OECD's recently published Pensions at a Glance 2015 report says that about half of OECD countries have taken measures in the past two years to make their systems more affordable in the long term. A third have made efforts to strengthen safety nets and help some vulnerable groups of pensioners.
According to the report, the scope of measures related to pensions taken by the Czech Government between September 2013 and September 2015 was narrow and their impact was minor. The country introduced lower indexation until 2015 and the second pillar of voluntary individual accounts that has been effective since 2013 will be closed in 2016 due to low take-up.
Retirement ages have risen substantially, with retirement at 67 becoming the new 65 in many countries. Several countries are planning to move towards 70, including the Czech Republic, Denmark, Ireland, Italy and the United Kingdom.
In the Czech Republic, the level of pensioner poverty is among the lowest in the OECD while first-tier benefits are relatively low. However, the poverty figure for population as a whole is also amongst the lowest in the OECD and pensions are particularly high for low earners if they have had a reasonably long career as was the case for most before the economic transition period. Still the value of minimum pensions is below 15% of average earnings, the report says.
In the future the highest male pension age given labour market entry at age 20 will equal 68 years in the Czech Republic, Ireland and the United Kingdom. The number of years of contribution for eligibility to minimum pensions ranges from one year in Switzerland for a partial pension (44 years are required for the full pension for men, 43 years for women) to 35 years in the Czech Republic (from 2019) for any payment to be made.
The report also highlights the challenge of the current low-growth, low-interest rate environment for savers and financial service providers offering life insurance and annuities. In addition, the mortality tables used by insurers in many countries do not take fully into account projected improvemetns in life expectancy. This could lead to pension funds and life insurers seeking higher yields and pursuing riskier investment strategies that could ultimately undermine their solvency. This would in turn jeopardise both current and future retirement income security for many people.
Read also recent World Economic Forum article and data on ageing.
Read also about recent statement of the Czech Minister of Labour and Social Affairs Michaela Marksová related to minimum pension level (in Czech). Look how long is pension in the Czech Republic. Analysts on planned govt changes in the Czech pension system. More here.
9th November 2016
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