Update: 04/30/2024 11:10 AM
Issued by: 30/04/2024, 11:10
Prague – Without the pension reform, pensions would have to be significantly reduced in the future, or taxes would have to be increased. The proposed changes, including raising the retirement age above 65, will help keep the decline in the pension system at around one percent of GDP, i.e. roughly at last year’s level. Labor Minister Marian Jurečka (KDU-ČSL) told journalists before the government meeting. The cabinet approves the reform pension amendment today. The leaders of the governing parties will address a press conference at noon.
“If we don’t do pension reform now, it will mean a big problem in the future. If no government solves it, in the future it will mean either a significant drop in the amount of pensions, or an increase in taxes to pay for pensions,” said Jurečka.
Society is aging and 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.
The government’s pension amendment envisages increasing the retirement age above 65 in line with 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.
According to experts, indebtedness can be slowed down by adjusting the parameters – the retirement age, the amount of contributions and the amount of the pension and its ratio to the average wage. According to the documents for the amendment, raising the age can reduce spending by 1.2 percent of GDP and the lower calculation of pensions also by 1.2 percent of GDP. The remaining nine proposed changes in the pension system, on the contrary, raise them. Jurečka is convinced that the government’s reform proposal is balanced.
According to the minister, the House of Representatives could start discussing the amendment at the turn of May and June. Jurečka expects long negotiations, even overnight. He invited the opposition to present its reform proposal. He is ready to discuss adjustments and settings of individual measures. “If there were possibly any changes on the agenda – but they would have to be ones that would not empty the meaning of the pension reform, I am ready to eventually incorporate them in the second reading (in the House of Representatives),” said Jurečka. According to the plan, part of the changes should come into effect from January. Other parts would be introduced gradually in the following years.
According to the opposition movement ANO, the government coalition is scaring people, and it does not want to discuss the reform with the government. Neither the trade unions, the council for the disabled nor the council for the elderly disagree with the government’s plan. According to economists, the current system is not sustainable without adjustments.
