Pensions in Czechia could rise twice as much as usual — up to 600 crowns a month

The Czech government is discussing a significant boost to January's pension increase — instead of the standard rise of roughly 300 crowns a month, payments could go up by 600 crowns. This was announced by Labour and Social Affairs Minister Aleš Juchelka during a Czech television broadcast.

According to him, the standard indexation currently stands at around 1.4% (approximately 300 crowns) — which would make it the smallest January pension increase since 2017, due to low inflation and the fact that the recent rise in real wages hasn't yet been factored into the formula. However, the government has the legal right to raise the indexation by government decree to 2.7%, or 600 crowns. "If we can agree on it, I'm personally in favour," the minister said. Prime Minister Andrej Babiš had earlier also floated the idea of an extra payment for pensioners.

Who's for it, who's against it

The idea of a generous indexation is backed by the SPD party. According to its leader and Chamber of Deputies speaker Tomio Okamura, the party has insisted from the outset on the maximum possible increase in order to "give pensioners back what the previous government of Petr Fiala took from them," plus pay out funds above the statutory indexation. SPD deputy Jan Hrnčíř added that a one-off additional payment is also being discussed — one that wouldn't become a permanent burden on the budget.

However, the coalition has yet to reach a unified position. Finance Minister Alena Schillerová, who must finalise next year's budget by the end of September, is in no hurry to promise a higher indexation. Vladimír Pikora, chair of parliament's budget committee from the Motorists for Themselves movement, argues that pensions should rise strictly according to the law rather than at the discretion of an individual minister. Most opposition representatives and economists share a similar view.

What it would cost the budget

The financial difference is substantial: a 300-crown pension increase would cost the state budget roughly 10 billion crowns a year, while doubling that sum would add another 10 billion on top. Petr Dufek, chief analyst at Creditas, warned that this isn't a one-time measure but a permanent increase in budget spending, which would deepen the deficit and add to the national debt. In his view, it's "a purely political decision," noting that pensioners are the only group whose income the state automatically protects from inflation through indexation.

When the exact figures will be known

The final parameters of the January indexation won't be known until September, once precise wage growth data is available. According to calculations by National Budget Council analyst Michal Hlaváček, the standard indexation would amount to roughly 300–350 crowns; if doubled, the total additional budget cost would be 18–22 billion crowns.

The average pension is expected to rise from the current 21,800 crowns to around 22,100 crowns. Ministers are currently on a two-week holiday, and discussions will resume in August, with the government's next press conference scheduled for 17 August. The cabinet is also preparing other changes to the pension system, including higher payments for people over 80 and support for working pensioners.

Source: novinky.cz