Pension reform to reduce budget revenues by CZK 45bn in 2013-2015

Prague, Sept 26 (CTK) - The launch of the planned pension reform as of next year will reduce state budget revenues by about Kc45bn in 2013-2015, according to the Finance Ministry's estimates.

The medium-term state budget outlook reckons with such a fall, the ministry said.

The launch of the pension reform may, however, get complicated as President Vaclav Klaus has vetoed the technical bill that would enable Czechs to send part of their compulsory pension insurance contributions to private accounts as from next year.

It is not yet clear whether Chamber of Deputies will override Klaus's veto since several MPs from the ruling coalition Civic Democratic Party (ODS) have joined Klaus's opinion.

Pension funds and experts nevertheless believe that the reform can be launched even without the vetoed technical legislation.

The draft state budget for 2013 reckons with a Kc6bn drop in revenues from social insurance resulting from the pension reform. In 2014 the fall should amount to Kc19.3bn and in 2015 to almost Kc20bn.

"The estimates of around Kc20bn are realistic," analyst David Marek of the Patria Finance company said.

However, the size of the decrease in state budget revenues resulting from the introduction of the pension reform is hard to estimate since it is unclear how many people will join the second pillar, Marek said.

"The costs may move between zero and Kc36bn," Marek added.

The Finance Ministry can cover costs connected with the pension reform from a special account. At the end of this year there should be Kc22.39bn on this account. At the end of 2009 the sum reached about Kc21n. In 2013, revenues from dividends worth about Kc150m should be transferred to the account.