Illustrative photo – From the left, the chairman of the parliamentary club of the SPD movement Radim Fiala, the chairman of the movement Tomio Okamura and MP Jan Hrnčíř spoke on June 16, 2020 in Prague at the press conference of the SPD before the meeting of the House of Representatives.
Prague – The opposition Freedom and Direct Democracy (SPD) considers the lower growth of pensions than currently stipulated by law to be unacceptable. The SPD will strive to ensure that the valuation does not decrease, Jan Hrnčíř (SPD), deputy chairman of the parliamentary budget committee, told ČTK today. The opposition ANO also rejects a change in the law that would allow a lower valuation, said the head of the club, Alena Schillerová.
The government announced on Wednesday that the retirement pension could increase by an average of 750 crowns from June due to inflation. All pensioners should receive 400 crowns, and the percentage of their pension should be increased by 2.3 percent. The cabinet will approve the draft remotely per-rollam on Monday.
The proposed 750 crowns corresponds to an increase of the merit percentage part of the pension by 4.9 percent. According to the current adjustment, the percentage areas should increase by 11.5 percent, says the proposalMinistry of Labour. This would mean an increase in state budget expenditures on pension insurance benefits by 34.4 billion crowns this year. According to the adjustment agreed upon by the coalition, the valorization will amount to 15 billion crowns this year.
Minister of Labor and Social Affairs Marian Jurečka (KDU-ČSL) should talk to Schillerová on the phone today at 12:30 p.m., she said Schiller.
Schillerová also spoke about the fact that the government will approve the matter at an extraordinary meeting on Monday. According to cabinet spokesman Václav Smolka, the cabinet already agreed on the form of amendments to the law on Wednesday. On Monday, he will approve the proposal, which is undergoing the last technical adjustments, remotely per-rollam, Smolka told ČTK. Similarly, in mid-January, he approved the fifth version of the lex Ukraine law.
Hrnčiř said that this change was unacceptable for the SPD. “Seniors are one of the social groups most threatened by the current high prices,” he explained. According to him, seniors expect that the state will not let them down. “It's a change in the middle of the game. There is valid legislation that provides for an increase by the entire amount,” he added.
The SPD will submit amendments so that the valuations do not change. Hrnčíř reminded that the movement has long been pushing for pensions to be increased by the same amount for everyone, not as a percentage. “From this point of view, the proposal is good, but the reduction is unacceptable,” he said.
Schillerová criticized that the state budget for this year did not take into account the extraordinary valorization. According to her, the Minister of Finance Zbyněk Stanjura (ODS) “forgot the expenses imposed on him by law.” That is why, according to Schiller, the government is now demanding a change in the law. He considers ANO's proposal to be impudence.
The government's plan is also criticized by the former ruling party ČSSD, which was voted out of the House of Representatives in the last elections. “The high indebtedness of the Czech Republic will once again be borne the most by those who are completely dependent on the state for their income,” the social democrats said today. They criticize, among other things, that the government's decision was not preceded by discussions with social partners. “Instead of a constructive search for new revenues for the state budget in the form of a progressive tax or taxation of energy companies, the government is determined to obtain funds through other antisocial measures,” stated the ČSSD.
According to the proposal, the limitation of the extraordinary valorization of pensions should only be one-time
The limitation of extraordinary valorization should be one-time and should only concern the planned June increase in pensions. Higher and middle pensions should grow less in favor of people with lower pensions. This follows from the draft of the pension amendment and the supporting documents published by the government on its website. According to the report on the law, 15 billion crowns have been set aside for raising pensions, and the average old-age pension should rise by 760 crowns from June instead of 1,770 crowns, by which it would increase under the current rules.
“According to the proposed change, the percentages of pensions will increase only so that the total expenditure on pension insurance benefits will increase due to the valorization of pensions in an extraordinary period from June 2023 by the amount of 15 billion crowns,” the Ministry of Labor said in the documents. He points out that according to the current setup, this year's expenses would rise by 34.4 billion crowns, and this year's pension system would lose 90 billion crowns. According to the department, it is “constitutionally permissible” for the rules to be adjusted according to the economic conditions of the Czech Republic in order to mitigate budgetary impacts and maintain the sustainability of the system.
The pension consists of a solidarity fixed part of 4,040 crowns and a percentage of merit based on years of service, the amount of levies from earnings and the number of raised children. In case of extraordinary valorization, the merit percentage is raised. It has been rising for five months after price growth exceeded five percent over the period under review. The increase in the consumer price index is rising. The Czech Statistical Office told ČTK that the increase for pensioner households from last July to this January was 9.9 percent. The Ministry of Labor states in its documents that prices have risen by 11.5 percent and the average pension has increased by 1,770 crowns.
According to the proposal, the percentage of the pension should be increased by 2.3 percent in June and by 400 crowns. For the average old-age pension, this is an increase of 760 crowns, the ministry stated in the documents. It calculated that people with a pension of 8,000 crowns will improve overall by 6.2 percent, with a pension of 14,000 crowns by 4.5 percent, with a pension of 18,000 crowns by four percent and with a pension of 22,000 crowns by 3.7 percent. According to the proposal, people with a pension of 8,000 crowns will receive 36 crowns more compared to the current setting, others less.
“At the same time, the proposed adjustment preserves the full measure of solidarity towards the most vulnerable group of people with the lowest pensions and aims at a certain one-time limitation of claims for people with medium and higher pensions,” the ministry said. According to him, however, the rule is maintained that higher pensions grow by a higher amount than lower pensions, even if their growth is temporarily limited “in favor of people with lower pensions”.
Fiala (SPD) : The House of Representatives could discuss the increase in pensions on February 28
According to Radim Fiala, chairman of the parliamentary club of the SPD opposition movement, the House of Representatives should discuss the government's proposal to increase pensions from June at an extraordinary meeting on February 28. He said this to ČTK today after a meeting with Minister of Labor and Social Affairs Marian Jurečka (KDU-ČSL). The SPD will not support the proposal, which envisages a lower valuation of pensions. ČTK is seeking the statement of the head of the ANO club, Alena Schillerová, who also spoke with Jurečka today.
According to Fiala, Jurečka explained why the government decided to take this step. Fiala countered that the cabinet may make savings, but seniors will get into huge financial problems. “I said that the SPD will of course vote against this proposal of theirs,” noted Fiala. According to him, it is not possible to agree to the fact that pensions for seniors will decrease in real terms.
The deputy prime minister defended the government's action by saying that pensions are growing very quickly, Fiala said. But the opposition politician argued that this is due to rising inflation, which, according to him, is due, among other things, to the energy crisis that the cabinet has not managed.
At the end of last year, more than 2, 84 million people, of which 2.37 million had an old-age pension. According to the ministry, the average retirement pension in January was 19,438 crowns. The ministries of the interior, defense and justice also have their pension systems.
According to lawyers, the lower valuation of pensions would probably survive a constitutional review
According to constitutional lawyers, a change in the law that would allow a lower valuation of pensions in June would probably survive a possible review of constitutionality. Lawyer Ondřej Preuss told ČTK today that he does not believe that a possible reduction in the valorization of pensions would be materially unconstitutional, according to lawyer Jan Kysela, the decisive issue is retroactivity, in another level, according to him, the proposal would stand.
The government announced on Wednesday that the old-age pension could increase by an average of 750 crowns from June due to inflation, which corresponds to an increase in the merit percentage part of the pension by 4.9 percent. According to the previous adjustment, the percentage areas should increase by 11.5 percent, according to the proposal of the Ministry of Labor. The head of deputies of the opposition ANO, Alena Schillerová, told today's Prav that she will turn to legal experts to analyze whether the government's procedure has an “unconstitutional dimension”. Also according to the ČSSD, the law is procedurally unconstitutional. “If there is a lower valuation, we as social democrats will initiate a constitutional complaint,” said the former government and parliamentary party in a press release sent to ČTK today.
However, Preuss does not believe that a possible reduction in pension valuation would be substantively unconstitutional. “That would mean emptying the role of the legislator. Deputies and senators are there precisely to defend such decisions, and the constitution only sets extreme limits,” Preuss told ČTK.
Kysela emphasized that it depends on the form of the modification. “In my opinion, the decisive factor is when the right to valorization arose. If it has already arisen, i.e. it arose in a certain amount, which the government regulation will only make clear, there may be a problem of retroactivity,” he said. However, if the claim does not arise until later and the rules change by then, it would not necessarily be retroactive. He added that he is unable to solve this question because he is not an expert on the Pension Insurance Act.
It would be more important if the procedure is not arbitrary and discriminatory, added Kysela. He also mentioned that the position of the poorest pensioners is improving, pensions will increase equally and the ratio of pensions to the average wage has improved in recent years. “Which is important both for assessing social solidarity and cohesion, and for defining the core of the right to adequate security in old age. In this respect, it seems to me that the proposal would stand,” he said.
According to the law, pensions are increased regularly since January and then also exceptionally if the price increase exceeds five percent during the monitored period since the last addition. From last July to this January, the price increase for pensioner households amounted to 9.9 percent, according to the statistical office. According to the current legal rules, the merit percentage of pensions should be increased by that much from June. However, according to Minister of Labor and Social Affairs Marian Jurečka (KDU-ČSL), 34.4 billion crowns would be needed for this year. According to the new formula, it will be around CZK 15 billion. Changes to the legislation, according to which pensions would rise less than the law now requires, must still be approved by Parliament and signed by the President.