Czech pensions to rise

by Anastasia Alexandridou

Prime Minister Andrej Babiš’s government announced a change in the composition of pensions earlier this month, according to Jan Velinger, correspondent at Radio Praha.

“The Czech pension scheme has two components: a fixed sum pension and an earnings-related part. The flat-rate fixed sum part provides all entitled citizens with a basic pension. The earnings-related component has a strong redistributive character,” reads Wilmington plc’s Pension Funds Online.

The new change sets the fixed sum, which will remain the same for everyone, 1% higher in the upcoming year, according to Radio Praha.

More specifically, in 2017 the fixed sum of pensions was 9% of the average salary in the Czech Republic. In 2018, the fixed sum should reach 10%, according to Radio Praha.

“The change will raise lower pensions, while slowing down increases in roughly one-half of all pensions,” said Labour and Social Affairs Minister Jaroslava Němcová according to the Prague Daily Monitor of February 26, 2018.

At the end of 2017, the Czech Social Security Administration (CSSZ) paid old age pensions to over 2.4 million people (the Czech Republic has around 10.5 million inhabitants), with an average sum of 11,850 crowns, according to the Daily Monitor.

Here are some recent statistics on Czech pension payments:

A mere one out of 10 old age pensioners received more than CZK 14,501 (€ 571,20) per month in 2016.
Half of them received more than CZK 11,344 (around € 447,40) two years ago.
one out of 10 received less than CZK 8,576 (around € 338,20).
The average monthly pension in 2016 was CZK 11,460 (€ 452).
The average monthly pension rose to CZK 11,828 (€ 466,5) as of last September, Radio Praha reports.

Based on article of Radio Praha. Conversions: the online converter (http://www.xe.com/), Feb. 27, 2018.

The latest change in September 2017 brought CZK 368 more to each Czech pensioner monthly (just under 15€).

The poverty line for 2013 was set at CZK 116,093 per year, or CZK 9,674 per month. 9% of all old age pensioner households [starobní důchodci] fell below the poverty line in 2013 and 2014, according to the Czech Statistical Office’s (CZSO) data.

Czech men retire at 63 years and two to four months, while childless Czech women retire at 62 years and four to eight months and mothers of children even earlier, Daily Monitor writes.

From the perspective of an individual’s overall quality of life, the latest increase doesn’t bring a big change, but of course, it could be a good start.

 

Czech Tips

Leave a Reply