Czech pensions to rise in January, with pensioners getting a one-off 2,000 crowns

From January, pensioners in the Czech Republic will receive higher pensions along with a one-off cash payment. Under a decree issued by Andrej Babiš's (ANO) government, the basic component of the pension will rise from 4,900 to 5,170 crowns a month, and every pensioner will additionally receive a one-time payment of 2,000 crowns.

How the pension increase is calculated

A Czech pension consists of two parts: a flat basic payment, the same for everyone, and a percentage component, which depends on a person's past income and contributions to the system. The basic payment will increase by 270 crowns — from 4,900 to 5,170 crowns a month. The percentage component, however, will be indexed by just 0.2%, so the difference between various pension amounts will remain barely noticeable.

For example, a pensioner currently receiving 14,000 crowns a month will get 289 crowns more — 14,289 crowns. For a pension of 20,000 crowns, the increase will be 301 crowns, bringing the total to 20,301 crowns. A pension of 30,000 crowns will rise to 30,321 crowns, while for 40,000 crowns — a level only a handful of pensioners reach — the increase will be 341 crowns.

The Czech pension system is divided into old-age, disability and survivors' pensions — the latter category includes widows', widowers' and orphans' pensions.

The one-off payment of 2,000 crowns

Besides the regular indexation, pensioners can expect another boost in January — a one-off payment of 2,000 crowns. According to Finance Minister Alena Schillerová (ANO), the money will go to both old-age and disability pension recipients.

While the government can set the amount of the regular indexation by its own decree, the one-off payment must be approved by lawmakers. Labour and Social Affairs Minister Aleš Juchelka (ANO) intends to push it through as an amendment to the pension insurance bill currently before the Chamber of Deputies. If the Senate or the president sends the bill back for revision, the payment to pensioners could arrive with a slight delay.

Increases for resistance fighters and minimum pensions

The increase will also apply to veterans of the Second World War resistance, people persecuted under the communist regime in Czechoslovakia, and their relatives — their allowances will rise by 0.2%.

Minimum pensions will also increase — these go to people with very low incomes or those whose calculated pension would otherwise fall below the statutory minimum. The minimum old-age pension, or pension for the most severe degree of disability, will rise from 9,800 to 10,340 crowns a month.

The increase will also affect survivors' pensions: a widow's or widower's pension for those who do not receive a pension of their own will rise from 7,350 to 7,755 crowns. If a person does have their own pension, the survivor's benefit may end up below the set minimum — different rules apply in such cases.

Additional indexation after age 80

Starting next year, age-based indexation is also due to be introduced: the percentage component of the pension is to be automatically increased every five years once a person turns 80.

At ages 80, 85, 90 and 95, the pension will grow by 500 crowns a month, and after age 100 — by 1,000 crowns at once. Currently, pensions increase by a thousand crowns at age 85 and by two thousand crowns upon reaching a hundred. This part of the changes is still contained in the aforementioned amendment, which has yet to be approved by the Chamber of Deputies and the Senate.

Source: novinky.cz