentralised in 1974, with the enactment of the last federal constitution, allowing Yugoslav republics to pass their own legislations and to establish administrative bodies. However, the Slovenian pension insurance system was altered at a slower pace and the Yugoslav Act on the Fundamental Rights of Old Age Insurance of 1982 remained applicable in the country up until 1991. Still, the Slovenian social security system was already considered as practically autonomous when the country became independent in 1991. After the country’s independence, the first Pension and Disability Insurance Act (Zakon o pokojninskem in invalidskem zavarovanju, ZPIZ) was passed in 1992. Since then, the Act has been subject to two major reforms in 2000 (ZPIZ-1) and in 2013 (ZPIZ-2), with the latter being currently in force albeit having witnessed seven major revisions. As of now, ‘standard protection’ is provided by mandatory insurance for the majority of the Slovenian workforce in the public pension scheme. Professional groups with burdensome and hazardous jobs are additionally enrolled in mandatory occupational pension schemes providing them with a fixed-term early pension. Public pensions can be ‘topped up’ by voluntary participation in supplementary private pension schemes incentivised by the state through tax reliefs and tax return measures. ‘Minimum’ subsistence can be provided through general social assistance measures that are not part of Slovenia’s public pension insurance scheme.
Standard Protection in Old Age
The majority of economically active persons, including the self-employed, are mandatorily insured within the Slovenian statutory pension and disability insurance scheme (obvezno pokojninsko in invalidsko zavarovanje), without opting-out rights. Possibilities for opting in are only available under specific circumstances. The statutory insurance scheme is primarily contribution-financed and based on a pay-as-you-go (PAYG) system. The Pension and Disability Insurance Institute of Slovenia (Zavod za pokojninsko in invalidsko zavarovanje Slovenije) has the sole authority in operating the scheme. One feature of the Slovenian public pension scheme is its strong redistributive element. The calculation of benefits is based on a maximum amount of contributory earnings defined in the law, while no assessment ceiling is defined for insurance contributions. An additional special ‘yearly allowance’ (letni dodatek) is granted to all of the scheme’s beneficiaries with proportionately higher amounts granted to low pension recipients.
The supplementary pension insurance for hazardous jobs (obvezno dodatno pokojninsko zavarovanje) is a fully funded ‘occupational insurance scheme’ (poklicno zavarovanje) which provides a fixed-term early pension to persons formerly employed in hazardous jobs until reaching the statutory retirement age. Insurance in this scheme is mandatory (without possibilities for opting out or for voluntary insurance) for all persons performing burdensome or hazardous jobs or work which cannot be performed professionally after reaching a certain age (e.g. soldiers, police officers). The scheme is solely financed by employers’ contributions.1
Public pension benefits can be topped up by supplementary pension insurance (prostovoljno dodatno pokojninsko zavarovanje) in fully funded ‘private pension schemes’, either in the form of individual or collective insurance (the latter requiring participation of the employer). The supplementary pension insurance is operated by private pension funds and based on individual accounts. The state incentivises participation through tax reliefs and tax return measures. Further, private income saving schemes subject to civil law and insurance law regulation provide private life insurance plans and/or investment plans as another alternative for securing financial protection in old age.
Тhe statutory pension and disability insurance scheme offers a ‘minimum pension’ (najnižja pokojnina) for individuals with insufficient contribution-based pensions. The ‘minimum pension’ is not a separate pension scheme, but forms a special condition within the public scheme guaranteeing a minimum level of public pension benefits to those individuals who qualify for a public pension. With the ‘minimum pension’ and proportionally higher amounts of pension benefits provided in form of the ‘yearly allowance’ for low pension recipients, the avoidance of old age poverty forms an integral part of the statutory pension insurance scheme. Since the abolishment of the ‘state pension’ (državna pokojnina) in 2012, the public insurance scheme no longer provides a means-tested pension to persons who do not qualify for a public old age pension. Instead, a minimum subsistence level is mainly achieved through a subsidiary, tax-funded basic income support (sistem socialnih pomoči). This general social assistance scheme is available to the general population with insufficient financial means but also addresses the needs of the elderly through additional benefits, such as the possibility to obtain a permanent right to monetary social assistance and entitlement to a special social assistance supplement.
1 As the main function of the supplementary pension insurance for hazardous jobs is to provide a fixed-term early retirement pension instead of long-term financial security in old age, these schemes are not pictured in the Pension Map for Slovenia.