The pension system represents a part of the social security which in the Republic of Croatia is implemented by the Croatian Health Insurance Fund (HZMO). The development of the Pension system began with a reform in the year 1999. when Pension Insurance Law has been brought. Forming the three pillars of the pension system is considered the most significant change that is still in force. The system made out of three pillars is based on generational solidarity and individual capitalized savings. The first and the second pillar are part of the compulsory pension fund, while the third pillar is completely voluntary. Total contribution collected amounts to 20% from gross salary, split in a way that 15% is collected for the first pillar (based on generational solidarity), while the remaining 5% is collected for the second pillar (based on individual capitalized savings). Additionally, the insured person can decide to contribute 20% in total towards the first pillar. The system functions in a way to finance itself primarily out of contributions, while only secondary out of the state budget. The current situation is that the number of retired persons is growing while the contributions from the employees and their employers are becoming insufficient for pension payouts. With this comes the unsustainability of the pension system which by large is starting to depend on the state's financial help. The correct functioning of the pension system is of great importance for every individual, but also the whole country.