In a landmark decision, the Constitutional Court of the Czech Republic upheld the controversial reduction in pension indexation, dismissing a motion by 71 opposition ANO MPs to repeal last year’s amendment to the pension insurance law. The ruling, announced by court chairman Josef Baxa, stated that pensioners will not receive additional funds through indexation, leading to cries of “Shame!” from disappointed onlookers, particularly pensioners who were present.

Last year, in response to soaring inflation, the government made a one-time adjustment to the extraordinary pension indexation mechanism. However, pensions increased less than expected, resulting in an average monthly loss of approximately CZK 1,000 for pensioners. The government justified this move citing budgetary responsibility and claiming savings of CZK 19.4 billion in the previous year.

Represented by former finance minister Alena Schillerova, ANO MPs argued in court that the government’s actions infringed upon pensioners’ rights, asserting that inflation entitled them to a significant increase in pensions. They further claimed that the government majority abused the state of legislative emergency.

The Constitutional Court judges engaged in extensive discussions over the proposal in closed sessions and held a public hearing, the first in nearly five years, where various experts and ministers testified. The decision to uphold the reduction in indexation was apparently a subject of dispute among the judges.

According to the ruling, the declaration of a state of legislative emergency was deemed constitutional, given the extraordinary economic and financial circumstances caused by inflation. The court contended that the parliamentary opposition had sufficient time to express their views on the bill, rejecting claims of obstruction.

The court also ruled that the reduction in indexation was not unlawfully retroactive, emphasizing that the amendment was passed before pension recipients were legally entitled to receive pensions. The judges underscored that there is no fundamental right to permanent increases in pensions, emphasizing the state’s obligation to provide a fair and adequate pension while considering the current state of public finances.

While recognizing the vulnerability of pensioners, the court emphasized the need for solidarity with contributors financing the pension system. The ruling concluded by highlighting the common interest in maintaining a balanced, fair, and sustainable pension system for current and future generations. Despite the verdict, ANO MPs, led by Schillerova, expressed dissatisfaction and hinted at potential political actions in the future, leaving the fate of pension policies uncertain.

Article by Prague Forum