With Greater Support for Working Retirees, the State Hesitates

The government’s program statement promised to support retirees’ work and consider their total working years. However, there has been no progress in this regard, and instead, early retirement has been significantly disadvantaged since October.

This year’s statistics have shown that only about 270,000 pensioners are working.

The Benefits of Extending the Working Life

Extending the working life is beneficial for all parties involved. Working longer definitely pays off, not only financially but also in terms of sharing experience within the company and improving the quality of life for seniors in the workplace, even on a part-time basis, admitted Jakub Augusta, the spokesperson for the Ministry of Labor.

However, both employers and employees have not paid much attention to this. According to this year’s statistics, only around 270,000 out of nearly 2.4 million old-age pensioners are still employed, while almost a third receive early retirement benefits.

By the end of last year, over 680,000 people were receiving early retirement benefits, which is 38,000 more than three years ago and 156,000 more than ten years ago. The estimate for this year is that there could be around 750,000 people receiving early retirement benefits.

Goverment Approves Pension Increase

Minister of Labor Marian Jurečka (KDU-ČSL) proposed to exempt working pensioners from paying social contributions instead of the current, primarily symbolic, increase in pensions in the spring. However, this proposal faced opposition within the government. Jurečka then stated that a similar measure might be introduced again as part of the planned pension reform, but it was not confirmed to Právo.

During the consultation process, the Ministry of Finance raised significant objections to Jurečka’s proposal to replace the current practice of increasing pensions for those who continue to work with a discount on insurance contributions of 6.5%. According to the Ministry, canceling part of the contributions from working pensioners would cost the state between four and 4.5 billion Czech koruna annually. After discussions within the government, this measure was removed from the planned amendment.

The remaining proposed changes are relatively less significant, such as the possibility of submitting an online application for a pension and adjustments to payment dates.

The Dilemma of Requesting an Increase

Experts in pension issues agree that the conditions for working pensioners should be adjusted.

“The current system is tragic. Retirees, meaning those who have reached the official retirement age but are still working, pay social insurance contributions like everyone else. For 360 days of such activity, they are entitled to an increase in their pension of only 0.4% of the calculation base. This often amounts to less than a hundred Czech koruna. Moreover, they have to request the increase, which is not worth it for some people,” said pension advisor Martin Kohoutek.

The cost of the administrative work required to process such requests and issue decisions is also a question. The planned reduction in social insurance contributions seemed like an exciting change. However, it is difficult to say whether it can be a sufficient motivation for retirees to remain in employment, added Kohoutek.

Advantages of Part-Time Employment

Since February of this year, the government has introduced advantages for shorter working hours for selected employees, including those over 55. Five percentage points reduce employers’ social insurance contributions from the standard 24.8%. This measure is intended to encourage the implementation of part-time employment.

A recent analysis by the Ministry of Labor stated that the most significant utilization of the social insurance contribution reduction for shorter working hours is among people over 55 years old (39%). However, it did not specify how many of them are pensioners.

By the end of June, 23,704 employers provided work on a reduced schedule, employing 99,000 people during the first half of this year. The number of newly created part-time positions was around 8,000. Three-quarters of those working part-time are women.

Jurečka has previously mentioned the possible incentives to encourage seniors to delay receiving their pension while still earning an income. However, representatives of employers and trade unions disagreed with the proposal to cancel contributions, and instead, they advocated for higher pensions for “overworking” seniors. They pointed out that while younger seniors receive both retirement and income, people in their later years cannot increase their income through work.