Where has the pension reform gone? The proposal for millions of Czechs is still being postponed


In September, in October, in a few days. While the Ministry of Labor and Social Affairs under the leadership of Marian Jurečka (KDU-ČSL) drops one controversial proposal after another, the most fundamental one is still awaited. Most recently, Jurečka promised to send the pension reform to interdepartmental proceedings within days before the end of October. With mid-November coming to an end, the message is still the same: the ministry is still finalizing the draft.

“Terms apply to us. We are taking all steps to send the proposal to the interdepartmental comment procedure in September and for the government to discuss the draft by the end of the year,” said Minister Jurečka in mid-August. “I assume it will be at the beginning of October,” he added in September. And since the end of October, they have been waiting for him to send the reform to the interdepartmental comment procedure in “a matter of days”, as he pointed out on October 26 on the broadcast of Radio Prostor. There he also mentions that the internal comment procedure ended ten days ago and only a “minor settlement” is underway.

However, this is something a little different from what Jureček’s ministry says. “The internal comment procedure is still ongoing, however, the draft should be sent to the interdepartmental comment procedure in the following days. Of course, there will be a press conference on the whole topic,” Jakub Augusta, spokesman for the resort, told Echo24.

However, the Minister of Labor Jurečka stands by the fact that even after the umpteenth incorrect estimate of the deadline, work on the reform remains within the framework of the original promises, according to him, the proposal should reach the government by the end of the year. It is also expected around this time that the first impact could come. The Constitutional Court is already dealing with the first of the complaints filed by the ANO movement, namely the slowing down of the last extraordinary pension valuations due to high inflation.

As a first step, the government pushed through the changes to early retirements, which were hesitantly signed by President Petr Pavel in September, and new, stricter rules have been in effect since October. In the case of the pension reform, however, there is talk of much more fundamental changes, which are supposed to respond to the growing deficit of the pension budget as well as the merciless development of the demographic curve, which will lead to a significant aging of the population in the coming decades.

According to previously presented government plans, the pension age should be set according to life expectancy every year for people who turn 50 (we wrote more about this here, for example). The new pensions should be slightly lower than today, people should save part of the money for their old age. The guaranteed pension should be a fifth of the average wage instead of the current tenth. Spouses could have a common assessment base for pension calculation. Fictitious contributions, from the average wage, would be taken into account for the period of maternity and parental leave or for the period of caring for loved ones. Most of the steps will start to be implemented from 2025.

Last year almost 600 billion crowns went to pensions, this year the amount could be about 90 billion crowns higher. This year, pension expenses could exceed income by roughly 80 billion crowns. Without changes, in the middle of the century, the deficit of the pension system could amount to around 350 billion crowns in today’s amounts, the head of the Department of Labor has already pointed out. The measures are intended to mitigate the decline.

According to the opposition, the proposal does not represent a reform, but only an adjustment of the parameters. Some opposition politicians talk about the fact that “the government is robbing pensioners” and wants to solve the state’s indebtedness at their expense. The cabinet points to a significant increase in pensions to match inflation. The average pension from the Czech Social Security Administration in June this year was 20,233 crowns, at the end of 2021 it was 15,425 crowns.

The ANO movement has previously turned to the Constitutional Court in the case of the approved proposal to limit this year’s June valorization of pensions. At the beginning of November, the movement submitted a proposal to the Constitutional Court also in the case of a newer amendment approved in the summer, which regulates, among other things, early retirement. However, the government stands by the fact that it will defend its procedure in both cases.

The article is in Czech

Tags: pension reform proposal millions Czechs postponed


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