Retired and disabled pensioners in the Czech Republic will see an increase in their pensions starting today. This increase is a result of extraordinary indexation due to high inflation that has impacted the country over the past two years. The average increase amounts to 755 CZK, with the average old-age pension expected to reach 20,216 CZK compared to the current average of 19,461 CZK.

Jitka Drmolová, a spokesperson for the Czech Social Security Administration, confirmed that the increase would be automatically applied to old-age, disability, and survivors’ pensions. Pension payments consist of two parts: the solidarity necessary amount, which is the same for everyone, and the percentage amount based on factors such as years worked, earnings deductions, and the number of children.

In June, the percentage amount of pensions increased by 2.3% along with a fixed amount of 400 CZK. The basic amount of pensions typically only increases during regular January indexations. Pensions approved before June 1st will reflect the increase in the June payment, while pensions approved later in the year will be indexed from their approval date.

For example, pensions currently set at 14,000 CZK will increase by 630 CZK, while pensions based on 16,000 CZK will rise to 16,676 CZK. Additionally, individuals who turn 85 in June will receive an additional thousand CZK in the indexed percentage amount.

Due to a large number of pension applications being processed, some individuals may experience delays of several days. However, these applicants will still receive the current increase and will not miss out. It is expected that this extraordinary indexation will be the last for the time being, as current inflation figures do not indicate another indexation occurring this year.

Starting next year, the government plans to introduce a temporary extraordinary contribution instead of indexations in the event of a significant price increase. This contribution will only be paid until the end of the year if cumulative price inflation reaches five percent. The calculation of regular indexations will also undergo changes, pending approval by parliament and the president’s signature.

MPs will discuss slowing down pension indexation and tightening conditions for early retirement at an extraordinary meeting scheduled for next Thursday. These discussions aim to address the financial sustainability of the pension system and adapt it to changing economic circumstances.

Article by Prague Forum