The government is delivering on its promise to raise pensions, approving a bill to the pensions’ law which would gradually increase all pensions, but would primarily help people with low pensions and those aged over 85.
The government-proposed bill, which still needs to win approval in Parliament, would raise all pensions as of January 2019, though some would grow slower than others. As Prime Minister Andrej Babiš explained, the idea is to help predominantly those pensioners who are now living on or below the poverty line. The divide in the level of pensions which has grown in recent years would thus be made smaller.
People with small pensions who retired years ago and people who earned less money and therefore paid less into the social system would get a bigger hike, those who retired in recent years and have a higher pension would see a slower rise.
The pensions of people over 85 would be increased by 1,000 crowns a month on the argument that they need to spend more money on medical care.
The bill would increase the fixed component of old-age pensions to 10 percent of the average salary from the current 9 percent, and a further increase would be linked to the merit-based component of the pension.
All pensioners should get an increase of at least 540 crowns per month in addition to the regular pensions' indexation.
The overall rise would be 918 crowns a month on average.
The cost of the pensions' increase would reach 14.5 billion crowns, of which 12 billion would cover the flat rise and 2.5 billion would cover the rise in pensions for people of over 85 by 1,000 crowns.
Prime Minister Babiš said the cabinet would make funds for the rise available through an amendment to the National Property Fund law, which it is to be debated next week.
Last year, the Czech state pay-as-you go pension system ended in surplus for the first time in eight years, its revenues exceeding the volume of distributed pensions by 0.9 billion crowns, according to the statistics released on Tuesday.