Pensions will again increase exceptionally due to inflation from June, but growth will moderate

Pensions will again increase exceptionally due to inflation from June, but growth will moderate

Since June, pensions have increased exceptionally again due to inflationší, growth but mitigate

Minister of Labor and Social Affairs Marian Jurečka at a press conference in Prague after the government meeting, February 15, 2023.

Prague – Retirement, disability and survivors' pensions will increase again from June due to inflation. The old-age pension could increase by an average of 750 crowns. All pensioners should receive 400 crowns, and the percentage of their pension should be increased by 2.3 percent. The government agreed on this. After her meeting, Minister of Labor Marian Jurečka (KDU-ČSL) said this at a press conference. The cabinet adjusted the valorization formula due to high expenses. Thus, pensions should increase less than the law now mandates. Changes to the legislation must still be approved by the Parliament and signed by the President. According to Jurečka, the government should send the proposal to the House of Representatives next week.

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According to the law, pensions are increased regularly starting in January and then also exceptionally if the increase in prices exceeds five percent during the monitored period since the last addition. According to the Czech Statistical Office (ČSÚ), the price increase for pensioner households was 9.9 percent between last July and this January. According to the current legal rules, the merit percentage of pensions should be increased by that much from June. It is over 1500 crowns. According to Jurečka, the need for this would be 34.4 billion crowns this year, and the amount would continue to grow in the following years. According to the new formula, it will be around CZK 15 billion. The average pension is to rise by 750 crowns.

Experts and some politicians have pointed out that with the extraordinary increase in pensions due to high inflation, under the current rules, people with low pensions, who feel the increase in prices more, will be less well off. They criticized the government for not changing the settings yet. They also mentioned a big impact on the budget. According to Jurečka, the new setting responds to these reservations.

“The increase will have two components. The first will be an increase in the pension by the same amount of 400 crowns for everyone and then a further increase above this amount in the amount of 2.3 percent. The average pension will increase by 750 crowns,” said Jurečka. He pointed out that the average retirement pension will thus exceed 20,000 crowns. In January, according to the ministry, it reached 19,438 crowns.

The pension consists of two parts. The solidary basic acreage is the same for everyone, and the merit percentage reflects the years worked, the amount of contributions from earnings and the number of raised children. In case of extraordinary valorization, only the merit part is increased so far. The minister pointed out that double-digit inflation and the subsequent high impact on the budget were not taken into account when setting the rules.

Over 2.84 million people received pensions from the Czech Social Security Administration (ČSSZ) at the end of last year, of them, 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.