Czech Senate Passes Controversial Reduction To Planned Pension Indexation
Based on the bill, the average monthly pension will increase by CZK 760 in June, rather than by CZK 1,770 as planned. Photo credit: CG / Brno Daily.
Prague, March 9 (CTK) – Yesterday, as expected, the Czech Senate passed the controversial lowering of the June pension indexation, proposed by the government on the grounds of controlling the increase in state expenditures.
Based on the bill, the average monthly pension will increase by CZK 760 in June, rather than by CZK 1,770 as planned.
The bill still needs to be signed into law by President-elect Petr Pavel after he assumes his office on Thursday. He promised to announce his position on Friday.
48 senators from the parties of the government coalition, including the Civic Democrats (ODS), Christian Democrats (KDU-CSL), TOP 09, Mayors and Independents (STAN) and the Pirates, voted in favour of the bill. 12 senators mainly from the opposition voted against it, and 12 senators abstained from the vote.
The lower indexation would cost the state CZK 15.4 billion this year, instead of the CZK 34.4 billion envisaged by the previous plans.
In the seven years to 2030, the costs would gradually increase to a total of CZK 291.3 billion, Finance Minister Zbynek Stanjura (ODS) told senators, plus further expenses worth CZK 50.5 billion related to the state debt, for a total of CZK 342 billion. He said that the government would have to borrow money for this.
Stanjura argued that the opposition’s suggestion to neither increase budget expenditures nor increase income through raising taxes, while at the same time decreasing the budget deficit, was not feasible.
According to the Labour Ministry, the average retirement pension was CZK 19,438 in January. After the lowering of the indexation, the average pension will rise to over CZK 20,000, reaching 46% of the average wage, the ministry said.
If the indexation had not been lowered, pensions would increase to 48% of the average wage, from a previous level of around 40%.