According to Nerudová and Rusnok, the restriction of the June valorization of pensions is non-systemic

According to Nerudová and Rusnok, the restriction of the June valorization of pensions is non-systemic

Limiting June's valorization of pensions is, according to Nerudov and Rusnok, unsystematic

Illustrative photo – Debate of presidential candidates on Czech TV before the first round of elections, January 8, 2023, Prague. Presidential candidate Danuše Nerudová.

Prague – Danuše Nerudová, the former chairperson of the Commission for Fair Pensions, and the former governor of the Czech National Bank (ČNB) and Prime Minister Jiří Rusnok assessed the upcoming proposal by which the government wants to limit the extraordinary June valorization of pensions as non-systemic. Former member of the National Budget Council Richard Hindls also warned against the retroactive effect of the measures.

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The Cabinet plans to approve the limitation of the extraordinary June valorization of pensions on Monday. According to the amendment, the average retirement pension should increase from June due to inflation by 760 crowns instead of 1,770 crowns, by which it would have increased under the current rules. According to the cabinet, the reduction is necessary to maintain the pension system, otherwise its deficit this year would reach CZK 90 billion.

The opposition wants to block the adoption of the amendment. “Wait for hell. This is unacceptable for us. We will do everything to ensure that it is not approved in the Chamber of Deputies like this. The law is being changed on the fly, in my opinion, that is the worst,” the vice-chairman of ANO said today in the Party program on CNN Prima News Karel Havlíček.

Former presidential candidate Nerudová stated that the decision is non-systemic in that it should only apply to specific valorization and does not solve the system in the long term. “Something needs to be done about the valuation formula,” she said. Increasing the percentage of pensions widens the gap between pensioners with higher and lower pensions, she pointed out. According to her, the government has a unique opportunity to submit systemic proposals in the first half of the election period.

Rusnok stated that there have been calls for a revision of the formula for valorization for a long time. They agree that the one-time reduction is non-systemic. “I am mainly surprised that the government found the courage at all, I am very worried about how things will turn out in the House of Representatives,” he said. The former prime minister described the rules of procedure and customs in the lower house as a disaster. “I hope that systemic change will be part of the announced pension reform,” he said.

The opposition this week suggested that the measure could be unconstitutional due to retroactivity. According to Hindles, it is for others to judge, but he sees elements of retroactivity in the proposal. According to him, with the announcement of the year-on-year rate of inflation published by the Czech Statistical Office (ČSÚ) on February 10, pensioners could legitimately expect a valorization in the amount now stipulated in the law.

The House of Representatives should approve the amendment at an extraordinary meeting on Tuesday, February 28. The coalition has a majority in the lower house, but obstructions can be expected. “We will speak, we will obstruct. I think this is a situation where everyone will understand. The government cannot do exactly what it wants,” Havlíček said on Prima. According to ANO's opinion supported by the legal opinions of experts, the legal right to valorization in its current form was already fulfilled on January 31, he added.