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March 18, 2018 7:48 pm | FILED UNDER: politics

Pension System Needs Real Reform Not Band-Aid: Ivan Pilny

By ČTK

Prague, March 18 (CTK) – The use of privatisation funds for financing the planned pension hike as of next year will not solve anything, former finance minister Ivan Pilny said today, adding that it is necessary to reform the entire pension system.

 

The cabinet of Prime Minister Andrej Babis in resignation has recently approved an amendment to the law on abolition of the National Property Fund that provides for easier money transfers between the so-called privatisation fund (privatisation accounts) and the state budget.

 

As of January 2019, pensions of citizens above 85 years are to grow by Kc1,000 a month, a measure that will cost the state some Kc14.5bn.

 

Some Kc21.96bn worth of funds were deposited in privatisation accounts at the end of last year.

 

The amendment that is yet to be approved by parliament and signed by the president has been criticised by the opposition.

 

The Kc14bn sum is just a fraction of what is spent and will be spent on pensions, which is why it is essential to carry out the reform of the pension system, Pilny said.

 

Last year’s spending on pensions amounted to Kc404.4bn, surpassing the Kc400bn benchmark for the first time, and Kc405.3bn had been collected, and so the pension system was in the black for the first time in eight years.

 

Babis said last week a special account for the payment of old-age pensions should be created in 2020. Until that time, the state should carry out the pension reform that would comprise a company pension scheme, he added.

 

The “privatisation fund” are the special accounts which comprise money transferred from the abolished National Property Fund to the Finance Ministry in 2006, income from the assets’ sale or dividends from energy company CEZ.

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