• Pension reform
  • Health reform
  • Social reform
  • Tax reform
  • Anti-corruption measures

Pension reform

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The task of the state is to ensure a dignified and reasonably secure old age for its citizens. The current pay-as-you-go model, however, is no longer capable of ensuring this security for future pensioners.

The reason for the need for change is primarily continuously rising average lifespans. Although this is a generally positive phenomenon, it does however mean both an extension of the period during which a person is dependent on an old-age pension and also growth in the total numbers of pensioners. In a few years’ time a situation will arise in which there will be only a single active citizen per pensioner. Thus the numbers of those who can make contributions to the pensioners is continually falling. It is therefore logical that the retirement age will also rise together with the proportionally rising lifespans.

To ensure that the security of future pensioners will not be threatened in the near future and their risk of falling into poverty will not increase, there is no alternative other than to search for other sources. The government has therefore prepared a new system that will provide possibilities for people to save part of their income towards their pension and thus ensure they will have more funds available in their old age.

The main changes

  • People will be able to save more money towards their old age thanks to the introduction of private pension accounts. Up to 35 years of age every person may decide to enter the so-called second pension pillar and thus add more to their future pension. People saving in the second pillar will be able to choose from three ways in which their pensions will be paid out, namely a whole-life pension, the payment of benefits with a hereditary pension or an allowance for a period of twenty years. Saving in the second pillar is completely voluntary.
  • The maximum state contribution in supplementary savings, today’s supplementary pension insurance, will rise. The reason for this is to motivate participants to deposit higher amounts.
  • Governments will not be able to increase pensions for specific purposes. The new principle for the valorisation of pensions will guarantee that the government will no longer have the authority to change pension amounts through issuing regulations. There is now only an automatic mechanism according to which old age pensions will be increased on the basis of inflation and real wage growth.
  • The retirement age for men and women will gradually be harmonised. The retirement age for women should rise during a transitory period by six months a year, and this irrespective of the number of children they have. The retirement ages should be harmonised at 66 years of age in 2041 through this system.
  • The retirement age will gradually rise. This change is related to the increase in average lifespans. People born after 1965 will retire later than the current rules stipulate.
  • Savings for early retirement will be strengthened. Employers of people working in labour-intensive or risky professions will be able to deduct higher contributions from their taxes towards supplementary pension insurance. Thanks to this it will be possible to retire between one and five years earlier.
  • The conditions for obtaining a widow’s or widower’s pension will change. If a widow/widower remarries they will lose the entitlement to the payment of the so-called surrender value. In addition, the period for regaining entitlement to a widow’s or widower’s pension will fall from five years to two years.
  • The base for the calculation of the old age pension will change from triple the average wage to quadruple it. People with higher incomes will get more money in their old age. This change was made on the basis of a decision by the Constitutional Court.

Reform targets

  1. a pension system that is sustainable long-term
  2. pensions at a respectable level
  3. greater fairness
  4. pensions will not be a tool for populist measures
  5. increased personal responsibility and financial literacy
  6. avoidance of intergenerational conflict

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