Pensions are to undergo an extraordinary indexation of CZK 750 in June due to high inflation. The average pension will thus exceed CZK 20 000. Labor and Social Affairs Minister Marian Jurečka (KDU-ČSL) announced this after Wednesday’s cabinet meeting. The cabinet also adjusted the valorization formula due to high expenses. Pensions should increase less than the current law mandates.
“We discussed and agreed on the parameters of the extraordinary valorization of pensions at the cabinet meeting. According to the law, the conditions for extraordinary valorization have been met,” Jurečka announced after the meeting.
According to him, this will take place in June. “The average pension will increase by CZK 750. We will reach the threshold that will exceed 20 thousand,” he added. All pensioners should receive CZK 400, and the percentage of their pension should rise by 2.3 percent.
The increase in pensions is linked to high inflation. According to the law, pensions are increased periodically every January, significantly if the price increase exceeds five percent in the reporting period since the last expansion.
“In 14 months, our average pension has increased by 30 percent,” Jurečka announced.
The cabinet adjusted the indexation formula due to high expenses. Thus, pensions should increase less than the law currently mandates.
The changes to the legislation still have to be approved by Parliament and signed by the president. Jurecka said the government should send the proposal to the lower house next week.
We have the courage for pension reform
After the cabinet meeting, Prime Minister Fiala also mentioned the pension reform, which has recently been reported in the media. According to some proposals, for example, the retirement age should rise to 68.
“Pension reform is necessary. We dare to implement it, and we are ready to discuss its parameters intensively with the opposition,” he said.
More than 2.84 million people received pensions from the Czech Social Security Administration (CSSA) at the end of last year, of whom 2.37 million had old-age pensions. According to the ministry, the average old-age pension in January was CZK 19,438. The interior, defense, and justice ministries also have their pension systems.