The alarming state of pensions in Slovakia

Pension expenses rising sharply.

By: sme.sk

Oct 21 2024
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The alarming state of pensions

Slovakia's public finances are in a catastrophic state. Still, PM Robert Fico's government is stubbornly sticking to its promise of paying pensioners €606 in the form of the 13th pension. This flagship of its social policy, however, is a significant burden on the Social Insurance Agency.

As the agency cannot cover pension expenses from contributions of working people, it is subsidised by the state. This year, it received €1.6 billion and has already spent almost all of it.

The 13th pensions will further deepen the Social Insurance Agency's managing deficit. This year, its loss could reach €2.5 billion, roughly as much as Fico's government intends to collect from people and companies using higher and new taxes, part of the consolidation of public finances.

In order to pay out pensions, sickness benefits and unemployment benefits, the agency will need increasingly higher financial support. If the social policy does not change, the government will have to find at least €2.5 billion every year.

Pension expenses sharply rising

Currently there are 1.16 million pensioners in Slovakia. Over the past four years, their number has increased by 68,000 or six percent. This was largely caused by the former government of Eduard Heger, which allowed people to retire early after 40 years of working. While previously 12,000 to 15,000 people would use this option, this year 43,000 have already used it.