Statutory Old Age Pension Scheme
Starobné dôchodkové poistenie
Coverage
Mandatory insurance
- Employees in the private and public sector (a natural person in a legal relationship that entitles him/her to a regular monthly income from the dependent activity; certain exceptions apply).
- Specific groups of self-employed persons whose annual income exceeds 50% of the national average wage from the previous two years.
Opting in
- Specific groups of non-compulsorily insured persons, such as: a natural person (parent or adopter of a child, or his/her spouse, person to whom the child has been entrusted to care replacing the care of the parents based on a decision of the competent authority), who properly cares for the child up to the latter’s sixth year of age; a natural person who takes proper care of a child with a long-term unfavourable health condition after reaching the age of six, up to the age of 18 at the latest; a natural person to whom a care allowance is provided; a natural person who, according to the contract on the performance of personal assistance, is to provide personal assistance to a natural person with a severe disability for at least 140 hours per month; a soldier of voluntary military training according to a special regulation; a natural person who has been granted a compensatory allowance.
Exempted
- Police officers and soldiers insured in the pension scheme for police officers and soldiers.
- Self-employed persons with an annual income of less than 50% of the national average wage from the previous two years.
- Recipients of old age pension and early pension with monthly income not exceeding EUR 200.
- Students pursuing minor work activities with monthly income not exceeding EUR 200.
- High school students, or college students in apprenticeship or traineeship.
- Employees in the least-developed districts whose monthly income is no more than 67% of the average monthly wage.
Voluntary insurance
- Persons of at least 16 years of age who are permanent or temporary residents and have not been entitled to early pension and are not mandatorily covered by the scheme, such as students or persons during unemployment.
Financing
General finances
- Mainly PAYG-financed from insurance contributions.
- Partly tax-financed out of the general budget.
Contribution rates
- For persons only enrolled in the statutory old age pension scheme: fixed share of monthly gross earnings (18%) shared between the employer (14%) and employee (4%) with contribution assessment ceiling; the self-employed contribute the same total rate themselves; the state covers the same total rate for the recipients of certain social benefits (such as maternity benefits).
- For persons also enrolled in the old age pension savings scheme: fixed share of monthly gross earnings (13%) shared between the employer (9%) and employee (4%) with contribution assessment ceiling; the self-employed contribute the same total rate themselves; the state covers the same total rate for the recipients of certain social benefits (such as maternity benefits).
- The contribution assessment ceiling is 7 times the average monthly wage for the calendar year from the two years before the calendar year in which contributions are paid (EUR 7,091 in 2020).
Taxation of contribution payments
- Contributions are tax-exempted.
Administration
- The Social Insurance Agency administers the scheme.
Qualifying Conditions
Qualifying conditions
- Standard old age pension: retirement age is flexible and depends on the year of birth, sex and number of raised children1; the maximum of the flexible retirement age is 64 years for childless men and women born in 1966 or after; minimum insurance period: 15 years.
- Minimum pension: a minimum pension benefit is granted to persons whose income falls below the ‘minimum pension level’ (100% pension-tested on the base of all pensions paid by the Social Insurance Agency) with a minimum insurance period of 30 years2; individuals must have exhausted all available options for potential pension entitlement.
Early retirement
- Available up to 2 years before reaching the retirement age of the standard old age pension for persons with a minimum insurance period of 15 years; available only if the minimum amount of the early pension is more than 1.2 times the ‘minimum subsistence level’ as defined by law; negative (permanent) adjustments to pension benefits (0.5% per every 30 days).
- Entitlement to early retirement is possible for persons not engaged in regular employment if the maximum amount of earnings that are subject to social security contributions does not exceed EUR 2,400 per year.
Deferred retirement
- Retirement can be deferred without limit with positive (permanent) pension adjustments to the pension benefit.
Combining employment & retirement
- Termination of employment is not a precondition for claiming the standard old age pension.
- Termination of gainful employment based on employment relationship is a precondition for claiming the early retirement pension; the recipient of an early retirement pension can perform work based on work agreements performed outside the employment relationship (if the maximum amount of earnings that are subject to social security contributions does not exceed EUR 2,400 per year).
Benefits
Pension benefits
- The old age pension (Starobný dôchodok) is a monthly benefit primarily based on the length of the insurance period and the amount of contributory earnings throughout the working career.
- Maximum amount: no specification in the law regarding a fixed maximum amount of pension benefits; maximum pension benefits levelled due to contribution assessment ceiling and the limiting of the average personal earnings point value (APEP) to a maximum of 3 points.
- Minimum amount: pension-tested minimum pension benefit for persons with a pension below the minimum statutory pension level; benefit amount dependent on years of insurance (minimum: 30 years). The minimum amount for the minimum insurance period of 30 years is 33% of the average monthly nominal wage for the calendar year from the two years before the year of pension entitlement. Benefit increases by 2% per year (31 to 39 years of insurance periods) and 3% per year (40 years or more of insurance periods) of the amount of the ‘minimum subsistence level’ established by law.
Factors for benefit calculation
- Based on the multiplication of the following factors: APEP x PPI x CPV.
- APEP: Average Personal Earnings Point (Priemerný osobný mzdový bod) determined as a proportion of the multiplication of personal points achieved during particular calendar years (during the decisive period) by the periods of pension insurance. The personal earnings point is determined as a proportion of the gross yearly income of the insured to the national average yearly wage (maximum value of the APEP: 3 points).
- PPI: Period of Pension Insurance (Obdobie dôchodkového poistenia) = number of insurance years.
- CPV: Current Pension Value (Aktuálna dôchodková hodnota). The CPV is declared each year by Social Insurance Agency. For calculating the benefits in 2020 the CPV is EUR 13.6361.
- Adjustments: yearly adjustment of pensions, based on changes in the consumer price index for pensioners' households reported by the statistical office for the first half of the calendar year preceding the relevant calendar year; no downward adjustment possible. In 2020, pension benefits increased by 2.9%, with a minimum nominal increase of 2% of the average amount of paid pensions.
Taxation and social security contributions
- Pension benefits are not subject to income tax.
- Pension benefits are not subject to social security contributions.
Coverage
Financing
Administration
Qualifying Conditions
Benefits
Mandatory insurance
- Employees in the private and public sector (a natural person in a legal relationship that entitles him/her to a regular monthly income from the dependent activity; certain exceptions apply).
- Specific groups of self-employed persons whose annual income exceeds 50% of the national average wage from the previous two years.
Opting in
- Specific groups of non-compulsorily insured persons, such as: a natural person (parent or adopter of a child, or his/her spouse, person to whom the child has been entrusted to care replacing the care of the parents based on a decision of the competent authority), who properly cares for the child up to the latter’s sixth year of age; a natural person who takes proper care of a child with a long-term unfavourable health condition after reaching the age of six, up to the age of 18 at the latest; a natural person to whom a care allowance is provided; a natural person who, according to the contract on the performance of personal assistance, is to provide personal assistance to a natural person with a severe disability for at least 140 hours per month; a soldier of voluntary military training according to a special regulation; a natural person who has been granted a compensatory allowance.
Exempted
- Police officers and soldiers insured in the pension scheme for police officers and soldiers.
- Self-employed persons with an annual income of less than 50% of the national average wage from the previous two years.
- Recipients of old age pension and early pension with monthly income not exceeding EUR 200.
- Students pursuing minor work activities with monthly income not exceeding EUR 200.
- High school students, or college students in apprenticeship or traineeship.
- Employees in the least-developed districts whose monthly income is no more than 67% of the average monthly wage.
Voluntary insurance
- Persons of at least 16 years of age who are permanent or temporary residents and have not been entitled to early pension and are not mandatorily covered by the scheme, such as students or persons during unemployment.
General finances
- Mainly PAYG-financed from insurance contributions.
- Partly tax-financed out of the general budget.
Contribution rates
- For persons only enrolled in the statutory old age pension scheme: fixed share of monthly gross earnings (18%) shared between the employer (14%) and employee (4%) with contribution assessment ceiling; the self-employed contribute the same total rate themselves; the state covers the same total rate for the recipients of certain social benefits (such as maternity benefits).
- For persons also enrolled in the old age pension savings scheme: fixed share of monthly gross earnings (13%) shared between the employer (9%) and employee (4%) with contribution assessment ceiling; the self-employed contribute the same total rate themselves; the state covers the same total rate for the recipients of certain social benefits (such as maternity benefits).
- The contribution assessment ceiling is 7 times the average monthly wage for the calendar year from the two years before the calendar year in which contributions are paid (EUR 7,091 in 2020).
Taxation of contribution payments
- Contributions are tax-exempted.
- The Social Insurance Agency administers the scheme.
Qualifying conditions
- Standard old age pension: retirement age is flexible and depends on the year of birth, sex and number of raised children1; the maximum of the flexible retirement age is 64 years for childless men and women born in 1966 or after; minimum insurance period: 15 years.
- Minimum pension: a minimum pension benefit is granted to persons whose income falls below the ‘minimum pension level’ (100% pension-tested on the base of all pensions paid by the Social Insurance Agency) with a minimum insurance period of 30 years2; individuals must have exhausted all available options for potential pension entitlement.
Early retirement
- Available up to 2 years before reaching the retirement age of the standard old age pension for persons with a minimum insurance period of 15 years; available only if the minimum amount of the early pension is more than 1.2 times the ‘minimum subsistence level’ as defined by law; negative (permanent) adjustments to pension benefits (0.5% per every 30 days).
- Entitlement to early retirement is possible for persons not engaged in regular employment if the maximum amount of earnings that are subject to social security contributions does not exceed EUR 2,400 per year.
Deferred retirement
- Retirement can be deferred without limit with positive (permanent) pension adjustments to the pension benefit.
Combining employment & retirement
- Termination of employment is not a precondition for claiming the standard old age pension.
- Termination of gainful employment based on employment relationship is a precondition for claiming the early retirement pension; the recipient of an early retirement pension can perform work based on work agreements performed outside the employment relationship (if the maximum amount of earnings that are subject to social security contributions does not exceed EUR 2,400 per year).
Pension benefits
- The old age pension (Starobný dôchodok) is a monthly benefit primarily based on the length of the insurance period and the amount of contributory earnings throughout the working career.
- Maximum amount: no specification in the law regarding a fixed maximum amount of pension benefits; maximum pension benefits levelled due to contribution assessment ceiling and the limiting of the average personal earnings point value (APEP) to a maximum of 3 points.
- Minimum amount: pension-tested minimum pension benefit for persons with a pension below the minimum statutory pension level; benefit amount dependent on years of insurance (minimum: 30 years). The minimum amount for the minimum insurance period of 30 years is 33% of the average monthly nominal wage for the calendar year from the two years before the year of pension entitlement. Benefit increases by 2% per year (31 to 39 years of insurance periods) and 3% per year (40 years or more of insurance periods) of the amount of the ‘minimum subsistence level’ established by law.
Factors for benefit calculation
- Based on the multiplication of the following factors: APEP x PPI x CPV.
- APEP: Average Personal Earnings Point (Priemerný osobný mzdový bod) determined as a proportion of the multiplication of personal points achieved during particular calendar years (during the decisive period) by the periods of pension insurance. The personal earnings point is determined as a proportion of the gross yearly income of the insured to the national average yearly wage (maximum value of the APEP: 3 points).
- PPI: Period of Pension Insurance (Obdobie dôchodkového poistenia) = number of insurance years.
- CPV: Current Pension Value (Aktuálna dôchodková hodnota). The CPV is declared each year by Social Insurance Agency. For calculating the benefits in 2020 the CPV is EUR 13.6361.
- Adjustments: yearly adjustment of pensions, based on changes in the consumer price index for pensioners' households reported by the statistical office for the first half of the calendar year preceding the relevant calendar year; no downward adjustment possible. In 2020, pension benefits increased by 2.9%, with a minimum nominal increase of 2% of the average amount of paid pensions.
Taxation and social security contributions
- Pension benefits are not subject to income tax.
- Pension benefits are not subject to social security contributions.
1 The retirement age for mothers is lowered based on the number of children; if the mother is unable to take advantage of the lower retirement age, the right to a lower retirement age can be transferred to the father.
2 As of 2021, new rules regarding the minimum insurance periods enter into force that introduce various stricter requirements on whether the insurance periods can qualify for the minimum pension depending on the years when the periods were acquired. The stricter requirements include various assessment aspects such as the income on the basis of which contributions were paid for periods acquired after 1993 (certain exceptions apply).
Legal Basis: Act No. 461/2003. Coll. on Social Insurance (Zákon o sociálnom poistení).