Klaus vetoes Czech government´s key pension reform bill

Klaus said the bill lacks the necessary consensus of experts, politicians and in society.

The pension reform is a crucial change to the welfare system, which has a long-time effect and concerns every citizen, Klaus wrote when explaining his decision on his website.

He also minds the pension reform being launched in a fluid economic situation, he indicated.

"I disapprove of the change to the pension system for reasons that are quite different from the [leftist] opposition´s," Klaus pointed out.

Along with the bill on pension saving insurance he also vetoed the amendment to a few other laws related to the reform.

The Chamber of Deputies definitively passed the former bill and the amendment on September 7, overriding the Senate´s veto.

It might vote on the legislation again in October. If they overrode Klaus´s veto, the bills would take effect as of 2013.

This is another time in a short period that Klaus has vetoed a crucial bill promoted by the right-wing cabinet of Petr Necas (Civic Democrats, ODS).

"I must express my position on the proposed changes quite unambiguously," Klaus wrote in connection with the pension reform today. He addressed his explanation to Chamber of Deputies chairwoman Miroslava Nemcova (ODS).

He recalled that the opposition-dominated Senate rejected the reform and the Chamber of Deputies passed it again by a narrow majority of government deputies´ votes.

"The forcible pushing of the key change through parliament does not set a good prospect of its long-term maintainability and of the stability of [pension insurance] conditions in the next possible political constellations," Klaus wrote.

The controversial law introduces the "second pillar" of the pension reform enabling Czechs to send part of their pension insurance contributions to private accounts managed by pension funds, instead of the state-run pay-as-you-go system. It enables them to send 3 percent of the insurance sum to a private account if they add 2 percent to it from their own money.

Klaus wrote that the pension reform, including its second pillar, is to be launched now that the financial crisis has undermined people´s confidence in long-term collective investment and that similar systems abroad are hit by a crisis and are being nationalised again.

Launching the reform in this situation would amount to putting on stake the confidence of people, stability of the pension system and with public as well as private money, Klaus added.

He said it is difficult to predict the second pillar´s impact on the current pay-as-you-go pension system on which the present generation of pensioners and people close to the retirement age will further fully depend.

"The system´s deficit will increase [as a result of the second pillar´s operation]. It is unacceptable to cover it by increasing taxes again and again," Klaus wrote.

The reform has been also criticised by the unions as a step to siphon off money from the public pension system. The unions want the reform to be postponed until the Czech economy starts growing again.

Author: ČTK
www.ctk.cz