MOJA MIROVINA PRO&CONTRA Željko Garača i Danijel Nestić

Guest Željko Garača i Danijel NestićMay 3, 2026

Željko Garača i Danijel Nestić

About this episode

What you'll hear in this conversation

The debate around pension systems often gets mired in abstract economic models. But what happens when a country implements a system that one expert calls "exceptionally harmful" to its economy, while another sees it as a vital personal safeguard? This episode brings together two sharply opposing views on Croatia's second pension pillar. Željko Garača, an economics professor, argues for its immediate suspension and eventual abolition, citing a litany of macroeconomic damages. Danijel Nestić, a senior advisor, challenges these claims. The conversation cuts through the policy jargon to ask: what is the real cost of this system to the national economy, and what are its tangible benefits to individual citizens like host Marijana Matković, who finds her own second-pillar account a reassuring sign of personal savings?

Insights from the conversation

What to take from this episode

Željko Garača's first move for Croatia's second pension pillar is not reform, but "suspension," meaning an immediate halt to all contributions and a mandatory return of insured individuals to the first pillar. This signals that for some economists, the problem with a system is so fundamental that a gradual shift is not enough; the only viable path is an abrupt stop.

Professor Garača outlines a cascade of macroeconomic damages from the second pillar, listing everything from excessive public debt and capital outflow to reduced economic competitiveness and even a negative demographic impact. A pension system, in his view, is never just about retirement — its effects permeate every layer of a nation's economic and social fabric.

Marijana Matković's personal account, showing 198,000 HRK saved and a projected 1,260 HRK monthly pension from the second pillar, represents a tangible benefit to her. But Professor Garača quickly counters that these "above-average returns" are not genuine gains but an illusion, paid for by additional tax burdens and inflated by accounting standards for old government bonds. The apparent success of an individual account can mask a systemic cost borne by the entire economy.

Despite nominal gains, Professor Garača argues that with current low interest rates on bonds (as low as 0.75%) and impending inflation, the real value of second pillar assets is set to decline. An investment that appears to grow on paper is actually diminishing in purchasing power if inflation outstrips its nominal returns.

When asked if a greater allocation to stocks or foreign investments would help, Professor Garača points to Croatia's underdeveloped capital market and the risk of a currency crisis if funds were to invest 120 billion HRK abroad. For smaller economies, the seemingly logical step of international diversification can become a direct threat to national monetary stability.

Professor Garača warns that the introduction of the Euro, while simplifying transactions, will also dismantle the "dam" currently preventing a massive outflow of capital from Croatia. For capital-poor countries, adopting a common currency means losing a key mechanism to retain domestic investment, potentially accelerating economic stagnation.

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