June 27 (CTK) – The Czech Republic has one of the biggest differences between the net earnings and pensions in the EU, according to a study compiled by the Institute of Democracy and Economic Analysis (IDEA) of the Czech Academic of Sciences and released yesterday.
When retiring, the income falls on average by over two-fifths.
The Czech pension system does not make people keep working longer either, even after they reach the retirement age, the study said.
The study evaluated the situation of the elderly before the October general election.
“The purchasing power of average elderly falls abruptly at the moment they retire. The difference between the starting retirement and previous net salary amounts on average to 42 percent,” the study said.
Compared with other EU countries, the decline is “relatively high,” it added.
The gap is even bigger in Slovakia, Lithuania, Croatia and Estonia.
On the other hand, the pension reaches over 80 percent of the net income in Hungary, Portugal, Spain, Britain, Austria and Ireland.
In Luxembourg, the pension is very close to the net salary and it is even higher in the Netherlands.
The pension stands at around 70 percent of the net salary in Sweden, Latvia, Belgium and Italy.
The sum of the pension depends on the years a person worked and less on the earnings and payment from them.
The collected sum is considerably redistributed, due to which the differences between the pensions of the people with high and low incomes are small.
The elderly who earned double the average salary have some 41 percent of it as their pensions.
By contrast, the employees with one-half of the average salary then receive 85 percent of their net salaries.
Most elderly retire because they reach the age at retirement. Only one-fifth do so because of the loss of job or health problems.
The government has enacted the upper limit of age at retirement at 65 years.
At present, 13 percent of pensioners work, while the EU average is 15.5 percent and in the Nordic countries as many as 35 percent.
The study says the Czech pension system does not sufficiently take into account the work after the elderly retire.
If a person works more, giving up the pension for one year, this will mean some 7.6 percent more of the pension.
The study said the work after the retirement age was reached benefited the elderly, state and society.
The people have extra earnings, keeping their living standards, while the state has the money from the taxes and society does not lose its human capital.
The report said before the elections, the parties should say whether they would insist on any changes in the pension system.
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