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Czech pension system has lowest deficit since 2008

ČTK |
30 December 2015

Prague, Dec 29 (CTK) - The Czech pension system had a deficit of 22 billion crowns in the first three quarters of the year, the lowest since 2008, according to the data of the Czech Social Security Administration (CSSZ) that show that both spending on pensions and social insurance paid have increased.

The deficit of the pension account amounted to 28.6 billion crowns at the end of September 2014 and to 32.5 billion crowns in the same period of 2013.

As from the end of September, there were 2.37 million old-age and 422,450 disability pensioners in the country. The widower´s, widow´s and orphan´s pensions were received by 67,650 people. On the whole, the CSSZ paid pensions to 2.86 million persons in the country with a population pf 10.5 million.

In 2014, the total was 3500 lower and in 2014 there were about 14,000 fewer pension recipients.

From January until end-September, 260.9 billion crowns were collected for pensions. In the same period last year, the figure was 13.8 billion crowns lower and in 2013 it was 20.1 billion lower.

The reasons for the increase this year are higher employment and wages.

The growth in the number of pensioners and consequently the spending is slowed down by the raising of retirement age. The expenditures also grew more slowly due to a lower indexation which was pushed through by the former rightist government of Petr Necas (Civic Democrats, ODS) as an austerity measure amid the economic crisis.

The centre-left government of Bohuslav Sobotka (Social Democrats, CSSD) returned this year to the original pace of raising pensions by inflation and one third of the rise in real wages.

On the other hand, the raising of the spending is due to that people with higher pensions retire.

The pension system was in surplus for the last time in 2008 when the surplus amounted to six billion crowns. With the arrival of the crisis in 2009, the system registered a deficit of 30.5 billion crowns and since then, it has been decreasing. It reached 49.7 billion crowns for the whole year 2013. Last year, thanks to the beginning economic revival, it dropped to 43.4 billion crowns.

The Czech pension system also ran into a deficit in the 1990s and in 2003, when the government reacted by raising pension insurance by 2 percentage points to 28 percent. In 1996, on the contrary, the payments dropped from 27.2 percent to 26 percent and the system slipped into a deficit.

This year, pensions were raised by an average of 200 crowns. As from January 2016, the pensions will go up by a mere 40 crowns monthly because both inflation and the increase in real wages were low. That is why the government decided to pay out a one-off bonus of 1200 crowns to the pensioners in February 2016.

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