How will pensions grow in 2025 and who stands to gain the most?
How should pensions be increased from January 2025?
The pension is made up of a basic rate and a percentage rate. In 2024, the basic rate is CZK 4,400. According to the draft regulation, the basic rate of the pension should increase by CZK 290 from January 2025, to CZK 4,690. The percentage should increase by 0.4%. This means that in absolute terms the pension will increase slightly more for those with higher pensions, but the relative increase will be higher for those with below-average pensions due to the increase in the basic rate.
Who will benefit from pension indexation?
Pension indexation will affect all state pensioners in the Czech Republic, where about 2.85 million people receive pensions (old-age, disability or survivors’ pensions). Some early retirees who retired between October 2023 and the end of 2024 and have not yet reached retirement age will be entitled to only part of the indexation. Their pension will only increase by CZK 290 at the basic rate, as they are not eligible for percentage indexation.
What influences pension increases?
Pension indexation is determined on the basis of real wage growth and the inflation rate. According to the Ministry of Labour and Social Affairs, prices rose by 1.7% from July 2023 to June 2024. This increase also corresponds to the increase in the average pension, which is divided between the basic and percentage assessment.
It is expected that a final decision on the indexation of pensions will be made in September 2024, when the Minister of Labour and Social Affairs, Marian Jurečka, will submit a draft regulation to the government. The coalition partners support the regulation.
Photo source: www.pexels.com
Author of this article
WAS THIS ARTICLE HELPFUL?
Support us to keep up the good work and to provide you even better content. Your donations will be used to help students get access to quality content for free and pay our contributors’ salaries, who work hard to create this website content! Thank you for all your support!
OR CONTINUE READING