Pension reform in the Czech Republic after 2010

Marek Loužek

Post-Communist Economies, 2014, vol. 26, issue 1, 89-102

Abstract: The aim of this article is to analyse pension reform in the Czech Republic after 2010. Pension reform in the Czech Republic has gained new pace. The panel of consultants and experts on pension reform recommended mandatory saving in funds. The Constitutional Court ruled that citizens with higher incomes during their professional careers should receive higher pensions. The government responded by a minor amendment to the Pension Insurance Act and also prepared a major pension reform, which has introduced an opt-out, albeit on a fairly modest scale. The political risks of the current pension reform are considerable. The Czech government is introducing an opt-out in times when the neighbouring countries are slowly abandoning this approach. People are quite sensitive to the problems which are associated with the reform in Central Europe. They have the feeling that government is forcing on them something that does not work elsewhere. A genuine reform should be fiscally neutral, i.e. it should not generate any new fiscal deficits -- whether explicit or implicit. Therefore it should be gradually modifying the parameters of the PAYG system. At present, increasing the age of retirement and decreasing the average pension/wage ratio seem to be options.

Date: 2014
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DOI: 10.1080/14631377.2014.874657

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