Czech Republic. Senate Approves Pension Reform Raising Retirement Age To 67
The Senate yesterday evening approved without changes a government pension reform that, among other things, raises the retirement age by two years to 67.
The law was passed as expected, despite objections from the opposition and trade unions. Among the most controversial passages of the pension amendment is the coalition’s restriction on the number of workers in risky professions who should be entitled to an early pension without reduction. The reform will now be submitted for consideration by President Petr Pavel, who has already announced that he will sign it.
Labour and Social Affairs Minister Marian Jurecka (KDU-CSL) described the reform, which was supported by 48 of the 66 senators present yesterday, as “a maximum of political and social compromise”. The senators’ debate on the reform lasted about six hours, with three dozen senators speaking, some of them repeatedly.
According to the government coalition, the reform is necessary for economic reasons, so that future pensioners are guaranteed decent pensions from the state as the number of seniors increases. The deficit of the pension insurance system reached a record CZK 72.8 billion last year. Without changes, the shortfall would reach 5% of gross domestic product (GDP) by mid-century, around CZK 350 billion in last year’s figures. After the approved tightening of rules for early pensions, slower indexation, and after the reform, it is speculated that the deficit could be around 1.5%.
In the government’s amendment, the coalition reduced the pool of workers in demanding occupations eligible for early retirement without cuts by around 90%, from 125,000. It would continue to cover around 12,000 people in the riskiest fourth category. Employers would pay 5 percentage points higher contributions for them. For the roughly 112,000 workers in the third category, who are exposed to excessive physical strain, vibration, extreme cold or heat, employers would be required to contribute 4% of their wages to the third pension pillar in individual accounts under the coalition’s forthcoming proposal.
