The pension system is one of the main foundations on which the social security of every state rests. The regulation of the pension system depends on demographic, economic, social and political determinants of society, but also has a reciprocal effect on them. The crisis of pension system became pronounced at the end of the 20th century. The period was marked by demographic changes (prolongation of life expectancy and falling birth rates), economic turmoil (globalization and liberalization of the market where economic shocks know no state borders), labor flexibility and rising unemployment. This calls into question the forthcoming organization of the pension system, and therefore the financing of the pension system is becoming an increasingly important issue. The aim of this final paper is to explain the development, functioning and non-sustainability of the pension system in the Republic of Croatia, to point out the importance of its stability in society and to connect it with demographic trends.