Pension in the Czech Republic
How does it work, and who is eligible?
Whether retirement is at your doorstep or still in the distant future, you should know how does it work in the Czech Republic and whether you, as a foreigner, are eligible to receive pension benefits. That’s why we wrote this article for you.
What is a pension?
Pension usually refers to old-age pension – i.e. benefits paid out by the government to a person who has reached pension age and meets the social insurance history condition. Old-age pension is basically a salary substitute for that time of our lives when we deserve a good rest instead of full-time employment. Besides old-age pension, there are also disability, orphan’s and widow’s/widower’s pensions.
Old-age pension claim – general conditions
To be eligible for an old-age pension, you have to meet two main conditions:
Currently, people 65 years of age are eligible to claim the old-age pension – this age applies to people born after 1965. Data for people born before 1965 can be found HERE.
Anyone who has worked for at least 35 years can enter early retirement. However, the pension benefit they can claim will be lower than that of a person who retires after the standard retirement age.
2) Social insurance
Only people who have paid their social insurance for at least 35 years can currently claim pension benefits. The ways of paying social insurance differ based on whether you’re an employee, self-employed, or working based on an agreement.
- Employee – employment contract
The employer pays social insurance for their employees – the amount is automatically deducted from their monthly salary.
- Employee – agreement on completing a job (DPP) or agreement on performing work (DPČ)
The employer pays social insurance for employees on DPP only if their monthly salary is above 10 000 CZK. Social insurance for employees on DPČ is paid only if their salary exceeds 3 500 CZK.
- Self-employed person (OSVČ)
Any person running a business has to pay social insurance on their own through monthly deposits send to Czech Social Security Administration (ČSSZ). Starting up a business has to be reported to the ČSSZ by no later than the 8th day of the month following the month in which the business was started. Once a year, self-employed people have to submit a tax return in which their income is compared to their health and social insurance deposits and any potential overpayments or underpayments will be compensated.
Attending daily studies, taking care of a child under 4 years or a helpless disabled relative, time spent in military service, and time spent all count towards the 35 years of required social insurance. The government pays social insurance for people who fall under the above categories.
Old-age pension conditions when working abroad
If you’ve worked in multiple countries, you’ll receive a so-called partial pension – i.e. from the governments of each of the countries, you’ll receive an amount based on time spent insured in that country. However, this depends on how the old-age pension is set in the country you’ve worked in (e.g. there are countries without any kind of old-age pension system) and further depends on whether the Czech Republic has a bilateral agreement with that country. For example, a Russian citizen who has worked 22 years in Ukraine, 8 years in Russia, and 10 years in the Czech Republic will receive 22/40 of the pension from Ukraine, 8/40 from Russia, and the remaining 10/40 from the Czech Republic.
Applying for old-age pension
You should apply for the pension at any of the Czech Social Services Administration offices by no later than 4 months before your retirement, but you may also apply retroactively up to 5 years after retiring.
In Prague, you may apply for the pension at the Prague Social Security Administration. Contact information can be found HERE. If you don’t feel confident in your Czech language level yet, you may ask one of our intercultural to accompany you and interpret at this office.
When applying, you’ll have to present an identification document, submit several supporting documents – proofs of gainful activities (i.e. employment contracts, proofs of working abroad, employer’s confirmations), proofs of study in the Czech Republic, documents proving taking care of children (e.g. birth certificates), personal records for pension insurance from your last employment, etc. If you’re not sure what to submit, you may talk to our social workers. They will be happy to consult you on this matter. You may make an online or in-person appointment by calling +420 252 543 846.
Paying out pension
Pension is paid out once a month. It can either be transferred to your bank account, or you can receive it in cash at any branch of the Czech Post. You can choose your preferred method when applying at the ČSSZ.
Carrying out a gainful activity when receiving pension
Retiring is not an obligation, but rather a right of any citizen of the Czech Republic. Even after retiring, you’ve still got the option to work. In that case, you’ve got several options:
- Receive full benefit and work – in that case, your pension increases by 0,4% each year.
- Receive only half the benefit and work – in that case, your pension increases by 3% each year.
- Receive no benefit and work – in that case, your pension increases by 6% each year.
Additional pension savings
You might not be able to maintain the living standards you’re used to with just the amount of the old-age pension that you’ll be receiving. That’s why we’d recommend opting for additional pension savings. Its main advantage is that it’s available from as low as 300 CZK per month, and the government further contributes 90 CZK – and the higher you opt to save each month, the more government contribution you’ll receive. Even your employer might contribute to the additional pension savings in some cases. You can withdraw the savings five years before reaching retirement age. It’s also possible to withdraw them earlier, but you’ll lose the government contribution. You can apply for additional pension savings at most banks.
If you’d like to learn more about old-age pension in the Czech Republic, we’d recommend visiting the www.cssz.cz website or making an appointment for our social counseling. We’ll be happy to explain all the details, and we can discuss the specifics of your case. You can make an appointment by calling +420 252 543 846.