Govt presents pension reform blueprint

The period for calculating the pension base would be longer and the vesting percentage would be higher. In adjusting the pensions, consumer price inflation would be taken into account to a greater extent.

Retirement age after 40 years of service to raise to 62 in 2035

Under the current legislation, citizens can retire with 40 years of pensionable service without any additional pension credit - 40 years of service - and 60 years of age. This was a demand which the trade unions insisted on in 2012, when the reform now in force was being drafted.

But now, the government points out that Slovenia has one of the lowest effective retirement ages among Organisation for Economic Co-operation and Development (OECD) countries, with women retiring on average at 61 and eight months and men at 62 and nine months.

The government proposes a gradual increase in the legal retirement age. For persons with 40 years of pensionable service, the retirement age would rise by three months each year between 2028 and 2035, so gradually it would go up to 62. For persons with less pensionable service, it would rise to 67. A longer transition period would help citizens to accept the changes more easily, especially those close to retirement, the government believes.

The age requirement for a widow's pension would be raised to 60 years. Lowering the age limit, for example to care for a child in the first year of life, as allowed under current legislation, is yet to be discussed.

Inflation to be included in pension calculations to a greater extend

Pension calculations currently take into account wage growth at 60% and consumer price growth at 40%, but under the blueprint consumer price growth would gradually be taken more into account while wage growth to a lesser extent.

The share of wage growth in the formula would be reduced by 10 percentage points every two years until it reaches 20% in 2033. Meanwhile, the share of consumer price inflation would increase in the same way until it reaches 80% in 2033.

Reference period for calculating pension base would gradually stretch to 40 years

The reference period for calculating the pension base, which under current legislation includes any best consecutive 24 years of service, would be extended over time to 40 (best) years from 2028. This would exclude the five worst years.

According to the government, a longer reference period would allow the pension to better reflect the amount of contributions paid during working life. The pension base would thus take into account the income based on which the person was insured and based on which contributions were paid.

Since a longer reference period generally means a lower average pension base, the government wishes to compensate for this by raising the assessment percentage for calculating the pension base. For 40 years of pensionable service, it currently stands at 63.5%, and would gradually increase by 0.25 percentage points from 2028, reaching 65.50% in 2035.