Ljubljana, 11 April 2025 – Slovenia’s pension reform should not be limited to addressing demographic and fiscal challenges but should also aim to strengthen capital market development, experts emphasized at the latest Tea with Reason Conference. While the proposed reform represents progress, there was broad agreement that enhancing the second and third pension pillars is essential to ensure adequate retirement income and unlock wider economic potential. Key proposals included tax incentives, mandatory enrolment, and diversified investment options. Drawing on experiences from Croatia and the UK, speakers stressed that well-designed reform can boost innovation, strengthen local capital markets, and attract billions in long-term institutional investment.

"While the current pension reform proposal addresses key demographic and fiscal challenges, it fails to include provisions that would activate and strengthen capital markets," stressed Luka Vesnaver, President of the British-Slovenian Chamber of Commerce, Managing Partner at ION Advisory, and Supervisory Board Member at NLB. He argued that Slovenia needs to take bolder steps to achieve comprehensive pension reform, especially given the example set by Croatia. Although Slovenia has yet to adopt a system of mandatory enrolment in pension funds like Croatia’s, Paul Suchar, President of the British Business Chamber Croatia in his opening remarks suggested that the evolving pension framework could be a catalyst for similar progress in Slovenia.

In a keynote presentation, Gregor Pajek, Partner at Law firm Rojs, Peljhan, Prelesnik & partners, outlined how pension reform could serve as a foundation for capital market growth. Slovenia’s pension system is currently built on three pillars. The first is the public, pay-as-you-go system, which is increasingly unsustainable due to demographic decline, while individual savings (the third pillar) is almost non-existent due to lack of incentives. While about 60% of workers contribute to supplementary pension plans (the second pillar), these account for only 6% of GDP, far below Croatia’s 28%.

Pajek proposed strengthening Slovenia’s second and third pension pillars to ease pressure on public finances and adapt to demographic changes. Key suggestions included automatic enrolment, individual pension accounts for transparency, and more flexible investment options. He also called for improved tax incentives, better financial education, and using pension funds to support domestic infrastructure and capital market development.

"Developing capital markets remains very important for the Ministry of Finance," described Urška Cvelbar, Director General of the Financial System Directorate. She elaborated on the Ministry’s draft law concerning individual investment accounts and a national program for financial literacy aimed at Slovenian retail investors to participate more actively in the financial markets. Developed capital markets are a cornerstone of any competitive and developed economy, reaffirmed Marko Bombač, President of the Management Board at the Ljubljana Stock Exchange, noting that they need strong support from policy makers to thrive and underlining their importance for companies to innovate, grow, and become more resilient.

According to David Benedek, Member of the Management Board at Sava Re, the primary objective of pension reform should be to ensure that pensioners accumulate sufficient capital in globally diversified portfolios. While pension funds can play a role in supporting capital markets, this should remain a secondary goal. Echoing this, Žiga Vižintin, Director of Retirement Solutions at Pokojninska družba A, noted that while capital markets and pension funds can support each other, one is not there because of another. The main focus of pension funds remains generating long-term capital for individuals, with their contribution to capital markets seen as an added value.

On the other hand, Simon Savšek, Head of EIB Group Office in Slovenia argued that according to the EIB latest investment report, firms that issue equity are the ones that are investing more and innovating more: "We need to see capital markets in a much broader perspective and not be limited to the issues of fiscal sustainability or guaranteeing safety net for individuals. In fact, we are looking into an issue of proper financing mix for the future." Benjamin Jošar, President of the Management Board at Triglav Skladi, added that pension funds have an essential role in supporting the long-term investment needs of smaller companies: “Smaller companies are often overlooked by foreign investors,” he noted, but pension funds can act as an engine for growth by investing in innovative sectors and boosting local business development. Mateo Blaće, Head of Corporate Governance at ERSTE, also highlighted the important role of strong corporate governance practices, enhancing transparency and accountability, ultimately building investor trust.

"If the level of financial literacy was higher and capital markets more developed, this would lead to a better understanding of the benefits of pension funds, encouraging more people to voluntarily join them,” argued Janez Kranjc, President of the Management Board at Prva Group. At the same time, Ivan Tadin, President of the Management Board at HITA-VRIJEDNOSNICE underscored that while retail investors are becoming more active, education is needed to help them understand how equity investments could be part of their private pension plan. While acknowledging that financial literacy is important for the development of the capital markets, Robert Prelesnik, Managing Partner at Law firm Rojs, Peljhan, Prelesnik & partners argued that financial literacy improvements may take generations. He stressed the need to speed up the regulatory processes to facilitate the necessary growth of Slovenia’s capital markets.

Reflecting on Croatia's experience, Ivana Gažić, President of the Management Board at the Zagreb Stock Exchange, explained that the pension reform in Croatia is one of the things they can be proud of, noting the significant benefits it has brought to capital markets. She explained that while the primary goal of pension funds is to provide pensions in the future, they also play an important role in stabilizing the market and attracting new investors. Ivo Balen, Advisor to the Management Board at Allianz ZB, added that Croatia's pension reform was the result of close coordination among all stakeholders, with regulators maintaining open dialogue.

On the other hand, Mark Richards, Member of the Supervisory Board at NLB, drew key lessons from the UK’s pension reform experience, emphasizing that a large pool of capital creates more investment opportunities. He noted that while Slovenia’s capital markets are underdeveloped compared to the UK, pension funds should be given more flexibility in making investment choices. Richards concluded that the UK’s model, with mandatory pension fund enrollment, has proven successful and could also stimulate market growth in Slovenia.

The conference was concluded with an Executive Wrap-Up, where Matej Golob Matzele, President of the Management Board at Modra zavarovalnica, recognized the potential benefits of the pension reform but urged for bolder action. While focus has largely been on the first pillar, he stressed the need to elevate alternative investments like venture capital and private equity, actively promoted at Modra. He noted that fully leveraging tax relief, if individuals invested the maximum based on gross salary, could inject up to €300 billion into capital markets. Danijel Delač, CEO of InterCapital Securities, reinforced that strengthening domestic pension funds is key to developing local capital markets. In small economies like Slovenia and Croatia, relying on international investors is unrealistic; strong local institutional investors are essential.

A special thank you goes to our partners for making this Tea with Reason Conference possible: Main Partner – Law firm Rojs, Peljhan, Prelesnik & partners, Conference Partner – ION Advisory, Panel Partners – Modra zavarovalnica, Triglav Skladi, and InterCapital Securities, and Supporter – Sava Re. The event was organised in cooperation with the British Business Chamber Croatia.

Photo highlights are available here.