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Senior – wallet – pension – money – senior – pension. Illustrative photo.
Prague – The Ministry of Labor and Social Affairs (MPSV) proposes that the valuation of pensions should no longer take into account all inflation, but only two-thirds of it. The new rules should apply from January next year, for at least the next two years. Czech TV (ČT) reported it today. The government wants to officially present the agreement to slow pension growth within a few weeks.
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The Minister of Labor Marian Jurečka (KDU-ČSL) spoke about the possible amendment of the law already last week. “This year and before the overall package of pension reform, we will prepare material that should adjust the legislative conditions of valorization – whether regular or extraordinary. We will want to correct the differences that arise, otherwise the gap between lower-income and high-income seniors will become even wider are opening,” Jurečka said last Sunday.
Pensions consist of two parts. The solidarity basic amount is the same for everyone and corresponds to ten percent of the average wage. This year it amounts to 4040 crowns. The merit percentage part then reflects the years worked, the amount of contributions from earnings and the number of raised children. In the case of extraordinary valorization, the percentage is increased according to the Pension Insurance Act. The extraordinary addition follows the fifth month after a month in which the increase in the price index for the period under review exceeds the five percent mark. The percentage is increased by the percentage of the increment.
According to CT, if pensions were valued at two-thirds of inflation, their increase from January next year would be about 100 to 200 kroner less per month than under the current rules. It will also depend on the level of this year's inflation. Next year, this could mean a saving of over ten billion crowns, and a year later over CZK 14 billion.
The opposition will not support a slowdown in the growth of pensioners' incomes. “They contributed to the social system, now the system is supposed to take care of them. And it's not like we're going to tap into these incomes in these difficult times. Unacceptable,” Alena Schillerová, chairwoman of the ANO parliamentary club, told CT. “We would not support it, because the result will be that people's real pensions will decrease,” said SPD parliamentary club chairman Radim Fiala.
However, according to experts, the rules for extraordinary valuations should be adjusted. Experts and some politicians point out that people with low pensions, who feel the increase in prices more, will improve less in the case of extraordinary increases in pensions due to high inflation. They criticized the government for not changing the settings yet. They also mentioned a big impact on the budget. Last year, two extraordinary valorizations increased pension expenses by approximately 29 billion crowns. The amount increases every year.
Last year, pensions were increased three times in total – properly in January and exceptionally due to inflation in June and September. Almost 57 billion crowns were needed for the three additions. This year, pensions were raised in January. Jurečka told ČTK this Friday that old-age, disability and survivor's pensions could increase again exceptionally in June due to inflation.
Over 2.84 million people received pensions from the Czech Social Security Administration (ČSSZ) at the end of last year 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.
