Retirement age cap not accounted for in Slovakia’s 2019 budget plan

The draft state budget, which is set to be debated in the House at its November session, doesn’t take into account the impact of the constitutional bill on introducing retirement age caps at 64 years, FinMin Peter Kazimir (leftist senior ruling Smer-SD deputy chairperson) said at a parliamentary finance committee session. Kazimir defended this situation by saying that the bill in question hasn’t been definitely approved by the parliament, as it was still being debated. According to Kazimir, the ministry has not yet calculated the exact financial impact of this constitutional bill as its final wording is still unknown. At the same time the minister admitted that the Smer-SD-sponsored bill on pension age capping could have a negative impact on retirement expenditures. According to Kazimir, higher pension expenditures could emerge as early as in 2021, but that this would very much depend on specific parameters, adding that the financial impact of the bill in question should be calculated before MPs vote on it in the plenary.

The trade unions have welcomed the plan, but the finance ministry’s Institute for Financial Policy said that the introduction of the retirement age cap will raise expenditures for pensions and lower the level of pensions, while S&P highlighted that the step could have a significant negative LT impact on the government fiscal position, and therefore affect the public finances’ LT sustainability. The RRZ warned that the introduction of a retirement cap would hurt both the economic performance of the country and its public finances in terms of LT sustainability.

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