Ceskenoviny.cz

Czech Republic

September 24, 2007

Czech old age pensions will increase by 346 crowns monthly on average as of next year, Labour and Social Affairs Minister Petr Necas (Civic Democrats, ODS) told journalists after a cabinet meeting. 

However, the opposition and trade unions say the planned increase is too low as it will not even compensate the impacts of the government public finance reform, including raised VAT tax on food, medicines and public transport. 

But Necas claims the living standards of pensioners will not decline. He said earlier that increased expenditures would be further compensated in 2009 if needed. 

The average monthly old age pension is to be 9111 crowns next year. Necas said the real value of the pension in 2008 will equal over 108 percent of its value in 1989 and 40 percent of the average salary. But according to the unions, pensions will get under the level of 40 percent of salaries. 

Unions also argue that the compensation does not take into account some new expenses arising from the reform steps, such as the introduction of payments for visits to doctors and hospitals. 

Necas recalled today that under the government reform pensions will be regularly raised, while the automatic indexation of other welfare benefits has been abolished. 

The increase in pensions will cost the state 11.66 billion crowns. According to the 2008 draft budget, the government is to spend 297.9 billion crowns on pensions, including disability and widow's pensions.  

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