Slovenian pensioners are one of the most neglected groups of Slovenian citizens under the government of Robert Golob. The government is now working on making some changes to retirement legislation – the so-called pension reform, which was classified and hidden in the crucial run-up to the European elections.
We are also witnessing a number of deceptions by those in power. The truth will be very painful.
The government has prepared a longer period of years for the pension base, which means a lower average pension base, so pensions will be lower than under current legislation.
At the same time, the government is misleading the public that the longer pension base period (40 years minus 5 worst years) will be compensated for by an increase in the vesting percentage, but the two percentage points they are proposing are far too few to compensate for this.
Instead of 65.5 percent as currently proposed, the vesting percentage should be 68 percent (to compensate for more years included in the base), but the government is opposed to this.
The changes were classified and hidden before the European elections
The ruling coalition consisting of the Freedom Movement party (Gibanje Svoboda), the Social Democrats (Socialni demokrati – SD), and the Left (Levica) already adopted the pension reform starting points in April. They were classified – and the label of classified was only removed from the dossier on the 19th of June, ten days after the elections to the European Parliament. The pension reform proposal is expected to be tabled in the legislative process in early 2025.
The changes will supposedly be adopted by next summer, i.e. within one year.
Negotiations with the social partners (employers and trade unions) should take place from September this year until the end of February 2025. This is a timetable that has already been amended at least once.
Higher age requirement (67 years); longer base – from 24 to 40 years (eliminating the worst 5)
The age requirement will be gradually increased by two years, starting in 2028 – meaning, in the years from 2028 to 2035, it will be gradually increased from the current age of 65 to 67.
The reference period for the calculation of the pension base, which under current legislation includes the most favourable consecutive 24 years of insurance, will be gradually extended from the current most favourable consecutive 24 years of insurance to 40 (best) years, starting from the year 2028. This would exclude the 5 worst years, which can be any of the years of employment and not necessarily consecutive. The pension base would thus include all income on the basis of which the person was insured and on which contributions were paid. This is not much talked about, and insiders are critical of it, as it is known that the income at the beginning of a person’s employment is much lower than in later years. The government has stated that all this should be compensated for by raising the assessment percentage. This currently stands at 63.5 percent for 40 years of pensionable service and will rise gradually by 0.25 percentage points from 2028, reaching 65.5 percent in the target year 2035. However, this is a mere 2 percentage points. Initially, there was talk of increasing the tax base to 68 percent, but this was supposedly strongly opposed by the Ministry of Finance, headed by Klemen Boštjančič (the Freedom Movement party), and apparently, the government decided to follow his suggestion.
Important: According to the available information, the Ministry of Labour has made calculations showing that 2 percentage points of higher vesting percentage is not enough to compensate for the increase in the number of years to calculate the pension base.
We will have to work longer, the annual adjustment of pension increases will also be worse
The materials that have been prepared set out a proposal to gradually increase the statutory old-age pension from 60 to 62 or from 65 to 67, starting in 2028, by three months a year until 2035.
For those who have not worked for 40 years, the statutory age limit would be gradually extended from the current 65 to 67, in the years between 2028 and 2035. Those who started working earlier, and would therefore also achieve 40 years of working earlier, will be able to retire younger, but not younger than 62, compared to the current limit of 60. The 40-year period of insurance is to remain unchanged.
Pension harmonisation: it will get worse!
Changes are also foreseen in the pension growth adjustment each year. At present, pensions are adjusted according to the following formula: 60 percent by the growth in average earnings over the previous year and 40 percent by average annual inflation. It is a 60 to 40 ratio. Under the new formula, the share of wage growth in the adjustment formula would be reduced by 10 percentage points every two years until it reaches a ratio of 20 to 80. The phasing-in would last until 2033 and would remain in force until 2035. This means that pensions would be adjusted annually in a very different way than at present, but the calculations of what this will mean have not yet been presented to the public. It is likely that this is not a coincidence, given what we have seen from this government so far.
Higher contributions
The government has also proposed to equalise contribution rates for both employers and employees. The employer’s contribution rate would gradually increase, and the insurance contribution rate would decrease. The phasing-in would be implemented from 2026 to 2034. The point is that employers currently pay a contribution of 8.85 percent (in the so-called second gross salary), while the employee contribution is 15.5 percent. Under the government’s proposal, however, the employer’s contribution would be slightly increased and the employee’s slightly reduced, so that both would be 12.17 percent.
There is also a proposal on the table that each party’s contribution (employer and employee) would be 13 percent, which is an increase.
The second pension pillar
The government is also proposing changes to the second pension pillar, which would be made compulsory. As much as the employee would contribute to his pension, the employer would also contribute. There are also plans to make membership of the second pillar compulsory and to increase the insurance base for sole entrepreneurs. The government is also proposing to raise widow’s pensions. It is not known what the changes would be. If they were substantial, they would already be “screaming.” A look into the introduction of new sources of funding for the pension fund is also planned. What exactly the sources would be is not yet known.
No one is mentioning cleaning up the pension coffers
Although not much has been heard in the public about the changes to the pension legislation, there are several doubts among insiders about the government’s starting point for this alleged reform. They have pointed out that the ruling coalition does not highlight the need to clean up the pension coffers. Namely, this is about those who are receiving pensions without having made the appropriate contributions to the pension fund.
Privileged pensions will therefore continue to be part of the pension payments, it seems.
In 2023, pensioners were deprived of at least 60 percent of their pensions, an average of 27 euros per month or 325 euros per year. The government adjusted pensions at the beginning of 2023, which is compulsory by law, but with inflation at the time at 10.3 percent and the prices of food rising by 19 percent, pensions rose by only 5.2 percent, when they should have risen by 9.7 percent.
The Slovenian Democratic Party (Slovenska demokratska stranka – SDS) demanded that the government immediately provide the financial means to pay pensioners the difference of 4.5 percent of the monthly pension they were deprived of in 2023. At the same time, the government should also carry out an extraordinary pension adjustment of 4.5 percent. The SDS party’s proposals and demands were ridiculed in the coalition. They did not accept any of it.
