The basic pension insurance, along with the sickness insurance, is a part of the social security in the narrow sense of the word.
The Czech pension system consists of two parts.
The first pillar is the mandatory basic pension insurance, defined by benefits (DB) and funded on a running basis (pay-as-you-go = PAYGO). The system is universal and provides for all economically active individuals; the legal regulation is the same for all the insured persons, there are no industry-specific schemes etc. Only in the area of organizational and administrative provision there are some variations in the so-called power sectors (e.g. soldiers, policemen, customs officers, firefighters). The pension from the basic pension insurance is drawn by more than 99 % of the population whose age is higher that the retirement age.
In addition, there is a voluntary complementary additional pension insurance with state contributions, defined by contributions (DC), capital funded. The additional pension insurance can be, according to the EU terminology, considered the third pillar of the pension system. The third pillar also includes products offered by commercial insurance companies – particularly life insurance. Pensions granted from the third pillar so far represent only a negligible portion of incomes of the retired. However, this pillar is not presented on the website of the Ministry of Labor and Social Affairs as it is in the competence of the Ministry of Finance. The second pillar, which is usual in EU member states (employer pension schemes), is absent in the Czech pension insurance system.
The fundamental substantive law regulation which governs the entitlement to a pension from the basic pension insurance, methods of determination of pension benefits and conditions of payment, is the Act No. 155/1995 Coll., on pension insurance, as amended, which came into effect on 1 January 1996.
Types of benefits
The following pensions are provided from the basic pension insurance:
- old-age (including the so-called early old-age pension),
- widow and widower,
Each pension consists of the following components:
- a basic assessment (which is a fixed amount identical for all types of pensions, regardless of the insurance duration and income) and
- a percentage assessment.
If conditions which entitle a person to several pensions of the same type have been met or payment of old-age pension or disability pension, then only one type of the pension will be paid, specifically the higher one. If conditions have been met which entitle a person to old-age or disability pension and to widow or widower pension or orphan pension, then the higher one shall be paid in the full amount and one half of the percentage assessment shall be paid from the other pensions, unless the Act on pension insurance establishes otherwise.
The decision about the entitlement to a pension, its amount and payment shall be made by the Czech Social Security Administration (Česká správa sociálního zabezpečení), with the exception of cases where the decision is made by competent social security bodies of the Ministries of Defense, Interior and Justice (in case of members of armed forces and corps).
Professional assistance in the matters of pension insurance shall be provided to individuals and organizations by district social security administrations (okresní správa sociálního zabezpečení = OSSZ) and in Prague by the Prague social security administration (Pražská správa sociálního zabezpečení = PSSZ) and its territorial workplaces.
The activities of OSSZ and PSSZ are managed and supervised by the Czech Social Security Administration (Česká správa sociálního zabezpečení = ČSSZ), which also decides about the entitlement to pensions, their amounts and payment.
For members of armed forces (career soldiers, policemen, members of the Prison Service and others) and their surviving family members the similar functions are fulfilled by social security bodies of the Ministries of Interior, Defense and Justice.
Česká správa sociálního zabezpečení (Czech Social Security Administration)
Křížová 25, 225 08 Praha 5
Tel.: +420 257 062 860
Ministerstvo práce a sociálních věcí (Ministry of Labor and Social Affairs)
Na Poříčním právu 1, 128 01 Praha 2
Tel.: +420 221 921 111