The government coalition has decided to significantly slow down the growth of the retirement age, which is part of the pension reform under discussion. For the majority of future retirees, this will mean earlier retirement, and for the state budget an intervention of several tens of billions. The alternative proposal of the Czech Demographic Society is intended to prevent greater differences between individual generations and, according to demographers, stick more fairly to what data on life expectancy show.
A fundamental part of the pension reform will thus be changed. He confirmed the agreement of the government coalition parties to the server iToday Minister of Labor Marian Jurečka (KDU-ČSL). The change is to be included in the amendment during the legislative process in the Chamber of Deputies. Server E15 then Jurečka said that the difference between the new and original version should amount to roughly 0.4 percent of GDP.
A fundamental difference compared to the original proposal from the workshop of the Ministry of Labor is the practically linear growth of the retirement age limit. So ideally, the difference between the individual years should always be a month later retirement. At the same time, demographers assume that the data show a similarly linear growth in life expectancy over the long term.
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“A suitable characteristic of the period of receiving an old-age pension is the generational life expectancy at the age of 65 (i.e. the number of years left to live for a 65-year-old person belonging to a given generation). According to current forecasts, we expect its value to grow almost linearly, the difference between individual generations will only change very slowly. Therefore, we recommend a linear increase in the retirement age with the same difference between individual generations,” the demographic society said in its statement opinion.
The development of the retirement age according to the alternative proposal of the Czech Demographic Society. Photo: ČDS
Therefore, if the government strictly adheres to the demographers’ proposal, the retirement age would be raised by one month every year since 1966. The 1977 year would break the 66-year mark, and the 1978 year would then retire at 66 years and one month. For the years 1979 to 1983, the age would then be determined according to the report on demographic development in 2028, as the law already regulates, demographers advise.
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In contrast, the original proposal of the Ministry of Labor envisaged that the retirement age should be raised above 65 for people born in 1966 by two months above 65. For the year 1967 it would be another two months, for the year 1968 one month, for the year 1969 another two months. For those born between 1970 and 1972, the age limit would remain at 65 years and seven months. The year 1973 would be delayed by two months.
The difference in the increase in the retirement age between the proposal of the Ministry of Labor and the Czech Demographic Society. Photo: ČDS
The retirement age is already increasing. For men it is two months a year and for women it is usually four months. He should reach 65 in the 30s. According to the original draft of the reform, the pension limit should be set every year for people who will be 50 years old according to their expected life expectancy. It could be postponed by a maximum of two months per year so that the pension lasts an average of 21.5 years. It would grow irregularly – some vintages by a month, others by two months or not at all. Demographers suggest a slower and more regular increase of one month per year so that people spend roughly a quarter of their lives in retirement. As life expectancy increases, the average time in retirement would also increase slightly.
For most of the mentioned years, the demographers’ proposal would mean a slightly earlier retirement, but above all, the demographers argue that there would be no significant inequalities between pensioners of very similar ages. “The ČDS proposal would ensure an even and gradual increase in the period of receiving a pension, according to the proposal of the Ministry of the Interior, the period of receiving a pension would increase disproportionately for some generations compared to the previous generation, while for others, on the contrary, there would be a slight decrease in the period of receiving a pension,” added the demographers.
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