- Hans Weber
- December 1, 2023
Czech Pension Law Changes May Lead to 10,000 Early Retirements and Increased Spending
Czech Labour Minister Marian Jurecka revealed that as many as 10,000 people may be eligible to retire earlier due to changes in pension legislation, potentially resulting in an additional spending increase of up to CZK 4 billion next year. These figures were shared during an interview with CNN Prima.
Jurecka noted that, based on previous experiences, approximately 10,000 individuals may opt for early retirement under the new conditions, although it may not necessarily be advantageous for them. He emphasized that even a one-month delay in the effective date of the law could have a significant budgetary impact, potentially amounting to CZK 3-4 billion in 2024. Such a large number of early retirees could place a considerable financial burden on the state.
The pension law amendment tightens the criteria for early retirement. Originally scheduled to take effect in September, President Petr Pavel expressed reservations about the bill and contemplated whether to veto it or sign it at a later date. Ultimately, he signed the bill on September 1, leading to its implementation from October. Among the key changes, the amendment shortens the period for early retirement from five years to three years and reduces the level of pension received.
Ales Juchelka, the shadow labour minister from ANO, criticized the pension amendment on a discussion program, characterizing it as a “strange game” that the president and the government played with those seeking early retirement. He argued that there was no need for changes to the pension rules.
Currently, early retirement can commence at the age of 60 at the earliest, with the retirement age gradually increasing. Men and childless women are eligible for regular pensions at 64 this year, allowing them to retire up to four years earlier. By the early 2030s, the retirement age will reach 65, and the period for possible early retirement was initially set to extend to five years. However, the amendment reduces it to three years.
Jurecka highlighted that the reduction could impact around 2,000 people who would need to postpone the start of their early retirement. While the new model of extraordinary indexation costs more, it aims to narrow the gap between higher and lower pensions.
The Czech social security administration has witnessed a surge in early retirement applications since last autumn. In the last quarter, it received nearly 120,000 such applications, a significant increase since the Labour Ministry declared early pensions advantageous in October 2022. It is now no longer financially favorable to opt for early retirement compared to the new regular pension scheme this year.
Article by Prague Forum