Pensions
Contens:
- Information about pension insurance
- Applications for pensions
- Old-age Pension
- Increases in retirement age
- Invalidity pensions
- Survivors' Pensions
- Adjustment
Information about pension insurance
Matters such as who pays pension insurance premiums, what her/his duties are, and what the premium amounts to, are regulated by Act No. 589/1992 Coll., on social security and state employment policy premiums, as amended.
The scope of persons who participate in pension insurance, the conditions for their participation in insurance, insurance periods, substitute insurance periods, conditions for entitlement to pensions and their payment, the calculation of pensions and rules for their adjustment are regulated by Act No. 155/1995 Coll., on pension insurance, as amended.
Social security authorities and their tasks in implementing pension insurance, duties and rights of employers and insured persons, and procedure in matters pertaining to pension insurance are regulated by Act No. 582/1991 Coll., on the organisation and implementation of social security, as amended.
Pension insurance is compulsory
Natural persons enumerated in the Pension Insurance Act have to participate in pension insurance, provided they meet the conditions stipulated by the Act. Most persons become participants in insurance by law, without having to sign up.
Exceptions:
- person who cares for a child up to four years of age
- person who personally cares for person who depends on care because of long-term averse state of health (level II., III. and IV.)
In these cases, participation in pension insurance will commence if they submit an application for participation in pension insurance within two years of the care for a child or a helpless person. Applications are to be filed with the District Social Security Administration offices in whose district the care-giver has permanent residence.
Self-employed persons
Self-employed persons have to inform the District Social Security Administration in whose district they have permanent residence (or, if they do not have a permanent residence in the Czech Republic, then the District Social Security Administration determined according to the place of their self-employment) that they have commenced or re-commenced self employment or co-operation in the self-employment of another person, or about the fact that they have terminated their self-employment, by the 8th day of the calendar month following upon the month in which the fact subject to information duty arose.
Voluntary insurance
Persons over 18 years of age may participate in pension insurance voluntarily, provided they have applied to participate in the insurance and it concerns the period when:
- they are registered as job applicants who are not entitled to unemployment benefit and this period exceeds the three years included "by law"
- they study at a secondary school, higher specialised school, or university, with the exception of the first six years of study after the age of 18, which are covered "by law"
- they are engaged in a gainful activity abroad
- they perform volunteer work on the basis of an agreement signed with the posting organisation based on the Volunteer Service Act
In the first two cases mentioned, an application for participation in the insurance may be submitted and premiums paid up at any time prior to the submission of an application for pension. In the case of a gainful activity abroad, or of volunteer services, premiums can be paid up retrospectively for up to two years prior to the submission of the insurance application.
All other persons over 18 year of age may participate in pension insurance voluntarily. They may, however, only pay up retrospectively for up to one year prior to the submission of the application for insurance. In total, up to 10 years of pension insurance may thus be acquired.
Applications are to be submitted to the District Social Security Administration in whose district the applicant has her/his permanent residence.
Applications for pensions
The following pensions are provided under pension insurance:
- old-age
- full disability
- partial disability
- widow's
- widower's
- orphan's
Applications for pensions will be filled out on prescribed forms:
- on behalf of employees in an employment relationship by the organisation by which they are employed, provided it takes care of their sickness insurance
- on behalf other profitably active persons (with the exception of self employed persons) by the organisation authorised to perform tasks in implementing pension insurance
- on behalf of all other citizens, by the District Social Security Administration
Applications for survivors' pensions may be submitted:
- by the survivors in the place which was authorised to fill out the pension deceased person's application
- by the survivors of non-working pensioners to the District Social Security Administration
- if a citizen is not able to work at the time of the submission of a pension application, and her/his permanent residence is in a different district than that of the registered seat of the organisation, or if the citizen's survivor has her/his permanent residence in a different district than that of the seat of the organisation by which the citizen was employed, the application may be submitted to the District Social Security Administration appropriate to the place of the applicant's permanent residence
- on behalf of citizens who, due to their state of health cannot submit a pension application themselves, an application may be submitted by their family members, provided they agree and on the basis of a physician's report confirming their health. In the case of citizens who do not have any family, application can be submitted by another citizen, on the basis of a power of attorney
- application for a pension to which entitlement arose during imprisonment or detention will be submitted by the citizen through the prison authority
- The appropriate organisation (employee) or District Social Security Administration will not refuse to fill out an application.
Old-age Pension
Conditions for old-age pension entitlement
- at least 25 years of pension insurance and reaching of retirement age
- if those conditions are not met, then at least 15 years of pension insurance, and the reaching of at least 65 years of age
The duration of pension insurance is the period for which premiums were paid in the Czech Republic. A calendar month in which the prescribed income considered for the assessment basis was not achieved (e.g., due to an unpaid leave of absence) will not be calculated as insurance period. A calendar month in which an employer did not pay premiums although it was required to do so, will be usually calculated into the duration of insurance.
Retirement age
As of 1996, retirement age has been gradually increasing every year, by 2 months for men and by 4 months for women, so that men and women without children would eventually reach the same age-limit of 63 years.
The retirement age of other women continues to be differentiated according to the number of children they have brought up, ranging from 59 and 62 years.
| Retirement age | Year of birth | |||||
|---|---|---|---|---|---|---|
| Man | Woman without children | Woman with 1 child | Woman with 2 children | Woman with 3 or 4 children | Woman with 5 and more children | |
| 54 | 1945 | |||||
| 55 | 1944 | 1948 | ||||
| 56 | 1943 | 1947 | 1951 | |||
| 57 | 1942 | 1946 | 1950 | 1954 | ||
| 58 | 1941 | 1945 | 1949 | 1953 | 1957 | |
| 59 | 1944 | 1948 | 1952 | 1956 | 1960 | |
| 60 | 1947 | 1951 | 1955 | 1959 | ||
| 61 | 1941 | 1950 | 1954 | 1958 | ||
| 62 | 1947 | 1953 | 1957 | |||
| 63 | 1953 | 1956 | ||||
Early old-age pension - permanently reduced
An insured person will be entitled to early old-age pension provided s/he has been insured for at least 25 years and s/he has less than 3 years to reach retirement age. Such pension will be permanently reduced, i.e., the granting of this type of early old-age pension excludes entitlement to a regular old-age pension once retirement age is reached.
Increases in retirement age
Old-age pension amount
Is composed of the basic amount and a percentage amount.
The basic amount is a flat rate identical for all pensions, which is from January 2008 CZK 1700.
The percentage amount depends on the insurance period and on the gross earnings covers the period since 1985 to the year preceding retirement. All earnings are indexed in relation to the average wage. Not all earnings are incorporated in the Personal Assessment Base (up to CZK 10 000 is 100% incorporation, from CZK 10 000 to CZK 24 800 is 30% incorporation and over CZK 24 800 is 10% incorporation) 1.5% of the Personal Assessment base per year of insurance (no maximum).
The minimum percentage amount of pension will be at least CZK 770 per month.
Accumulation Concurrence of old-age pension and earnings from the work gainful activity
A condition for entitlement to the payment of an old-age pension alongside with income from gainful activity is that the employment relationship is concluded for a definite period of time, which does not exceed one year.
There is no entitlement to the payment of a early old-age pension, if the beneficiary engages in gainful activity or receives unemployment benefits.
Invalidity pensions
Full disability and partial disability will be assessed by the doctors of District Social Security Administration in the place of permanent residence of the citizen in question.
Full invalidity pension
An insured person is entitled to a full invalidity pension:
- if s/he has become fully disabled and has completed the required insurance period, provided that s/he had not, as of the date on which her/his full disability arose, been entitled to an old-age pension or, if s/he has not reached retirement age, s/he is an insured person who has been granted a permanently reduced early retirement
- or if s/he has become fully disabled due to a work-related injury or an occupational disease
An insured person is fully disabled if, due to her/his handicap
- her/his reduced capacity for any economic activity has decreased by at least 66 %
- is, due to her/his disability, handicap she/he is able to work only under entirely extraordinary conditions
Partial invalidity pension
An insured person is entitled to a partial invalidity pension:
- if s/he has become partially disabled and has completed the required insurance period
- if s/he has become partially disabled due to a work-related injury or an occupational disease
An insured person is partially disabled:
- if, due to her/his handicap her/his ability to economic activity has decreased by at least 33 %
- if her/his long-term adverse state of health significantly impairs her/his general standard of living. The group of disabilities which significantly impair one's general living conditions is specified in Ministry of Labour and Social Affairs regulation no. 284/1995 Coll.
Insurance periods
The insurance periods required for entitlement to a full or partial invalidity pension are the with respect to specific groups:
- up to 20 years - less than one year
- between 20 and 22 years - one year
- between 24 and 26 years - three years
- between 26 and 28 years - four years
- between 22 and 24 years - two years
- over 28 years - five years
Amounts of invalidity pensions
Is composed of the basic amount and a percentage amount. The basic amount of both the full and partial disability pensions is a flat rate identical for all pensions, which is from January 2007 CZK 1700.
The percentage amount depends on the insurance period and on the Personal Assessment base (gross earnings - see old-age).
The percentage amount of full invalidity pension is 1.5 % of the Personal Assessment Base per year of insurance (no maximum).
The percentage amount of a partial invalidity pension is 0.75 % of the Personal Assessment Base per year of insurance (no maximum).
For these purposes, insurance periods are deemed to continue between the date when entitlement to a full disability or partial disability pension arose, and the date when the beneficiary reached retirement age. That is the so-called additional period.
The minimum percentage amount of a full invalidity pension will be at least CZK 770 per month.
The minimum percentage amount of a partial invalidity pension will be at least CZK 385 per month.
Accumulation invalidity pension with earnings from work
Full invalidity - no limitations.
Partial invalidity - no limitations.
Survivors' Pensions
Widow's or Widower's Pension
A widow (widower) is entitled to a widow's (widower's) pension, if the late husband (wife) was a beneficiary of an old-age, full disability or partial disability pension, or had, as of the day of her/his death, complied with the condition of the period required for entitlement to a full disability pension, or to an old age pension, or if s/he has died due to a work-related injury or an occupational disease.
A widow (widower) is entitled to a widow's (widower's) pension for one year, following the death of her husband (his wife). After the passage of one year, the widow (widower) is entitled to a widow's (widower's) pension provided that:
- she/he is taking care of an dependent child
- she/he is taking care of an underage child suffering from a severe long-term disability who requires extraordinary care, or of an of-age child, who is predominantly or totally incapacitated
- s/he is taking care of a substantially or totally incapacitated parent of hers/his or of her/his husband's (wife's), who lives with her/him in one household, or of such a parent who is partially incapacitated and is more than 80 years old
- is fully disabled, or has reached the age of 55 years (or 58 years, in the case of a widower) or pension-age, if the pension-age is lower
Entitlement to a widow's (widower's) pension will arise again if any of the above conditions is met within five years of the expiration of the former entitlement to the pension.
Entitlement to the pension will expire upon entry into a new marriage. In that case, a widow (widower) will be entitled to a lump-sum amount in the amount of 12 monthly pension payments to which s/he was entitled on the date of the expiration of her/his claim.
Amount of a widow's and widower's pension
Is composed of the basic amount and a percentage amount. The basic amount is a flat rate identical for all pensions, which is from January 2007 CZK 1570.
The percentage amount of a widow's (widower's) pension is 50 % of the percentage amount of the old-age or full disability pension to which the deceased person was entitled or would have been entitled, or 50 % of the percentage amount of a partial disability pension of the deceased person - beneficiary of such a pension, who, as of the date of her/his death, did not comply with the conditions for entitlement to a full disability or old-age pension. If a widow (widower) is, in addition to a survivors' pension, also entitled to an old-age, full disability or partial disability pension, the higher of the pensions will be paid out in full (both the basic and percentage amounts), plus only one half of the percentage amount of the lower pension.
Orphan's pension
An dependent child is entitled to an orphan's pension if her/his (adoptive) parent, or the person who has taken the child to substitute family, died, and the child was, at the time of that person's death, primarily dependent for nourishment on her/him, the nourishment not being provided by the child's parents for serious reasons. A child orphaned by both parents will be entitled to an orphan's pension after each of them.
Conditions for entitlement to an orphan's pension:
- the deceased person was a beneficiary of an old-age, invalidity or partial invalidity pension
- or had, as of the date of her/his death, complied with the condition of the insurance required for entitlement to a full invalidity pension or an old-age pension
- or died due to a work-related injury or an occupational disease
A child will not be entitled to an orphan's pension after her/his foster parent or her/his spouse.
A child's entitlement to an orphan's pension expires with the child's adoption. If a child orphaned by both parents is adopted by only one person, the child's entitlement to orphan's pension will expire with respect to the parent who was replaced by the adoptive parent.
Entitlement to an orphan's pension will be renewed if adoption is abolished.
Amount of orphan's pension
Is composed of the basic amount and a percentage amount. The basic amount is a flat rate identical for all pensions which is from January 2007 CZK 1700.
The percentage amount of an orphan's pension is 40 % of the percentage amount of the old-age or full invalidity pension to which the deceased person was entitled or would have been entitled at the time of her/his death, or 40 % of the percentage amount of a partial invalidity pension of the beneficiary of such a pension, who, as of the date of her/his death, did not comply with the condition of insurance periods required for entitlement to a full invalidity pension or to old-age pension.
If a child orphaned by both parents is entitled to two orphan's pensions, the higher of the pensions will be paid out in full (both the basic and percentage amounts), plus the percentage amount of the lower pension.
Adjustment
Basic principles for adjustment
Periodical pension payments are increased regularly, every January. A different process is only used in the case of a very low inflation rate (when the increase would be less than 2 %) and in the case of a high inflation rate (over 10 %).
A pension increase will be set in a way as to constitute at least 100% of the price increase in the case of the average old-age pension, and at least one third of the increase of real wages. The specific increase will be set by a government regulation; an increase may be higher than that stated by law as the minimum increase.
The basis for regular January increases is the total growth of the overall household consumer price index in the twelve-months' July-July period preceding the pension increase.
The basis for the growth of real wages is the calendar year, which precedes the year of the pension increase by two years.
Pensions will be increased extraordinarily, at any a different date, if the price-increase over the period monitored is at least 10 %; the government will decide on such an increase within 50 days from the day on which this condition is met.
Overview of increases of pensions paid out
| Month/year of increase | Increase in percentage amount Pensions awarded | Increase of basic amount (in CZK) | Basic pension amount after increase (in CZK) | |
|---|---|---|---|---|
| Prior to 31.12.1995 | After 1.1.1996 | |||
| April 1996 | 8 % | 8 % | 240 | 920 |
| October 1996 | 6 % | 6 % | 140 | 1060 |
| August 1997 | 8 % | 8 % | 200 | 1260 |
| July 1998 | 9 % | 5 % | 50 | 1310 |
| August 1999 | 7,5 % | 5 % | 1310 | |
| December 2000 | 9 % | 5 % | 1310 | |
| December 2001 | 11 % | 8 % | 1310 | |
| January 2003 | 4 % | 3,8 % | 1310 | |
| January 2004 | 2,5 % | 2,5 % | 1310 | |
| January 2005 | 5,4 % | 5,4 % | 90 | 1400 |
| January 2006 | 6 % | 4 % | 70 | 1470 |
| January 2007 | 6,6 % | 5,6 % | 100 | 1570 |
| January 2008 | 3 % | 3 % | 130 | 1700 |
Contacts
Specialised assistance in matters concerning pension insurance will be provided to citizens and organisations by the District Social Security Administrations (DSSA - "OSSZ"), in Prague by the Prague Social Security Administration (PSSA - "PSSZ") and its local branches.
The DSSA and PSSA activities are governed and reviewed by the Czech Social Security Administration (CSSA - "ČSSZ"), which also makes decisions on entitlement to pensions, pension amounts, and their payment.
In respect of members of the armed forces (professional soldiers, police, prison guards, and others) and their survivors, similar duties will be performed by social security authorities of the Ministry of the Interior, Ministry of Defence, and Ministry of Justice.
Czech Social Security Administration
Křížová 25, 225 08 Prague 5
Tel.: +420 257 062 860-8
Czech Social Security Administration
Ministry of Labour and Social Affairs
Na Poříčním právu 1, 128 01 Praha 2
Tel.: +420 221 921 111
MoLSA Information Office:
Tel.: +420 221 922 462
www.mpsv.cz, MoLSA journal, e-mail: posta@mpsv.cz