Czech Pension Policy

Result code in IS VaVaI

<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F04274644%3A_____%2F21%3A%230000766" target="_blank" >RIV/04274644:_____/21:#0000766 - isvavai.cz</a>

Result on the web

<a href="https://doi.org/10.34658/9788366287938" target="_blank" >https://doi.org/10.34658/9788366287938</a>

DOI - Digital Object Identifier

<a href="http://dx.doi.org/10.34658/9788366287938" target="_blank" >10.34658/9788366287938</a>

Result language

angličtina

Original language name

Czech Pension Policy

Original language description

Inflation and the low indexation of bend points in the first half of the 1990s substantially reduced the dependence of old-age pensions on previous earnings. The 1996 Pension Insurance Act has added a small basic amount of all pensions to the system of ‘percentage amounts’ of individual pensions, heavily levelled by bend points and reduction coefficients. The ‘progressivity’ of this system is high: a newly granted average old-age pension is roughly by 30% earnings-related. The basic amount of old-age pension shall be transformed into a separate flat-rate pension, with an independent system of retirement age, minimum residence or economic activity (35 years) and valorization. The percentage amount of the old-age pension shall become an independent pension pillar of social insurance, optimally with the construction of the Austrian pension accounts, with a separate retirement age and valorization system and with a minimum insurance period of 3-5 years. The extremely complicated system of state support for ‘personal pensions’ is almost entirely the result of lobbying by the completely superfluous ‘pension companies’ that have a monopoly on the provision of supplementary pension savings. The rate of state support for employer contributions to these savings is 87%, which is by far the highest one in the world. State support for participant contributions is lower. More than half of the population is involved in the system, but its role in protection is as low as in other countries. The main purpose of ‘pension savings’ (and ‘building savings’) is tax optimization, coupled with the fiscal illusion that the state support is a free lunch. We recommend either a complete cancellation of state support for all financial products or the transition to a uniform TEE regime in the form of British Individual Savings Accounts (ISA) or Canadian Tax-Free Savings Accounts (TFSA).

Czech name

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Czech description

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Type

C - Chapter in a specialist book

CEP classification

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OECD FORD branch

50206 - Finance

Project

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Continuities

I - Institucionalni podpora na dlouhodoby koncepcni rozvoj vyzkumne organizace

Publication year

2021

Confidentiality

S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

Book/collection name

Pensions today. Economic, managerial, and social issues

ISBN

9788366287938

Number of pages of the result

12

Pages from-to

228-239

Number of pages of the book

279

Publisher name

Lodz University of Technology Press

Place of publication

Lodz

UT code for WoS chapter

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