In line with a government proposal approved by Parliament late last year the country’s close to 3 million pensioners will be paid out a one-off bonus of 1,200 crowns in February to make up for the low valorization of pensions in 2016. Following lengthy disputes on the issue in the lower house, the government now says it wants to be able to increase pensions without Parliament’s consent in the future.
Under an “automatic” valorization of pensions based on inflation and a growth in real wages the country’s close to 3 million old age and invalid pensioners are to receive an increase of 40 crowns a month – i.e. less than two euros. The government labeled this undignified and proposed an increase of 200 crowns a month in view of the healthy state of the Czech economy. There followed a stormy debate in the lower house over how this should be done and how much extra money pensioners should get. The compromise agreement reached was to pay out a one-off bonus of 1,200 crowns which would cost state coffers an extra 3.5 billion. Because of the delays pensioners should get the money by the end of February.
Meanwhile, the government says that in view of the complications it wants to be able to increase pensions above the sum stipulated by the law without Parliament’s consent in the future and has drafted a proposed change of legislation to that effect. The idea has raised a storm of opposition from backbenchers. The head of the Civic Democrats Petr Fiala said this would give the government unprecedented powers in public spending.
The head of TOP 09, Miroslav Kalousek, is also vehemently opposed to the idea saying it would inevitably be abused in election campaigns. Labour and Social Affairs Minister Michaela Marksová has dismissed the criticism, saying the government merely wants to ensure greater expedience in helping the most vulnerable group of the population.
“I think the government should have greater flexibility to act in the event of need and we are only proposing that it should be able to raise pensions independently up to a given limit –of approximately 200 crowns. And I think that in view of the complications and delays that accompanied the Parliamentary debate I think demand for the government to be able to act alone is legitimate and then pensioners could get the money in January as was intended.”
Although the pensions fund is in better shape than it has been in the past eight years, it is still deep in the red. The average old age pension is now at just over 11,000 crowns and last year the government paid out 22 billion crowns more in pensions than it collected. Moreover the country has an aging population with people now spending on average 24 years in retirement, which means an increasing burden on state coffers and indicates that –irrespective of whether the government gets the extra powers it wants - pensions will remain a thorny issue in the years to come.