Czech Republic falls into line and sets maximum retirement age at 65

01-09-2016

The Czech Republic has stood out so far as the sole European country which has not so far set a maximum retirement age. The government on Wednesday agreed to address that problem but many other questions still remain over when and in what circumstances Czechs will face retirement in the future.

Andrej Babiš, photo: CTKAndrej Babiš, photo: CTK A battle over the maximum retirement age had been expected with Andrej Babiš, leader of the second biggest party in the three-way coalition, ANO, signalling before the Cabinet meeting that he would oppose what he described as a populistic move.

The ANO leader added that he had been seeking a deeper government debate about retirement and pensions as well as decisions on what groups of workers should qualify for earlier retirement.

In the end though, faced with support for the move from the Social Democrats and Christian Democrats, Babiš gave way and the proposed 65-year retirement limit was accepted. This, it is reckoned, should leave citizens able to enjoy around a quarter of their lives in retirement. A higher alternative age of 67 had been put forward by the Ministry of Labour and Social Affairs.

This is what the finance minister had to say after the Cabinet meeting:

“We of course do not in itself have a problem setting a limit. We had thought there should have been a debate given the fact that the limit will cost 67 billion crowns.”

That’s the estimated cost a year for the move.

The Czech Republic is thus set to join 13 European Union countries which have already set 65 as the ceiling for their citizens to retire with 11 countries having set the barrier even lower. Germany, though has already established a higher limit at 67 years of age.

The new Czech limit should take effect from 2030 with the limit assessed and open to revision every five years. Those older than 51 will not be affected by the new rules but qualify for retirement on the basis of how many years they have contributed to their pensions. But the qualifying periods and average ages there are regularly being revised and were heading in most cases towards the 65 year limit by 2030 or soon after.

Photo: Filip JandourekPhoto: Filip Jandourek The move should be guaranteed a fairly easy passage through parliament with the Communists set to bolster the coalition parties majority in the face of criticism of the move from the centre-right Civic Democrats and TOP 09 parties.

For the most part they focused their criticism on the fact that the retirement age is just part of the bigger retirement picture and claimed that the government should have come up with a broader package of plans which also address the questions of what level of pensions most Czechs will get when they reach 65 and if the state will be able to afford more generous provision. Surveys often single out the elderly as among the most at risk of poverty.

The Civic Democrats’ former pension reform moves, which encouraged citizens to top up state pensions with private one, was scrapped by the current government. But signals of what new steps could be taken in the face of burgeoning grey haired population have been thin on the ground.

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