The Czech government is considering replacing extraordinary pension increases with temporary “cost-of-living benefits” in case of high inflation. If inflation surges, pensioners could receive a temporary subsidy instead of a remarkable pension increase.
The rise in pensions could also be slowed down from half of the real wage growth to one-third. The current pension adjustment process is carried out annually based on inflation rates. This proposal is part of discussions surrounding reforming the country’s pension system, which is currently being debated in the government coalition.
The proposal has been discussed between the government coalition and the opposition party ANO and SPD. While Marian Jurečka, the Minister of Labor and Social Affairs, has said there is no final version of the proposal, the material outlines that pensions will be adjusted according to inflation rates.
However, the age of retirement will not be changed. The document proposes that the cost-of-living benefit will be paid out when inflation rates reach 5% from the end of the relevant period for the previous adjustment.
The cost-of-living benefit is intended to cover the increased living costs for pensioners during high inflation. According to the document, the payment will not be a permanent part of the pension and will not increase the pension amount permanently.
The payment is expected between July and December before the subsequent regular adjustment in January. This proposal, along with the suggestion to slow down the increase in pensions, has been previously recommended by the National Economic Council of the Government (NERV) due to the country’s rising debt.
The Czech government is considering replacing extraordinary pension increases with temporary cost-of-living benefits in the event of high inflation. This proposal is part of discussions surrounding reforming the country’s pension system, which is currently being debated in the government coalition.
The proposed cost-of-living benefit is intended to cover the increased living costs for pensioners during high inflation. However, the payment will not be a permanent part of the pension, and it is not expected to increase the pension amount permanently.