Pensions, the amount of the average pension and the number of pensioners are always the current topics of the political and financial scene of Croatia. The basic function of the pension insurance system is to ensure that individuals and members of their families have the option to distribute their consumption throughout their lifetime, especially after the work life is ended, in case of working disability or loss of caregiver, ie in all cases where the insured and members of their families are unable to earn for their living. In addition, pensions are a very important form of individual and national savings, which is, apart from the importance for the individuals, important for the society in general. This paper describes the concepts and functions that are connected to pension system and pension insurance, and provides a brief history and development of the pension system in Croatia. The pension system is subject to various impacts, and the most prominent factors are demographic, economic and legislative factors. The Croatian pension insurance system is based on three pillars of pension insurance, in which the first and second pillars are mandatory and the third pillar represents voluntary pension insurance. In order to better understand the differences between individual pillars of pension insurance, the similarities and differences between mandatory and voluntary pension funds and pension funds categories are explained, and at the very end there is a short list of rights and obligations of pension beneficiaries.