Saturday, 15 March 2025
The Czech pension insurance system recorded a deficit of CZK 50.7 billion in 2024, representing an improvement of CZK 22.1 billion compared to the previous year. This reduction marks the first time in years that revenue from contributions has grown faster than pension expenditures and administrative costs. Total revenues amounted to CZK 716.5 billion, reflecting a CZK 24.1 billion increase from the previous year. Contributions from employees, employers, and certain self-employed individuals totaled CZK 665.8 billion, an increase of CZK 46.2 billion over 2023, according to data released by the Ministry of Finance.
Despite the improvement, the system remains in deficit. In January 2025 alone, the pension fund showed a negative balance of CZK 5.3 billion, although this shortfall was smaller than those recorded in the past two years. At the end of 2024, the Czech Social Security Administration (CSSA) distributed 2.37 million old-age pensions, 415,600 disability pensions, and 65,300 survivor pensions. The average old-age pension stood at CZK 20,680, while pension schemes managed by the Ministries of Defense, Interior, and Justice provided higher benefits to tens of thousands of beneficiaries.
Total pension expenditures reached nearly CZK 710 billion in 2024, a year-on-year increase of CZK 24.7 billion. Administrative costs amounted to CZK 6.5 billion, down from CZK 7 billion in the previous year. Overall spending increased by 3.5%, while revenue from pension contributions rose by 7.5%, amounting to CZK 665.8 billion. Historically, pension expenditures have outpaced revenue growth, but in 2024, the trend reversed due to economic recovery, high employment, wage increases, and government-led adjustments to pension policies. The opposition ANO movement opposed these reforms and filed a complaint with the Constitutional Court, which was ultimately dismissed.
As of January 2025, pensions increased by an average of CZK 358, bringing the average old-age pension to CZK 20,680. Pension system expenditures for January amounted to CZK 62.2 billion, CZK 1.2 billion higher than in the same month the previous year. Revenue also rose, surpassing CZK 57.4 billion, an increase of CZK 4 billion year-on-year.
The government aims to curb further pension system deficits through a pension reform enacted in 2025. The reform introduces slower pension growth rates, a gradual reduction in new pension calculations, and the establishment of a minimum pension floor equivalent to 20% of the average wage, ensuring that pension benefits do not fall below a certain threshold.
The 2024 pension deficit was the fourth highest since 2000 in nominal terms. The record deficit of CZK 72.8 billion was recorded in 2023, followed by deficits of approximately CZK 55 billion in 2012 and 2013. However, during those years, total expenditures and contribution revenues were significantly lower, making the deficit equivalent to 16% of revenue in 2012, 11% in 2023, and 7.6% in 2024.
Source: CTK
