Prague, Sept 14 (CTK) – Too little attention has been paid to the pension system, Martin Potucek, head of the pension reform commission set up by the outgoing Czech government, said after the last meeting of the commission on Thursday.
The final report on the commission’s work admits that its effort to reach an agreement on a reform of the Czech pension system has not been very successful.
The centre-left government of Bohuslav Sobotka (Social Democrats, CSSD) formed the commission of representatives of politicians, experts, trade unions and various organisations. Politicians in the commission shared the view that the system must be changed, but they failed to agree on how the reform should look like.
After the October general election, a new, more effective model of work on a pension reform should be found, the report says.
Potucek said the state pay-as-you-go system, called also the first pillar of the pension system, will not collapse, although some warn about its disintegration.
“There will always be money for pensions. The state cannot let its citizens abandoned. However, it is a question whether the pension would be dignified. It will cover the needs of the pensioners more or less,” he said.
Potucek said the present decision of the system’s reform will influence the situation in 20 or 30 years.
He said the conclusions and proposals of the commission will be released in October.
The task of the commission was to present a comprehensive solution that would guarantee the stability of the pension system and pensions at sufficient levels.
This has not been achieved and the Czech pension system remains in a deficit. The pension account deficit was decreasing in the past few years, but this was thanks to the economic growth and the low unemployment rate. A vast majority of old people in the country depend on the state pension and their incomes sharply drop due to retirement.
The commission has presented ten proposals for changes in the pension system to the Labour and Social Affairs Ministry since its first meeting in May 2014. The ministry submitted nine of the proposals to the government, and eight of them were pushed through parliament and took effect.
The commission proposed to set a ceiling for the gradually rising retirement age at 65 years. It prepared the abolition of the second pillar of the pension system, which had been introduced by the previous right-wing government.
Within the second pillar, Czechs were able to redirect 3 percent from their social insurance payments to the pay-as-you-go state system to private funds if they added 2 percent from their own money. The participation in the second pillar was voluntary.
Sobotka’s government said the second pillar undesirably siphoned off money from the state pay-as-you go system, the first pillar.
The state subsidises private pension saving schemes (third pillar), to which people may contribute in addition to the first pillar.
