The Czech Republic is bracing for a multi-year process to implement a new pension processing system due to the outdated nature of the current system. Thousands of individuals who applied for old-age pensions more than three months ago are still waiting for their payments.

In addition to the delayed pension payments, these individuals also find themselves indebted to health insurance companies. The state has not provided the necessary information to confirm their pension status, exacerbating their financial struggles. The current pension processing system has been in use for four decades, with only a small group of social security employees possessing the expertise to operate it.

František Boháček, the head of the Czech Social Security Administration, addressed this issue before members of parliament, acknowledging that the pension processing system is 40 years old and is only running due to sheer luck. Previous attempts to introduce a new system since 2014 have been unsuccessful, encountering various obstacles along the way.

The current plan entails the Czech Social Security Administration developing the new system and securing funding from the National Recovery Plan. According to Boháček, the project is expected to take 10 years and will be carried out in gradual steps. However, experts estimate that the implementation of the new system will take at least five years due to its complexity. The system contains vast amounts of data and a complex algorithm that changes with each legislative modification.

The delays in pension payments and the resulting financial hardships faced by retirees have drawn criticism for being unethical and unfair. Suggestions have been put forward to provide temporary estimated pension amounts to alleviate the financial burden while the final pension calculations are being processed. The issue of health insurance debt for new retirees also persists, as insurers are unable to determine pension status without notification from the state.

Minister of Labor and Social Affairs Marian Jurečka and Prime Minister Petr Fiala have expressed their apologies for the delays in pension payments. They acknowledge the frustrations caused by the extended waiting times and reaffirm their commitment to addressing the issue. The recent surge in applications for early retirement has further strained the pension system.

Minister for Regional Development and Deputy Prime Minister for Digitization Ivan Bartoš explained that even with the implementation of digitalization, defining, testing, and rolling out the new pension processing system would take time. The Ministry of Labor and Social Affairs, led by Karel Trpkoš, has been actively working on digitalization efforts to streamline processes and improve efficiency within the ministry.

Article by Prague Forum