OECD Reviews of Pension Systems: Czech Republic

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This review provides policy recommendations on how to improve the Czech pension system, building on the OECD’s best practices in pension design. It details the Czech pension system and identifies its strengths and weaknesses based on cross-country comparisons. The Czech pension system consists of a mandatory pay-as-you-go public scheme and a voluntary private scheme. The public defined-benefit scheme has two main components: a contribution-based basic pension and an earnings-related pension. The review also describes the first layer of old-age social protection in the Czech Republic. The OECD Reviews of Pension Systems: Czech Republic is the sixth in the pension review series.


Mandatory earnings-related pensions

This chapter focuses on the mandatory earnings-related pension scheme. The main component of the Czech old-age pension system is a pay-as-you-go defined benefit system. The chapter provides an overview of the demographic and labour market trends in the Czech Republic, as well as pension reforms undertaken over the last three decades. Current pension outcomes are presented. The chapter describes the rules of the current pension system and assesses its capacity to deliver good pensions in a financially sustainable way. While the new reform proposal by the Czech Commission on Fair Pensions is discussed, the chapter concludes with policy recommendations to improve earnings-related pensions.


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