1. Legal Framework
The pensions are operated by the Czech Social Security Administration (“ČSSZ”) and are comprised of salary-based contributions paid by both the employer and the employee.
2. Required Contributions
Receipt of the pension benefits is contingent upon payment of the social security contributions provided for by the law (Act No. 589/1992 Col., on Premiums for Social Security and Contribution to the State Policy of Employment, as amended.). Employees contribute currently 6,5 per cent of their taxable income to social security schemes, while employers contribute 25 per cent of the gross taxable income of all its employees. Health insurance contributions amount to 13,5 per cent of an employee´s gross taxable income; one third (4,5 per cent) of which is paid by the employee and the remaining two thirds (9 per cent) by the employer.
There is a new maximum calculation base for payment of social security contributions and contribution to the state employment policy, defined as 48 multiple of the mean annual wage. The maximum calculation base for the purpose of insurance premium calculation amounts to CZK 1.245,216.
The following benefits are provided from pension insurance if the determined conditions are fulfilled:
- old-age pension
- invalidity pension
- widow’s and widower’s pension
- orphan’s pension
4. Required Maternity/Sickness/Disability/Annual Leaves
In connection with childbirth and care for a new born child, a female employee is entitled to maternity leave for a period of 28 weeks; if the employee gives birth to two or more children at the same time, she is entitled to maternity leave for a period of 37 weeks. Maternity leave in connection with childbirth may never be shorter than 14 weeks and may in no case be terminated or interrupted prior to expiry of 6 weeks from the date of birth.
A basic condition for entitlement to financial assistance while on maternity leave is participation in insurance (e.g., continuation of insured employment) at the time of commencement of maternity leave (financial assistance during maternity).
From 1st JAN 2014 an employee is entitled to this benefit from the sickness insurance from the 15th calendar day of his / her temporary incapacity to work, for the calendar days. The support period lasts no longer than 380 calendar days from the date of the temporary incapacity to work or quarantine order, unless stated otherwise. The amount of sickness benefit per calendar day is 60% of the reduced daily basis of assessment.
There is no special legal regulation for disability leave, the short term disability leave (< 1 year) is regarded as standard sickness (see above); while long time disability leave is treated under social security law and the employee may be granted status of an invalid.
5. Mandatory and Typically Provided Pensions
A condition for entitlement to old-age pension is accumulation of the required period of insurance and attainment of the stipulated age (i.e., retirement age or the age derived therefrom or 65 years of age). On 1 January 2010, Act No. 155/1995 Coll., on pension insurance (the “Pension Insurance Act”), was amended. A new retirement age and the new required period of insurance for entitlement to old-age pension were set; changes were also made to the pension amount. The age of retirement also increased, taking effect from 30 September 2011.
The required period of insurance gradually increases depending on the retirement age of the insured individual or the age of the insured individual.
Old-age pension upon amassing 30 years of insurance
The entitlement to old-age pension arises for insured individuals who attain retirement age after 2014 and accumulated at least 30 years of insurance, provided they did not fulfill the conditions of the Pension Insurance Act; in this case, notionally credited periods of insurance are not included in the insurance period.
Conditions for the entitlement to an early old-age pension
The basic condition that has to be fulfilled is accumulation of the required period of insurance, i.e., the period of insurance. The entitlement to this pension then depends on reaching the age of retirement:
- the age of retirement of the insured individual is at least 63 years old, the entitlement arises no earlier than upon reaching at least 60 years of age, or
- the age of retirement of the insured individual is less than 63 years old, the entitlement to an early old-age pension arises no earlier than on the day from which no more than three years remain until retirement age is reached.