The Czech government on Tuesday approved a pension reform allowing the retirement age to rise above 65 to respond to the needs of an ageing society, Prime Minister Petr Fiala said.
The reform, expected to take effect in 2025, will be submitted to parliament where the government has a majority.
“The reform will ensure dignified pensions to people who are in their thirties and forties today,” Fiala told reporters.
“Had we not approved it, the system would not be sustainable and it would collapse sooner or later,” he added.
The retirement age has been growing steadily and is currently capped at 65 years for people born after 1971.
Following the reform, the retirement age will rise with life expectancy and will be set every year for people who have just turned 50.
The reform reckons that an average Czech will spend 21.5 years in retirement.
The government expects its pensions account to run a deficit representing one percent of gross
domestic product (GDP) in 2050 following the reform, against five percent without the reform.
“We had one pensioner per five people in 2000. In 2050, it will be one per two people, and it’s clear that we must do something,” Fiala added.
The minimum pension will grow to 20 percent of the average wage.
The reform also allows people doing risk jobs to retire up to five years earlier.
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