Právo: Pensions to rise by just CZK 174 in 2012

Prague, Nov 3 (CTK) - The average monthly old-age pension in the Czech Republic is to rise by 174 crown as of January 2012, which is much less than the government promised in the summer, the daily Pravo reports yesterday, referring to the Labour and Social Affairs Ministry.

"The average old-age pension will be indexed by 174 crowns as from January," Pravo cites the ministry's proposal.

In August, the Labour and Social Affairs Minister Jaromir Drabek (TOP 09) proposed that old-age pensions be raised by 259 crowns on average.

However, in September the ministry released a draft directive on its website under which the pension rise would be lower.

The government has repeatedly promised the indexation of pensions to compensate pensioners for higher prices of food, medicines and other products in connection with the planned rise in the lower VAT rate from the current 10 to 14 percent.

The VAT increase will primarily affect pensioners and low-income families with children.

According to the Finance Ministry's calculations, a pensioner's costs of living are to rise by almost 2 percent next year or by 313 crowns a month on average.

Pravo writes that the impact of the government austerity measures on pensioners might be even more severe. Moreover, rents and energy prices are to increase, too, it adds.

The ministry-proposed indexation of pensions will definitely not help most people who have retired since September 29 as their old-age pensions will be by up to 170 crowns lower than if they retired earlier, Pravo writes.

The government thereby reacted to the Constitutional Court's verdict from last year, saying that the present system does not sufficiently reflect how much people contributed to the state pension system while working.

As a result, 70 percent of new pensioners should get lower pensions than they would get now and 20 percent of people with high incomes should get higher pensions than now.

Differences between newly calculated pensions are to increase even more in the future.

According to statistics, the average old-age pension in the Czech Republic is some 10,500 crowns, while the average monthly gross pay is slightly over 23,000 crowns.

($1=18.214 crowns)