Government Ups Pensions by 470 Crowns a Monthitle 

 Prague Daily Monitor

June 3, 2008

Czech Republic

The Czech cabinet Monday approved a pension rise by 470 crowns a month as of August in reaction to the unexpected high increase in prices, the Government Office press section informed CTK. 

The average pension in the Czech Republic will reach 9616 crowns in August, compared to the current 9111 crowns.

"The same rise is planned for all types of pensions - old-age, disability, widower's, widows's and orphans pensions regardless of their level," the government said on its website.

Both houses of parliament had already passed a new bill enabling the exceptional increase in pensions.

The rise will concern some 2.8 million people in the 10-million the Czech Republic and will cost some 6.73 billion crowns.

The government will at the same time rise pension benefits to resistance fighters, political prisoners of the communist regime and family members of the communist regime victims by 3.6 percent.The pension rise was proposed by Labour and Social Affairs Minister Petr Necas (senior ruling Civic Democrats, ODS).

Pensions are annually indexed on January 1. The August increase is possible under the amendment newly enabling to index pensions if inflation exceeds 5 percent. Up to now, indexation was possible only in the case of over 10 percent inflation.

In January and February prices in the Czech Republic increased by 7.5 percent year-on-year and in March by 7.1 percent.

Czech pensions consist of a firm and flexible part. Necas wants the firm part, equal for all pensioners, to be increased in August to 2170 crowns from the current 1.700 crowns.

This is to benefit mainly people with low pensions.

Necas said the pensions would be raised by 5.1 percent which corresponds to the increase in prices between August 2007 and January 2008.

After the increase, the real value of a pension will be 107.6 percent of its real value in 1989. Pensions will reach 40.3 percent of the average gross wage and 53 percent of the average net wage, Necas said.

The opposition Social Democrats (CSSD) say the increase in a monthly pension is insufficient. The CSSD, supported by the junior ruling Communists (KSCM), previously proposed a one-off subsidy of 6,000 crowns to each pensioner. The lower house turned down the proposal recently.

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