RPT-Czech govt seeks to alter pension scheme from 2009

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PRAGUE, June 26 (Reuters) - The Czech government invited the opposition on Tuesday to work on a plan to revamp the country's pay-as-you-go pension scheme from 2009 to prevent it from slipping into deepening deficits, Deputy Prime Minister Petr Necas said.

The Czech Republic is the only country among European Union members in central Europe that has yet to tackle the rise in pension expenditure, which Necas warned threatened to get out of hand as the population ages.

Necas said the government, with only 100 deputies in the 200-seat lower house of parliament, would be seeking to secure cross-party support for any changes before presenting a draft bill to lawmakers.

"In the short-term, the primary aim is not to save money in public finances, but to stabilise the system and adjust expenditure to its revenue," Necas told a news conference.

"The system is financially unsustainable in its current form over the long term," said Necas, who serves as Labour and Social Affairs Minister in the right-of-centre coalition administration.

Reiterating government plans first presented earlier this year, Necas said the changes would include extending the gradual rise in the retirement age to 65 years by 2030 and lengthening the minimum insurance period required to 35 from 25 years.

The modifications complement a package cutting spending and overhauling taxes that is currently in parliament and aims to slash the budget deficit to 3.2 percent of gross domestic product (GDP) in 2008 from an estimated 4 percent this year.

Necas said all receipts from state asset sales from 2009 onwards should be used for beefing up the state system before a fundamental pension reform that the government is planning to prepare before the end of its mandate in 2010.

The government's ultimate goal is to allow people to switch a certain percentage of pension insurance payments from the mandatory state system into a voluntary, private fund-based pension savings scheme.