The Czech Minister of Labor and Social Affairs, Aleš Juchelka, plans to urgently send a higher valorization of pensions and a lower retirement age to the House of Representatives for discussion. Seniors should receive more money from January next year, and the retirement age should be capped at 65. The opposition criticizes the proposal, as according to calculations, it will burden the state budget with up to 127 billion CZK (5.24 billion euros) per year. Juchelka has not yet specified where he will take the higher pensions. The novinky.cz server informed about it.
- The minister plans to increase pensions and lower the retirement age.
- Senior citizens will receive more money from January next year.
- The retirement age should stop at 65.
- The measures will significantly burden the state budget of the Czech Republic.
- The opposition and experts criticize the lack of funding for this plan.
The proposal, which was previously pointed out by the e15.cz server, is planned by the ministry to be implemented this year, so that it will be reflected in the January valuation. According to the material, pensions would again increase by inflation and by half of the growth of real wages instead of the current third. In addition, for senior citizens after reaching the age of 80, they would be increased by another fixed amount every five years. The proposal does not specify its amount. Now the system adds 1000 CZK at the age of 85 and 2000 CZK at the age of 100.
The changes should also apply to working pensioners. For each additional year of service, their pension will increase by 1.5% of the calculation base. It was originally 0.4%, but former minister Marian Jurečka canceled it. Instead, he introduced a discount on social insurance for pensioners. According to Juchelka’s earlier statements, the discount will remain.
The adjustment will burden the budget
The proposal also includes capping the retirement age at 65 years instead of the current 67 years. “The age of healthy life expectancy is important. This means how long a person can last in retirement in order to enjoy it,” Juchelka said earlier. However, the proposed steps will have a significant impact on public finances. According to the material, capping the retirement age would mean long-term expenses of around 0.8 to 0.9% of gross domestic product per year, i.e. approximately CZK 68 billion to 77 billion in today’s prices. Adjustment of valuations would add about 30 billion CZK over 20 years, changes for working seniors 17 billion and age bonuses roughly 3 billion CZK per year.
“There will be little money for pensions. And it will have to be solved by increasing debt, increasing taxes, or going elsewhere,” said economist Filip Pertold from the IDEA think tank. In total, these measures should cost the state budget up to CZK 127 billion more. However, Pertold estimates that the impact of the changes on the budget will be higher than the ministry anticipates. He expects it to be up to 160 billion CZK in today’s prices.
According to ex-minister Jurečka, this will have overwhelming consequences for the budget, according to whom the money should rather be directed to the care of the aging population. By 2035, the number of people over the age of 85 will increase, and it will be necessary to provide them with almost 35,000 beds in homes for the elderly. “I understand that people want higher pensions. But the quality of life of senior citizens in eight years will depend mainly on whether there will be someone to take care of them,” said Jurečka.
