Number of Czechs retiring early is on the rise

The percentage of people who retired earlier than the standard pension age in the Czech Republic has increased this year. Nearly 28 percent of senior citizens in the country, or 656,700 people, are receiving a reduced pension as they retired early, data from the Czech Social Security Administration (CSSZ) shows.

At the end of the first quarter of this year, those in early retirement received an average monthly pension of 13,738 crowns from the CSSZ. Those who started receiving their pension when they reached the standard retirement age receive about 1,600 crowns more per month.

On the whole, Czech society is getting older, and the number of pensioners is growing. At the end of the first quarter, the CSSZ paid out 2.39 million pensions. The Czech Republic has roughly 10.7 million inhabitants.

The increase in the number of pensioners has been slowed by the gradual postponement of the standard retirement age, for men by two months every year and for women by four months every year. The standard retirement age in the Czech Republic is currently 63 for men and 62 and four months for women; by the mid 2030s, the retirement age should be 65.

As the number of old-age pensioners keeps growing, the number of those who decide to retire earlier is higher, too. However, the percentage of those who retire prematurely has also risen. Ten years ago, one in five seniors chose premature retirement. About 15 percent of them had chosen it in 2005 and roughly 9 percent, or 175,700, of the seniors in 2000.

People may retire prematurely if they paid pension insurance for at least 35 years, and they are not more than three years younger than the standard retirement age. When the retirement age will rise to 65, people will be able prematurely retire at 60, five years before they reach the standard age.

Pensions consist of two parts - the basic amount that is the same for all and it is 3,550 crowns a month now, and the percentage amount that is based on the person’s earnings.

Last year, the Organisation for Economic Co-operation and Development (OECD) assessed the Czech pension system. The OECD recommended shortening the compulsory time period of paying insurance to 25 years, and link the pension age to life expectancy, which has increased in the Czech Republic over the past years. According to the OECD, the retirement age could be postponed every year by less than a month from the mid-2030s.

Czech trade unions say the retirement age cannot be postponed any further as many people will not be able to work anymore. They also call for earlier retirement for demanding professions.

Labor Minister Jana Maláčová presented a bill introducing earlier retirement as part of her proposal of a pension reform. The earlier pension would concern about one tenth of employees, or around 400,000. But experts say the state should contribute to the reduction of such demanding work and support the use of robots, retraining employees, and life-long training.