Based on a law approved by parliament on May 29, pensions in future will be more closely tied to how much a contributor earns, while women will retire later and parliament will cease to decide over pension increases.
In one of the first steps towards reform of Slovakia’s pension system the current government has taken, the legislature agreed that people who contribute more to the pension fund because of higher earnings should have a right to higher retirement earnings.
At the moment, every retiree receives a pension based on the five top wage-earning years during their last economically active, irrespective of how much they contributed during their lifetimes.
The retirement age of women will also rise to 60 from its current 55 by the year 2027, which is expected to reduce the impact of the greying of Slovakia’s population.
Finally, deputies approved an automatic system for calculating annual increases in pensions to keep up with inflation, which is to replace the current system in which MPs every year decide the extent of the pension rise.
This year, which will see national elections in September, parliament has already approved a five per cent pension rise as of July, even though pension fund officials say they cannot cover the costs of the increase.
MPs have not, however, approved a second ‘pillar’ for the pension system, which would be state and personal pension accounts that would accumulate interest during the lifetime of contributors. At the moment, pension contributions are immediately spent on retirees.
Compiled by Tom Nicholson from press reports.
The Slovak Spectator cannot vouch for the accuracy of the information presented in its Flash News postings.
