RPT-Czechs to raise retirement age, more reform in doubt

                                
 (Repeats story published late on Wednesday)
                                
 By Petra Vodstrcilova
                                
 PRAGUE, June 25 (Reuters) - The lower house of the Czech
parliament approved a bill raising the pension age to 65 years
on Wednesday, a key step in the government's efforts to avoid a
collapse of pension system strained by an ageing population.
                                
 The vote is a boost for the shaky centre-right ruling
coalition, but more fundamental changes remain elusive due to
rebellions and setbacks in parliament which have thwarted
several other reforms steps.
                                
 Czech men now retire at the age of 62 and women at 61,
earlier than most other European Union citizens.
                                
 If approved by the upper house, where the government has a
comfortable majority, the retirement age will gradually rise
until 2030.
                                
 "The demographic development is so clear and irreversible
that the Czech political representation cannot stick its head
into the sand," Labour and Social Affairs Minister Petr Necas
told parliament ahead of the vote.
                                
 Necas, as well as financial markets analysts and rating
agencies, have warned the state budget would crumble under
skyrocketing pension payments some 10-15 years ahead as people
live longer and fewer young people enter the labour force, a
situation mirroring the trend around Europe.
                                
 Prime Minister Mirek Topolanek had staked his three-party
coalition's future on the reform, saying it would make no sense
to keep the government afloat if it is toothless.
                                
 The cabinet has just 100 seats in the 200-seat lower house,
and internal dissent has often effectively stripped it of a
majority.
                                
 The pension law was approved with 95 votes against 91, with
14 abstentions.
                                
 The government had repeatedly tried to reach a cross-party
consensus on the basic pension reform steps, but the leftist
opposition Social Democrats and Communists voted against.
                                
 Earlier on Wednesday, the parliament approved an exemption
for babies from paying fees for seeing a doctor, a
back-pedalling on a health reform that has divided the
coalition.
                                
 
                                
 MORE NEEDED, BUT UNLIKELY
                                
 The raising of the pension age, coupled with an extension of
minimum working period to 35 years from 25 and tougher
conditions for early retirement, is just the first step in the
cabinet's reform plans.
                                
 It wants to set up new pension funds and divert some of
people's social security payments into them, to make people save
for their own pension rather than rely fully on the current
"pay-as-you-go" system where the contributions are immediately
distributed to current pensioners.
                                
"This (higher retirement age) is a measure pulled out by a
cabinet that does not have a chance to push through a more
fundamental reform. It is maintenance, a delaying measure," said
Ales Michl, an analyst at Raiffeisenbank.