Czech State Budget 2026: Pensions to Cost More Than Defence, Transport and Schools Combined

Out of every notional thousand crowns in the Czech state budget for 2026, 294 crowns will go towards pensions — more than the combined spending on defence, transport and education. This is according to the draft state budget prepared by the Ministry of Finance.

Next year, the state plans to spend around CZK 758.8 billion on pensions of all kinds. Of that, CZK 741.5 billion will go to pensions paid through the social security system — mainly old-age pensions, along with disability, widow's, widower's and orphan's pensions. A further CZK 17.2 billion will be spent on pensions for military personnel, police officers, firefighters and other members of the armed and security services, paid out through the departmental systems of the Ministries of Defence and the Interior.

By comparison, schools and education account for just over a hundred crowns out of the same notional thousand, defence for 68 crowns, and transport for 63 crowns. In real terms, that amounts to CZK 288 billion for the Ministry of Education, CZK 191 billion for the Ministry of Defence, and CZK 163.4 billion for transport infrastructure development. Almost CZK 759 billion spent on pensions would be enough to cover the state's annual spending on defence, transport, schools, police and firefighters combined — and half that sum would cover healthcare, agriculture, industry, trade and justice all together.

Why pensions can't simply be cut

Such comparisons don't mean the state could simply swap pensions for roads, the army or schools. Pensions aren't an ordinary budget line — they are a mandatory payment to which people have a legal entitlement. The Czech pension system operates on a pay-as-you-go basis: payouts are financed through pension contributions made by employees, employers and entrepreneurs. Today's pensioners paid their own contributions and taxes in their time, funding the pensions of their parents and grandparents.

Next year, the authorities plan to increase pension spending by CZK 19.3 billion, bringing it to that CZK 741.5 billion figure. The sum factors in the scheduled indexation, which will raise the average pension by roughly CZK 270, as well as a CZK 500 bonus paid every five years after a pensioner turns 80. A one-off payment to pensioners is also under consideration, though it would not become a permanent burden on future budgets.

As of the end of June, 2.33 million people were receiving an old-age pension, with the average payout standing at CZK 21,803. Disability pensions were paid to 420,900 people, and survivor's pensions to 67,800. Tens of thousands more pensions are paid out through the Ministries of Defence, the Interior and Justice, where the sums involved are higher.

The system moves into surplus for the first time in years

Despite an unfavourable demographic outlook, the Ministry of Labour and Social Affairs estimates that the pension insurance system will post a surplus this year for the first time in a long while — around CZK 10 billion. A year earlier, it recorded a deficit of CZK 9.2 billion. The system was last in the black in 2018–2019, before the COVID-19 pandemic.

Even so, total pension spending keeps rising and, according to economists, will continue to grow further due to indexation and an ageing population. "Czechia is dying out, and migration is nowhere near compensating for this decline. In the first half of this year alone, the country lost more than 21,000 people through natural decrease, and newcomers made up for only 42% of that loss. For our labour market and for public finances, this is a ticking time bomb that will go off within two decades at the latest," warned Štěpán Křeček, chief economist at BHS.

According to him, the long-term decline in the birth rate, combined with the ageing of the large generation born in the 1970s, will place an enormous strain in the coming decades not only on the pay-as-you-go pension system but on healthcare as well.

Under the Ministry of Finance's draft, total spending in the Czech state budget next year is set to reach CZK 2.578 trillion, against revenues of CZK 2.189 trillion — resulting in a deficit of CZK 389 billion. Representatives of the ruling coalition have said, however, that the deficit could still be trimmed by several billion crowns.

Source: novinky.cz