Chamber Gives A Chance For Slower Pension Indexing

Stanislava Benešová, Právo

The Czech Chamber of Deputies has given the green light to a government proposal that would slow down the regular pension adjustments and tighten the conditions for early retirement. The opposition threatened to obstruct the proposal, but after more than 13 hours of debate, the bill was approved. The Social Affairs Committee will now review the proposal, and there will be a half-month deadline for its discussion.

The Minister of Labor and Social Affairs, Marian Jurečka, defended the proposal, saying, “We are taking steps that will lead to stabilization so that future pensions have a decent level and value.” The Ministry believes that slowing down the valorization and tightening the conditions will contribute to alleviating the decline in the pension system and reducing debt.

“We care about the sustainable management of the Czech Republic,” emphasized Prime Minister Petr Fiala. According to the norm, the government wants to decide on the valorization of pensions for next year already in September.

However, the opposition disagrees with the proposed bill. “The main and only goal is to reduce the standard of living of pensioners,” criticized Alena Schillerová, head of the parliamentary club of the ANO party, adding that the proposal is senseless and antisocial.

“These are changes that will significantly harm all current and future pension recipients,” added Tomio Okamura, head of the SPD party.

The opposition representatives initially threatened to obstruct the proposal until the weekend. The debate lasted over 13 hours and ended on Friday at around 1:30 am.

The SPD party accepted the proposal in the first reading. Of the 142 present deputies, 60 opposition deputies voted for the proposal, and 82 coalition representatives voted against it.

Pensions are regularly increased every January. They are growing by the growth of prices and half the growth of real wages. From next year, it should increase only by the development of costs for pensioner households and by one-third of the growth of real wages, just like before 2018.

Early retirement should be possible no more than three years before retirement age instead of the current five years. Those who have worked and paid contributions for 40 years could go into early retirement, but previously it was only 35 years.

The disadvantage of early retirement

The amount received in early retirement should be cut more than before.

Pension consists of two parts. The solidarity introductory exchange rate is the same for everyone, and the merit percentage reflects the years worked, the number of contributions from earnings, and the number of children. According to the proposed bill, the merit part would not be valued for early retirement until the regular due date.

If prices rise by at least five percent since the last increase, pensioners will receive more money just like now, during extraordinary valorization.

They should receive a temporary supplement, and the merit part of the pension should also be raised, but only temporarily.

The percentage by which the merit part would grow due to inflation in the previous year would be the same by which its regular increase was lower. The temporary supplement and the increased percentage exchange rate should reflect 60 percent of the rise in prices.