The Czech government has announced that pensions will undergo an extraordinary indexation of CZK 750 in June due to high inflation. This means that the average pension will exceed CZK 20,000, which represents a significant increase in a relatively short period. According to Labor and Social Affairs Minister Marian Jurečka, this increase is due to the fact that inflation has exceeded 5% since the last expansion of pensions.

The cabinet has also adjusted the valorization formula to account for high expenses, which will result in pensions increasing less than the current law mandates. The changes to the legislation still have to be approved by Parliament and signed by the president, and Jurečka has said that the government will send the proposal to the lower house next week.

There have been recent reports in the media about proposed pension reforms, including raising the retirement age to 68. Prime Minister Fiala has acknowledged the need for pension reform and is willing to discuss its parameters intensively with the opposition.

At the end of last year, more than 2.84 million people received pensions from the Czech Social Security Administration (CSSA), of whom 2.37 million had old-age pensions. The average old-age pension in January was CZK 19,438, so the CZK 750 increase in June will be significant for many people.

This increase in pensions is a positive development for many Czech pensioners, particularly given the current high inflation rates. The government’s decision to adjust the valorization formula is also understandable given the country’s high expenses. However, there will likely be further discussions and debates about pension reform in the coming months as the government looks for ways to ensure the sustainability of the pension system in the long term. Overall, though, the current increase in pensions is good news for retirees and their families.

Article by Prague Forum