Toni Milun explains how to increase a pension by 47 euros a month: “People lose more than 500 euros a year”

A pension choice could cost one Croatian woman more than 560 euros a year, according to mathematician Toni Milun. In a LinkedIn post, Milun explained that she was considering the combined pension option, known as Model B, without fully understanding the consequences.

Milun said she would receive 489 euros a month under Model B. By transferring all her savings from the second pension pillar into the first, she could instead choose Model A and receive 536 euros. The difference is 47 euros every month.

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I look at the pension funds' returns and cry with sadness. The investment results are poor, but the fund managers duly took their one to two percent commission.

The example, the article says, illustrates a broader rule for many future retirees. Model A, which provides a single pension from the first pillar, is almost always more advantageous for people who earned less during their working lives or do not have long employment histories. The combined pension from the first and second pillars is generally more favorable for people with higher incomes.

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I will apparently have to come out of early retirement for at least another 10 years to supplement my pension. And I am only 66.

The decision often confuses future retirees, making advice and careful preparation important, the article says. The issue has gained added attention after a recently announced 5.40 percent pension adjustment, which would not undo the consequences of choosing the wrong payment model.

Milun's post prompted frustrated responses about pension-fund returns, fees and low pensions compared with other European countries. One commenter said fund managers had collected one to two percent in commissions despite poor investment results. Another described 536 euros as insufficient to live on, while a businesswoman called the need for people to provide for their own old age from their first working day a “sad and painful truth.”

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People really need to be reminded every day that they must provide for their old age themselves, from their very first working day. A sad and painful truth.