Prague, July 20 (CTK) – The current Czech pay-as-you-go pension system is sustainable in spite of population ageing, Vladimir Spidla, chief aide to Prime Minister Bohuslav Sobotka (Social Democrats, CSSD), told journalists today, referring to a Government Office’s study that is available to CTK.
No major reform of the pension system is needed, said Spidla, head of the Masaryk Democratic Academy, which is a think tank of the CSSD.
Demographic parameters are not going to change by 2080 to such an extent that would cause the disintegration of the system, he added.
The study, which is to be posted on the Government Office website on Monday, was worked out by the government’s analysis section and it describes pension reforms in Central Europe, the Baltic states, Sweden, Switzerland and Latin America.
The authors openly present their left-wing attitude to the issue. They include Michal Picl, CSSD expert on EU funds, and Vit Kleparnik, founder of the leftist think tank Cesta.
According to the study, the Czech pension system can be maintained provided that its parameters are adjusted, a higher portion of GDP is sent to the pension account and the saving in the third pillar of the system is reinforced. A radical reform is unnecessary if the system manages to react to the changes in the labour market and the onset of robotics, the authors write.
Taxes should be imposed on robots and more money is to go to the pension system since salaries are to rise, they add.
Poland, Slovakia and Hungary introduced mandatory saving in pension funds, however, Poland and Slovakia lowered the mandatory contributions after a few years and Hungary scrapped the whole system, which caused a wave of criticism.
In the Czech Republic, the right-wing government of Petr Necas (Civic Democrats, ODS) introduced a moderate pension reform called the second pillar, within which people could send a part of their compulsory pension insurance to private pension funds. Sobotka’s outgoing government scrapped this reform.
The authors write that the main motivation behind the reform was the effort of certain economic lobbies, including pension companies, to gain finances.
The Czech right-wing opposition claims that Sobotka’s government abolished the second pillar without introducing any alternative to increase the stability of the system, in which the expenditures have been higher than revenues for years in a situation of population ageing. People aged over 65 represent about one fifth of Czech society, but in 2030 they may form nearly one fourth and in 2050 one third of society.
Many experts say the pensions can be high enough only if the system is changed and people also start saving for their old age on their own.
One of the parameters of the pension system is the retirement age, which has gradually been rising the Czech Republic and its ceiling is set at the age of 65 at present.
The authors of the study point out that pension reforms focus on making the system sustainable rather than on the situation of pensioners. Spidla said the debate concerns privatisation, though it should rather deal with different pension levels of men and women.
The pension insurance for parents of several children might be lowered and fictitious accounts used in Sweden might be introduced into the state pay-as-you-go system.
Possible changes to the pension system were discussed by a special commission comprising experts and members of the major parties. Spidla said it would be advisable that this commission resume its work after the autumn general election.
