President Delays Signing of Pension Law, Deferring Date of Effect
The pension amendment tightens the conditions for early retirement. Credit: Pixabay.
Prague, Sept 4 (CTK) – As many as 10,000 people may be able to retire earlier due to the postponed effect of the law on pension changes, which could raise spending by up to CZK 4 billion next year, Czech Labour Minister Marian Jurecka (KDU-CSL) told CNN Prima on Saturday.
“Based on the experience of last year, there may be as many as 10,000 people who can opt in, although it may not be that advantageous for them,” Jurecka said. Thus, he said, a one-month delay in the effective date could have a budgetary impact of CZK 3-4 billion in 2024. He said that such a large number of people retiring could incur significant costs to the state.
The pension amendment tightens the conditions for early retirement. The government had originally planned the changes to take effect from September. However, President Petr Pavel said at the end of August that he had reservations about the bill and was still deciding whether to veto it or sign it later. He finally signed it on 1 September, which means that it will take effect from October. The amendment limits early retirement from five years to three years from October, and further lowers the level of the pension received.
Shadow labour minister Ales Juchelka (ANO) criticised the pension amendment in the discussion program on Prima TV today. “A strange game has been played with those who want to retire. It was played by the president and the government,” Juchelka said. He said there was no need to change the pension rules.
Early retirement is currently possible from the age of 60, at the earliest. The retirement age has been gradually increasing, and the age for possible early retirement is therefore increasing as well. Men and childless women are entitled to a regular pension at 64 this year, so they can retire up to four years earlier. In the early 2030s, the retirement age will reach 65. The period for possible early retirement was to reach five years then, but the amendment now reduces it to three years.
Jurecka said this reduction could affect up to 2,000 people who would have to postpone the beginning of their early retirement. A report accompanying the pension amendment stated that about one in ten early pensioners retire more than three years before their regular retirement age. Half of early pensioners retire less than 12 months before the regular retirement age.
President Petr Pavel expressed reservations about the amendment, saying it lacked a transitional period for reducing the limit for early retirement. He also blamed the government for the fact that the new setting of extraordinary indexation was more expensive than the current one.
Jurecka said people had known about the plan to tighten the conditions for early pensions and shorten the transition period since April, and could have made arrangements accordingly. He added that the new model of extraordinary indexation costs more, but is intended to limit the gap between higher and lower pensions.
The Czech social security administration has been facing a high number of applications for early retirement since last autumn. In the last quarter, it received nearly 120,000 such applications, a significant increase since the Labour Ministry said in October 2022 that early pensions were advantageous. Early retirement last year was higher than a new regular pension this year. Jurecka noted that it is no longer advantageous.