Pensions To Increase By CZK 850 From January, Totalling CZK 19,500 With Child Bonuses
The average old-age pension could increase by about CZK 850, regularly indexed from January. With child-raising bonuses, it could total around CZK 19,500. Labour Minister Marian Jurečka announced the increase at a press conference on Tuesday. According to the minister, it will be clear in September how much of the added amount should go to the solidarity and merit part of the pension. Photo: Prime Minister Fiala in discussion with Labour Minister Marian Jurečka before the meeting on 21 June. Credit: vlada.cz
Czech Republic, July 30 (BD) – Old-age, disability and survivors’ pensions in the Czech Republic have been indexed since January. They have increased according to price rises and half the increase in real wages. Pensions consist of two parts; the basic solidarity rate is the same for everyone and corresponds to ten percent of the average wage, while the merit part reflects years of service and the amount of contributions from earnings. Pensions can also be indexed exceptionally if prices rise by more than five per cent over the given period.
“From 1 January next year, based on the current data, we can assume the average increase in the old-age pension in the Czech Republic should be CZK 850. The average pension after 1 January 2023 should be roughly CZK 19,500, including the education allowance,” said Jurečka.
The so-called “education allowance”, a bonus added to the pension of CZK 500 per child raised, is provided by an amendment adopted by parliament shortly before last autumn’s elections. The bonus will be added to the merit part of the pension. This also applies to early retirement pensions. The cost of this bonus should amount to almost CZK 19 billion in the first year alone, and will then rise every year after that. The law does not address how the sum will be covered.
Both women and men can receive pensions. Automatically, CZK 500 per child will be added to the amount received by those who retired early to raise their children. Other recipients of old-age pensions must apply for the increase. According to Jurečka, applications can be submitted from 1 September. The bonus will also count towards new pensions, depending on the number of children included in the application for a pension.
The September rise will require CZK 7.8 billion, while the June increase will cost around CZK 21 billion. The regular January increase will require 28 billion this year. In total, almost CZK 57 billion more is expected to go towards pensions this year than last year. Last year, according to the Finance Ministry, CZK 537.4 billion was paid out for pensions, almost a third of state spending.
The allowance is one of the measures the government wants to use to mitigate the impact of rising prices on families. According to the government documents, 1.6 million children could be entitled to the benefit and the expenditure could amount to about CZK 7.8 billion. Labour authorities paid 302,600 child benefits in June, according to ministry data. Recipients should therefore receive CZK 5,000 per child automatically in August. Others will have a year to apply. The money should then reach them by the end of the next month after the decision to grant the amount.