Under the bill, the age for old age pension for men and women will be made the same over the next ten years, and those opting for early retirement would see a 4.08 percent decrease in their pension for every year of early retirement, or a maximum 20.4 percent decrease for five years of early retirement. At the same time, the bill envisages benefits for postponed retirement.

Currently the age for old age pension for women is 60 years, and for men it is 65 years. The government proposes in its bill that in the period from 2011 to 2019 the age for women be increased by six months every year, so that by 2020 the age for old age pension for men and women is made the same.

During the same period, the age for early retirement too would be made the same for men and women. This means that in ten years' time, women too would have the right to early retirement at the age of 60 and with 35 years of service.

Economy Minister Djuro Popijac said that the bill was in line with a 2007 ruling of the Constitutional Court which set the end of 2018 as the deadline for harmonising the age for old age pension for men and women.

Under the bill, which would go into force on October 1, penalties for early retirement would increase from the current 1.8 percent per year of early retirement to 4.08 percent, so retiring five years before the legal deadline for old age pension would mean a 20.5 percent drop in pension allowance.

At the same time, every year of service beyond the legal deadline for old age pension would mean an increase in pension allowance of 4.08 percent or 20.4 percent for a maximum five years.

Economy Minister Popijac said that measures difficult and unpopular as this one had to be taken once in a while in order to stabilise the pension system and make it sustainable in the long run.

The current situation in the pension system, considering the retirement age and pension insurance rights, is such that it makes the pension system difficult to maintain, said Popijac.

Prime Minister Jadranka Kosor said this was evidenced by unfavourable figures on the worker-pensioner ratio, adding that there were currently

1,532,633 insurees and 1,187,509 pensioners. Of this number of pensioners, 11.6 percent have 40 years of service and 23.8 percent have 35-39 years of service.