The reduced pension indexation, as pushed through by the Czech cabinet last year, was today upheld by the Constitutional Court, which dismissed a motion by 71 opposition ANO MPs to repeal last year’s amendment to the pension insurance law, court chairman Josef Baxa announced yesterday.
As a result of the ruling, pensioners will not see any additional money from the indexation.
The justification of the ruling was read by the court’s judge-rapporteur, Vojtech Simicek. The court chamber was filled with journalists and members of the public, especially pensioners. After the announcement of the verdict, cries of “Shame!” were heard.
Last year, amid soaring inflation, the government made a one-off adjustment to the mechanism of extraordinary pension indexation. As a result, pensions rose, but less than expected. The average pensioner lost about CZK 1,000 per month. The government justified this mainly on the grounds of budgetary responsibility, with savings of CZK 19.4 billion last year alone.
ANO MPs, who were represented in court by former finance minister Alena Schillerova, argued that the government had interfered with pensioners’ rights, and that due to inflation, they were entitled to a significant increase in pensions. In addition, according to ANO, the government majority abused the state of legislative emergency.
In the past weeks and months, the Constitution Court judges discussed ANO’s proposal in more than ten closed sessions of the plenary, a body of all 15 judges.
They also convened a public hearing, the first in nearly five years, where economists, statisticians, civil servants, Finance Minister Zbynek Stanjura (ODS) and Labor and Social Affairs Minister Marian Jurecka (KDU-CSL) testified as witnesses. The judges’ questions 14 days ago mostly focused on what information and documents on expected inflation the government had available from experts during 2022, and whether it knew in advance about the need for an extraordinary pension indexation.
Last week, the judges reached a decision at one of their closed plenary meetings. The decision was apparently the subject of some dispute, as Jan Svaton, the original judge-rapporteur, was replaced by Simicek after proposing a solution that did not meet strong enough support. For the court to repeal the legislation, at least nine of the 15 judges would have had to vote to repeal.
Before today’s announcement, Schillerova had described the government’s arguments as shaky and expedient. She also said that if the ANO MPs failed with the proposal, the court’s decision would be final and then there would be nothing to do but wait for political solutions. “If we win the parliamentary elections in 2025, we will subject this whole system to a thorough review,” said Schillerova. ANO is currently enjoying a comfortable lead in opinion polls.
According to the court, the declaration of a state of legislative emergency by the government was not unconstitutional. This accelerated procedure for approving laws can be used in extraordinary circumstances, which are not only natural disasters, epidemics or wars, but also shock disruptions to the state’s economic or financial situation, which occurred at the turn of 2022 and 2023 due to inflation, the court ruled.
It said the opposition had plenty of space to speak in the Chamber of Deputies, with Freedom and Direct Democracy (SPD) leader Tomio Okamura alone speaking for more than seven hours. According to the court, some of the speeches were clearly obstructive.
“Therefore, it cannot be said that the parliamentary opposition was denied the right to express its views on the bill due to lack of time, since it used the time it was given to do so for obvious obstruction, i.e. for something other than the substantive discussion of the bill,” the ruling reads.
Nor did the court see the reduction in the indexation as unlawfully retroactive. The amendment was passed before the pension recipients were legally entitled to the pensions. The entitlement arises only when a specific benefit becomes payable, the court said.
The ruling stated that there is no fundamental right to permanent increases in pensions or to see pensions follow price increases. The state guarantees a fair and adequate pension, not automatic increases, and it must take into account the current state of public finances. The key is that the implementation of pension policy should not empty the very essence of the fundamental right to adequate security in old age, which, the court said, did not happen last year.
The Constitutional Court judges said in their ruling that they understood the vulnerability and plight of pensioners. However, pensions have been repeatedly indexed, so pensioners have been relatively less affected by inflation than some other groups in society, the court stated. It also pointed to the need for solidarity with the generations whose contributions are now financing the pension system.
“They, too, look with confidence to the law and the constitutional institutions that determine its parameters, that the system will be workable even when the contributors become the beneficiaries of pensions. There is therefore a common interest in ensuring that the pension system as a whole is balanced, fair and sustainable, not only now but also in the future,” the court ruling concluded.
