(Repeats story published late on Monday)
By Jan Korselt
PRAGUE, Feb 11 (Reuters) - The Czech centre-right government
agreed on Monday to raise the retirement age and lay the basis
for wider pension reforms to secure the system's long-term
financial stability.
The cabinet sent to parliament a bill that sees a gradual
increase in the retirement age to 65 by 2030 and an extension of
the required length of employment.
A further step to follow later will be changing the current
pay-as-you-go scheme -- where people pay contributions that are
immediately transferred to pensioners -- to a partially
fund-based system where people save for their own pensions.
"The necessity to change the pension system comes from the
demographic development, an overall dip in natality and rising
longevity," Labour and Social Affairs Minister Petr Necas told a
news conference.
Natality is the ratio of live births to the population.
The Czechs lag behind other central European ex-communist
countries that have mostly revamped their pensions.
Czech pension payments are expected to reach 306 billion
crowns ($17.34 billion) this year, nearly 30 percent of the
budget, and are expected to grow fast as the population ages.
The Labour Ministry expects the proportion of people over 60
to rise from 20 percent of the population to more than 35
percent in the next 50 years.
The ruling coalition, which has already revamped taxes and
cut social benefits, had tried to win an all-party consensus on
the reform but decided to go ahead on its own after leftist
opposition parties disagreed with the plan.
The government has just 100 seats in the 200-seat lower
house of parliament, and has had to rely on support from two
independents in key votes.
"We are further prepared to talk with political partners in
the lower house to achieve a wider agreement," said Necas.
BULK OF REFORM STILL AHEAD
Current legislation mandates a gradual rise in the
retirement age to 63 years for men and women with no
children, from earlier 60 for men and 57 for women.
The bill would also extend the minimum time of employment to
qualify for full pension to 35 years from 25 years and raise the
penalties for early retirement.
"It is good news that they found the courage, however this
is still just a change in parametres," said Tomas Sedlacek,
chief strategist at bank CSOB.
"We still have to wait for a change of the pay-as-you-go
scheme, and that is where the biggest clashes will come."
In the next phase of the reform the government wants to set
up a fund fed by income from privatisations.
The government would then allow people to divert part of
their pension contributions to savings. The gap caused in the
system by the diversion would be filled from the reserve fund.
Many Czechs already have private pensions savings, which are
supported by government subsidies and tax breaks, but the
volume is too low to support them in retirement.
The average Czech pension is 9,111 crowns ($515.9) per
month, about 42 percent of the average salary.
(Writing by Jan Lopatka)
