Parental bonus amendment proposed as first change to pension system, coalition partners at odds

Labour Ministry has unveiled the first part of its proposed pension scheme reform. Long-awaited tax system reform still out of sight.

The old-age pension scheme will change, again.The old-age pension scheme will change, again. (Source: SME)

The Eduard Heger government is set to make fundamental changes to Slovakia's pension scheme, after the previous Smer-led governments made the system unsustainable in the long run, so much so that observers have dubbed it a time bomb for public finances.

But Labour Minister Milan Krajniak of Sme Rodina cannot be sure to gain the necessary support of the ruling coalition for the major pension reform he has drafted.

Krajniak expects objections not only from coalition partners, but also from the central bank, the fiscal council and other relevant players.

“We have decided to propose a compromise that will help people receive decent pensions, all the while ensuring that [pensions remain decent] 50 years later,” Krajniak stated.

Some changes have already been made via an amendment appended to the judiciary reform by Justice Minister Mária Kolíková (Za Ľudí), which the MPs passed in December 2020. The amendment creates the constitutional framework for the parental bonus, a planned new feature of the pension system, while further legislation is needed to put the bonus into practice.

Related articleOld-age pension scheme gains three new features Read more 

Two of the four coalition parties have voiced disagreement with the new legislation. Several employers’ organisations have opposed the proposed hike in the levies of the biggest earners, deeming it a punishment of those who work hard on their expertise.

Three laws instead of one constitutional law change

Shortly before the 2020 parliamentary election, the Smer-led government changed Slovakia's three-pillar old-age pension scheme. In one main change, it replaced the pinning of the retirement age to the average life expectancy with no fixed upper limit to the 64-year pension cap. Analysts have warned that the pension system has become unsustainable in the long run.

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