- Hans Weber
- November 29, 2023
Changes to Early Retirement in Czech Republic Raise Concerns for Future Pensioners
Prague, Czech Republic – Renowned pension advisor Martin Kohoutek has warned that early retirement in the Czech Republic may no longer be advantageous due to impending government changes. The conditions surrounding early retirement are set to undergo significant deterioration, prompting concerns among those considering this option. However, Kohoutek suggests that interested individuals can employ a clever strategy to maintain favorable conditions.
Currently, nearly one-third of pensioners in the country have opted for early retirement. Last year, early retirement proved more advantageous than regular retirement due to extraordinary valorizations resulting from high inflation. A similar situation is expected to occur this year with another exceptional valorization in June.
However, the implementation of new rules will lead to a considerable reduction in the benefits of early retirement. The percentage of the pension exchange will not increase until the regular retirement age is reached, resulting in minimal valorization for these pensions. Furthermore, two additional changes are planned to take effect from the fall of 2024. Early retirement will only be available three years before reaching regular retirement age, and individuals will need 40 years of pension insurance to qualify.
In light of these impending changes, Kohoutek advises those interested in early retirement to take specific steps to maximize their benefits. The recommended approach involves submitting a form expressing interest in early retirement during the summer. This initiates a six-month period, during which individuals can subsequently submit a formal application for early retirement. The application will then be retroactively recognized within six months from the date of the form submission, provided the individual meets the current conditions for early retirement.
By following this process, individuals can carefully choose when to approve their pension, potentially deferring until November or December. One advantage of this approach is that from the end of September, it will be possible to precisely calculate the pension granted in 2024, as the necessary parameters will already be known.
Given the forthcoming legislative changes that will negatively impact early retirement, it is strongly recommended to submit a form expressing interest in early retirement before the fall of 2022. Individuals who are eligible for regular retirement in 2024 are advised to apply for early retirement and calculate the appropriate variant in the fall. However, the situation becomes increasingly unfavorable for those with eligibility for regular retirement in subsequent years, such as 2025, 2026, 2027, and beyond.
Article by Prague Forum