Czech Public and Occupational Pension Schemes and Reforms

Abstract

The Czechoslovak communist retirement protection scheme resembled the Bismarckian earnings-related pensions, with new benefits close to final salaries and with their insufficient indexation. The aim of this paper is to evaluate the reform processes in Czechia and the potential for a simple technical reform that would make the public retirement schemes understandable and efficient. In the process of the transition to capitalism under liberal Czech governments, the prevailing concept of the public retirement scheme changed to a Beveridge model of pensions not being related to previous wages. The insufficient valorisation of bend points was the main method of this transition. Modern international pension theory recommends the separation of a solidary pillar and an earnings-related pillar. After the Czech “small” pension reform, a basic technical reform may be simply realised, resulting in a higher flat-rate pension and an NDC pension insurance scheme, convenient to parties with programmes based on three basic welfare regimes. The introduction of occupational pension schemes is necessary to reflect the specifics of arduous occupations.

Keywords

• retirement pension
• welfare regimes
• occupational pension schemes
• pension pillars
• Bismarck system
• Beveridge system