In the Member States of the European Union, a citizen with a monthly income of less than 60% of the median wage is considered poor. “Poor Europeans” are far superior to poor people in developing countries because of sophisticated European social policy, yet “poor Europeans” feel excluded from society. In some Member States of the European Union, retirement means falling into “poverty” for many people. The Czech Republic is not one of them.

Poor pensioners – total poverty in the country

Poor pensioners x total poverty in the country

On average, 13.8% of citizens over 65 live in poverty in the EU Member States. The overall poverty rate in the European Union is 16.6%. In a number of EU Member States, low-income occasional benefits are reduced when calculating state pensions, which helps to reduce retirement poverty. However, in Bulgaria, Estonia, Cyprus, Finland, and Slovakia, the poverty rate of citizens over 65 is higher than the country’s overall poverty line.

Husbands are retired better

Husbands are retired better

The financial limit of the married couple’s poverty is only 1.5 times higher than the individual’s financial poverty line. This is due to the fact that household expenses are reduced. Thus, married couples are significantly less affected by poverty than individuals. As a rule, “spouse” is also not affected by “poverty” if he or she receives his / her own retirement pension and is also entitled to a widow’s pension after her husband. The most affected by retirement poverty are self-employed women who are not entitled to a survivor’s pension, as women have, on average, significantly lower pensions than men. The reason for the average lower-income of women is mainly the lower average earnings of women during their working lives. Only women after the deceased spouse are entitled to a widow’s pension if the legal conditions are met.

Solidary pension calculation

pension

Although the conditions for granting state pension in the Czech Republic are gradually tightening, and in 2016 applicants for retirement pensions must obtain an insurance period of at least 32 years, in the past it was sufficient to obtain a lower insurance period. In 2009, it was necessary to obtain an insurance period of 25 years and subsequently the required insurance period increases by one year each year and from 2019 it will be necessary to obtain a period of insurance of 35 years. The old-age pension is thus granted to a higher number of people in the Czech Republic than in some Western European countries. In addition, in the Czech Republic, the principle of solidarity is strongly represented in the calculation of the state pension, where lower-income citizens have a relatively high replacement rate when calculating their state pension. This measure contributes to the fact that, in the Czech Republic, few citizens over the age of 65 in poverty are living in the Czech Republic.

Mrs. Persona will receive a 40-year insurance period and an average monthly wage of CZK 9,900, as well as Mr. Novák. Both spouses retire in 2016. Although both spouses had a below-average wage for the entire productive life, at the current minimum wage, they will have an aggregate monthly pension of CZK 16,760, which is more than the poverty line for a married couple CZK 15 thousand).

Number of poor pensioners (citizens over 65) (in EU countries,%)

Country The number of poor Country The number of poor

Bulgaria

27.9%

Romania

15.0%

Estonia

24.4%

Malta

14.9%

Croatia

23,4%

Germany

14.9%

Slovenia

20.5%

Portugal

14.6%

Cyprus

20.1%

Spain

12.7%

Lithuania

19.4%

Poland

12.3%

Belgium

18,4%

Denmark

10.6%

Latvia

17.6%

Ireland

10.1%

Great Britain

16.6%

France

8.7%

Sweden

16.4%

Luxembourg

6.2%

Finland

16,1%

Slovakia

6.0%

Austria

15.4%

Czechia

5.8%

Italy

15.3%

Netherlands

5.5%

Greece

15.1%

Hungary

4.4%