Czech Government Proposes Pension Reform with Lower Newly Granted Pensions and Gradual Retirement Age Increase

The Czech government is set to present a pension reform on Thursday that would lead to lower newly granted pensions and less growth in pensions for current pensioners than before as part of a consolidation package. The reform would also set a gradual increase in the retirement age. Additionally, early retirement will be less advantageous, and state contributions will be adjusted to encourage people to save more for retirement in pension funds.

According to CNN Prima News, the pension system changes will amount to at least 11 modifications. One of the most significant will be the recalculation of individual ranges between so-called reduction limits, which, in effect, would lead to a reduction in newly granted pensions by hundreds or thousands of crowns compared to the present. It is unclear if this will only affect those with the lowest incomes.

The proposed changes will significantly affect the amount of the merit component, which is currently based on the personal assessment of up to 44% of the average salary. Thus, the coefficient for subsequent reduction limits will also be lowered. Pension advisor Martin Kohoutek said that, in reality, seniors’ pensions would be reduced by hundreds of crowns gradually.

Changes could begin in 2026, and the government has already approved reduced early retirement and future devaluations. For regular January pension adjustments, pensions will only be increased by a third of real wage growth, not the current half, and they will rise by inflation.

However, the precise parameters of the pension reform, including the implications of each of these measures, will be presented on Thursday. The government aims to address the significant imbalance in the current pension system, which suffers from unprecedented debt. While some see the changes as purely technical, with the only goal being to reduce the value of pensions, others argue that the system has to be reformed more profoundly to make it sustainable for future generations.