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Czech News in English » Business » Finance » Government approves changes to pensions' level

Government approves changes to pensions’ level

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Prague, Feb 27 (CTK) – Old-age pensions of people over 85 will be increased by 1,000 crowns a month as of January 2019 based on an amendment to the pension law approved by the Czech cabinet on Tuesday.

The bill is yet to go through the parliament.

The bill brings a change to the fixed part of the pensions which is the same for everyone. It should be increased to 10 percent of the average salary from the current 9 percent.

The national average pay is currently over 29,000 crowns.

According to Labour and Social Affairs Minister Jaroslava Nemcova (for ANO), one half of the pensioners will be receiving higher pensions owing to the changes, while the other half will see a slower growth of their pensions.

All pensioners should get an increase of at least 540 crowns in a monthly pension including the regular pensions’ indexation, of which 320 crowns would be the extra increase, Nemcova said.

PM Andrej Babis (ANO) said there will be a further increase linked to the merit-based part of the pension.

“The overall rise will be 918 crowns on average,” Nemcova added.

The overall costs of the pensions’ rise are 14.5 billion crowns, of which 12 billion will cover the flat rise and 2.5 billion will cover the rise in some of the pensions by 1,000 crowns, Nemcova said before the cabinet’s meeting.

Babis said the cabinet would make funds for the rise available through an amendment to the National Property Fund law, which it is to be debated next week.

“There are 21 billion in the fund that the cabinet will use for pensions,” Babis said.

The new measures are to help people with small pensions. Those who have been taking pension for a longer time could see a rise and so would women and people who retired earlier or those who were earning less money. A majority of those who retired in the recent years will see a slower rise.

Last year, the Czech state pay-as-you go pension system ended in surplus for the first time in eight years, its revenues exceeding the volume of distributed pensions by 0.9 billion crowns, according to the data the Czech Social Security Administration (CSSZ) released on Tuesday.

The system previously remained in deficit from 2009. In 2012 and 2013, the gap reached almost 50 billion crowns.

Last year, a record 405.3 billion crowns were collected in pension insurance payments as a result of the high employment rate and rising wages.

Before, the pension system ended in surplus in 2008 last time, when the volume of contributions flowing to it exceeded the sum distributed in pensions by six billion crowns.

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