Extraordinary Pension Growth and Future Outlook in the Czech Republic

Pensioners have clearly been the preferred group of the population in the Czech Republic in the last ten years. No one’s standard of living has risen as much as they have. It should be noted that even in 2014 the average pension amounted to CZK 11,075 and it did not seem that it should increase any more sharply. But then things took a rapid turn and the result is that next year the pension will be 20,693 crowns.

This hasn’t been here for a long time

This represents practically double over this period. At the same time, you will hardly find an employee whose salary has increased from, for example, CZK 20,000 to CZK 40,000. Certainly there will be some like that, but in the case of pensioners we are talking about a coherent group reaching almost three million individuals.

From this point of view, however, the growth of pensions next year will be truly extraordinary. And extremely low. The pension will be increased by only CZK 360, in the form of an allowance on the solidarity basis of the pension across the board. This is to ensure that everyone receives the same amount and to reduce the gap between high and low income pensioners. The meritorious portion of the pension will not increase even by a crown, which is something completely unheard of in recent years.

This is a continuation of the trend, where pensioners are at least getting on the back foot and the state is trying as much as possible to relieve the pension system, which is currently very burdened. That is why he also intervened at the moment when it became clear that this year’s extraordinary pension valorization will raise the pension by an average of CZK 1,800. However, the state budget could not afford this, so it was artificially reduced to just 760 CZK. However, even that cost 19 billion crowns.

Foto: Shutterstock

Will it increase during the year?

“When I first heard it, I thought they were joking. They already rounded up the increase for us this year, and now they’re only going to add 360 CZK? After all, what will you buy for that today? I can’t even take my granddaughter to the cinema for that,” says Mrs. Anežka from Jindřichova Hradec. “At the same time, everything keeps getting more expensive. So we will turn over every crown again.“

At the same time, it is still not clear how inflation will affect pensions next year. Although it is still high, it is decreasing at a relatively fast pace. The Czech National Bank expects that it could drop to the required two percent next year, but it is far from certain. Any external shock can cause another sharp rise in prices, which would then also affect pensions.

Read also: Pensioners have matured for it. They take 3 thousand more per month than what they should have taken. This is how it’s done, learn

But forget about the extraordinary valorization that paid off so much for pensioners last year. This will be replaced by temporary fulfillment in the form of contributions, which will not be so financially interesting and, moreover, will not increase pensions permanently.

Foto: Shutterstock, resources: Ministry of Internal Affairs and Communications, CSSS

2023-10-15 16:00:00
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