Prague – The government has approved a bill reforming pensions. This was announced by Prime Minister Petr Fiala (ODS) at a press conference after the cabinet meeting. According to him, thanks to the changes, it will be possible to keep the budget deficit at around one percent of GDP. The pension amendment envisages increasing the retirement age above 65 according to life extension, reducing the calculation of new pensions, a minimum pension of 20 percent of the average wage or an earlier pension for work in a risky environment. The House will receive the norm. According to the plan, the changes should come into effect gradually from next year. Deputy Prime Minister and Minister of Labor Marian Jurečka (KDU-ČSL) assured that pensions for current old-age pensioners will continue to grow and will remain educational for them.
“Pension reform is needed. It should have been implemented earlier. The previous governments did not have the courage, we have it. Thanks to this reform, the young generations – those in their thirties and forties – will have a decent pension,” said the Prime Minister. He added that even with the reform, pensions will increase. He specified that the average pension is now over 20,000 crowns and should exceed 30,000 crowns in the mid-30s. People were supposed to spend 21.5 years in retirement. The Prime Minister described the changes as balanced, predictable and fair. According to Jurečka, the changes will not affect current pensioners. Retirement pensions will continue to grow every year by inflation and a third of the growth in real wages, the granted educational allowance will be part of the pension.
Society is aging and life is getting longer. People over the age of 65 now make up about a fifth of the population, by the middle of the century it should be a third. Pension costs are rising. Now it makes up about a third of the state’s expenses. Last year, 685.3 billion crowns were paid out on pensions. Year-on-year, the amount increased by 97.2 billion crowns, i.e. by 17 percent. Incomes have increased by eight percent, but they do not have time to cover expenses. The pension insurance system ended up with the highest ever deficit of 72.8 billion crowns. It’s around a percent of GDP. According to earlier data from the Ministry of Labour, in a few decades the annual deficit could correspond to up to five percent of GDP, in today’s values it would be around 350 billion crowns.
According to economists, the pension system is not sustainable without changes. The opposition rejects the proposals. According to the opposition movement ANO, the government coalition is scaring people, and it does not want to discuss the reform with it. Neither the trade unions, the council for the disabled nor the council for the elderly disagree with the government’s plan.
The amendment contains 11 measures. The retirement age should continue to increase according to life expectancy. The age limit would be set every year for people who would have just turned 50 years old. She would be up by two months at most. The retirement age is already increasing by at least two months per year. He will reach 65 in his 30s. Demographers suggest a regular increase of one month per year. The settings are still in question.
The calculation of new pensions should decrease between 2026 and 2035. A smaller part of the earnings should be taken into account gradually every year. After ten years, 90 percent of the amount that has been fully taken into account into the first income limit would be taken into account, and 1.45 percent would be calculated for the year of service instead of the current 1.5 percent.
The minimum pension should be raised to 20 percent of the average wage. The solidarity part of the pension should remain at ten percent of the average earnings, and the merit part should be raised from the current 770 crowns to a tenth of the average as well. According to the new rules, this year the lowest old-age pension would amount to 8,800 instead of 5,170 crowns.
People with risky jobs could retire up to five years earlier, depending on the number of shifts worked. It would apply to all workers from the so-called fourth category and part of the third category, who have physical stress, vibrations, cold and heat at work. The employer would pay five percentage points higher levies for them.
People who continue to work in retirement would not have to pay pension contributions of 6.5 percent of their earnings. The measure is intended to replace pension increases for extra time worked.
Child care allowance should continue to be paid only for the third and subsequent children. For the first two offspring, it should gradually be replaced by the calculation of fictitious earnings in the amount of the national average wage for the period of care. The bonus of 500 crowns for a raised child should also stop being valued. Spouses could have a voluntarily shared assessment basis from contributions for pension calculation.
The reduction of early retirement should be halved for people who have paid contributions for 45 years. The age for receiving the so-called deferred old-age pension should be lowered. Now you have to wait five years, now it would be two years. The period for renewing the right to a widow’s and widower’s pension should be extended from two to five years. Successfully completed doctoral studies should be counted towards replacement insurance periods.
According to ANO and SPD, the government did not propose a reform, but does not address the adjustment of parameters and income
According to the opposition movements ANO and SPD, the government did not propose a pension reform, but only an adjustment of the parameters of the pension system. They criticize the fact that the cabinet did not address pension income. ANO vice-chairman Karel Havlíček and SPD MP Lucie Šafránková told ČTK. According to her, raising the retirement age above 65, reducing the calculation of new pensions, or gradually limiting educational allowances in new pensions is unacceptable for the SPD, on the contrary, the movement welcomes the remission of contributions when working at retirement age or a lower reduction of early pensions for people who have worked and paid contributions for 45 years . ANO also rejects increasing the age and reducing new pensions.
“The government knows our demands, but she doesn’t want to hear them. She clearly said that she will push through the changes even without us. It’s just a comedy in which we won’t make them a staff member. Her parametric changes to the first pillar are based on the reduction diet of future seniors,” he said Havlicek According to him, 15 billion crowns per year will not be paid after the government measures, and the budget would receive this amount thanks to EET. “(The government) is not at all solving how to get new resources into the system – for example, through the investment pillar with a state guarantee proposed by us,” added the vice-chairman of ANO.
.ANO rejects the planned increase of the retirement age above 65 years according to the extension of life. Politicians of the movement have repeated several times that when they get into government, they will cancel the measures. They propose instead the establishment of a so-called second pension pillar. In this fund, which, according to ANO’s ideas, would invest in the core and highways, people would save with a state guarantee. They would benefit from the income in their old age.
The head of the National Budget Council, Mojmír Hampl, said last week at a conference on family prosperity that the ANO proposal is just an illusion. He pointed out that by combining the debt on infrastructure and the core with the debt on pensions, the indebtedness will not be cancelled. The yield will not arise. “You cannot erase the debt in the pension system by adding more debt. In the end, you will have to increase contributions or increase the cost of debt service,” added Hampl. He considers a slight increase in the retirement age to be the least painful compared to a decrease in pensions or an increase in contributions.
According to Šafránková, the government’s proposal is not a reform, but a “set of parametric adjustments” to the system. “Two of the proposed measures are completely unacceptable to us,” said Šafránková. She mentioned the “unlimited increase in the age” over 65 and the reduction of the calculation of new pensions after 2026. According to the deputy, the limitation of educational allowances in future pensions is also unacceptable. “The proposal completely abandons what is most essential – to seek new income for the pension system without increasing the pension insurance rate and to set up an active pro-family policy to support the birth rate in working families,” wrote Šafránková. The SPD, on the other hand, welcomes the proposal to waive pension contributions for working pensioners and to reduce the early retirement pension for people who have worked for 45 years. According to the deputy, the movement pushed these changes into the government proposal.
According to economists, the pension system is not sustainable without changes. Experts point out that increasing the birth rate will not solve indebtedness. There are weak years in the age of the parents.
Coalition leaders highlighted the necessity of reform, criticizing ANO for its reluctance to act
If the government did not have the courage to accept the pension reform, the whole system would not be sustainable in the future and sooner or later it would collapse. Prime Minister Petr Fiala (ODS) said this at the press conference after today’s approval of the pension reform law. According to him, the coalition government did everything to reach an agreement on the proposal with the opposition. But the ANO movement was not ready to come to an agreement and does not want to take political responsibility for the future of the Czech Republic, the prime minister said.
According to Fiala, thanks to the changes, it will be possible to keep the budget deficit at around one percent of GDP. Retired novel it envisages increasing the retirement age over 65 years according to life extension, reducing the calculation of new pensions, a minimum pension of 20 percent of the average wage or an earlier pension for work in a risky environment. The norm will be discussed by the House of Representatives. According to the plan, the changes should come into effect gradually from next year.
According to Fiala, the pension reform is needed and should have been implemented earlier, however previous governments did not have the courage to do so. “Thanks to this reform, today’s young generation, those in their thirties and forties, will have a decent pension,” he noted.
Fiala mentioned that it would be good to reach an agreement across the parties. “But for such an agreement, you need the opposition, the opposition movement YES in this case, to be ready to come to an agreement and behave at least a little responsibly. Unfortunately, we did not get that,” said the prime minister.
Deputy Prime Minister and Minister of Labor and Social Affairs Marian Jurečka (KDU-ČSL) said that he had about ten meetings with representatives of the opposition. According to him, they received a proposal for comments in December. According to him, ANO “didn’t even send a comma”, the SPD added its ideas to support families. Should the ANO movement change its approach, Jurečka repeated that he is willing to discuss the proposals. He noted that current old-age pensioners are guaranteed that their pensions will increase in the future.
Deputy Prime Minister and Minister of the Interior Vít Rakušan (STAN) noted that the opposition did not have enough responsibility or courage to prepare the reform. “It turned out that this government certainly does not lack courage, but the opposition does not lack a series of excuses,” he pointed out. According to him, in the next rounds of negotiations, it is important not to replace responsible politics with boundless populism.
If the reform was not carried out, in the future any political representation would decide how to preserve the dignified life of pensioners, says TOP 09 chairwoman Markéta Pekarová Adamová. It would mean an increase in taxes, a reduction in pensions or a reduction in funding for some other area, she noted. According to her, ANO did not show a solution, did nothing at all and stuck its head in the sand.
Helena Horská, a member of the Government’s National Economic Council (NERV), said that the government had listened to some of the council’s proposals. According to her, the aim of the reform is to create a sustainable, fairer, more predictable and flexible pension system. According to her, relying on a certain population development would be very risky and fiscally irresponsible. Nor is rapid economic growth the solution, she said.
In March, representatives of ANO took part in negotiations on pensions with Jurečka and President Petr Pavlo at Prague Castle. They canceled their participation in a second such meeting a week ago after disagreements over the results of the meeting and Fiala’s statement that the coalition would push through the reform regardless of the opposition’s opinion.
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