Pensions at a Glance 2025: Czechia
Table of contents
This country note shows how Czechia compares with other OECD countries in Pensions at a Glance 2025. This edition covers recent pension reforms and includes a focus on gender pension gaps.
The average pension of women was 10% lower than that of men in Czechia in 2024, which is one of the lowest differences in the OECD. The gender pension gap is less than half the OECD average of 23%, and it is only smaller in Estonia, Iceland and the Slovak Republic. The gender pension gap is small in comparison to the gender gap in expected lifetime earnings, at 38% just above the OECD average of 35% in 2022, due to a combination of high female labour market participation rates prior to the 1990s and several redistributive features in the Czech pension system.
In Czechia, the pension gap in lifetime earnings is largely driven by shorter expected careers and lower hourly wages, whereas differences in working hours play a modest role: in 2023, women on average earned 18% less per hour than men and their careers were 6.6 years shorter, while they only worked 2.8 fewer hours per week. The highly progressive calculation of the pension benefit – the benefit consists of a contributory basic component for which entitlements are not linked to individual earnings level, as well as of an earnings-related component in which earnings up to 42% of economy-wide average earnings have much more weight than earnings in excess of that limit – avoids that the significant gender gap in earnings translates into a sizable gender gap in pensions. Furthermore, Czechia is one of nine OECD countries that give credits just for having had children or that provide pension bonuses to parents, irrespective of whether a career break occurred. Child-related pension credits can reduce the impact of women’s shorter career length on their pensions.
Percentage difference of average pension of women relative to average pension of men
Source: Figure 2.1.
Age from which a man is eligible to full retirement benefits after a full career from age 22 in 2024
Source: Figure 3.8.
The Czech pension system does contain some features that could be disadvantageous to women. Czechia is currently one of five OECD countries where mothers can retire earlier than childless women, alongside France, Italy, the Slovak Republic and Slovenia. Depending on the number of children, mothers can currently retire between one and four years earlier than childless women in Czechia, although this possibility is set to disappear in 2037. A lower retirement age also means a shorter contributory period, and therefore lower pensions. At the same time, the very long 35‑year career requirement to retire at the normal retirement age, currently at 64 years and 2 months and increasing to 65 by 2032, particularly affects women even if it concerns a minimal share of older people. Finally, the low level of survivor’s pensions in Czechia means that they play a limited role in reducing the gender pension gap, unlike in many other countries.
Czechia is one of only two OECD countries that decided to increase the normal retirement age over the last two years, but retirement ages will increase in a majority of OECD countries due to earlier reforms. The normal retirement age is set to increase from 64.2 years for men retiring now, around half a year below the OECD average, to 67 years for men entering the labour market now, around half a year above the OECD average. Current and future normal retirement ages are the same for men and women in Czechia, as for the vast majority of OECD countries. The statutory retirement age was already increasing by two months per year until reaching 65 in 2030. Based on the 2024 reform, the retirement age is set to increase further after 2030, but at a slower pace: it will go up by one month per year until it reaches 67 in 2056. This pace is close to what would be required to keep the relative share of time spent working and time spent in retirement constant, as proposed in the 2020 OECD review of the Czech pension system. Moreover, Czechia has introduced an option for workers to retire without penalty 15 months before the statutory retirement age if they have worked at least about 10 years (more precisely, 2 200 shifts) in jobs deemed arduous or hazardous, or 30 months before with at least about 20 years (4 400 shifts).
In addition to increasing the retirement age, the 2024 reform has reduced future pension benefits by lowering the reference wage and the accrual rate over the period 2026‑2035. Czechia reduced its accrual rate slightly from 1.5% to 1.45% per year worked. The reduction in the reference wage, moving from taking into account 100% to 90% of earnings below 42% of economy-wide average earnings in the pension calculation, makes the pension system somewhat less redistributive. Despite this, the difference in future net replacement rates after a full career between a low and an average earner remains one of the highest in the OECD. The reference‑wage calculation and redistributive elements in the pension system result in an effective accrual rate for an average earner that is well below the legislated accrual-rate parameter of 1.45%: in the future an average earner will each year build up pension entitlements equal to 0.77% of earnings, below the OECD average of 1.05%.
With the effective contribution rate of 31.3% already among the highest in the OECD, there indeed is more space to improve financial sustainability of the pension system through adjustments to the retirement age and to pension levels. If the party that won the recent elections follows through on its campaign promise to roll back the retirement-age increase from 65 to 67, contribution rates would have to increase or pensions would have to be lowered further to offset the impact on pension finances.
The penalty for early retirement and bonus for delaying pension uptake, at 4.8% for an average earner in Czechia, is close to the estimated actuarially neutral rate of 5.2%. However, different bonus and penalty rates apply to different components of the public pension: there is no bonus or penalty for the contributory basic part of the pension, whereas a 6% bonus and penalty rate applies to the earnings-related component. Due to the recent reform, the penalty on the earnings-related component will be halved (from 1.5% to 0.75% per 90 days of early take‑up) for workers retiring early after 45 years of contributions from 2026. It is not exceptional to exempt people with long careers from early-retirement penalties at least to some extent, as 10 OECD countries apply no penalty after a long career, including France, Germany, Italy and Spain. Yet, empirical evidence among others from France and Germany suggests that such rules may particularly benefit people who have been able to stay in good health, as people for whom health risks materialised are less likely to be attain the career length required.
Czech relative old-age poverty is well below the OECD average
The working-age population will shrink fast, undermining pension financing
The mandatory contribution rate is very high compared to the OECD average
Pension replacement rates are much higher for low earners than for average earners
Contact
Wouter DE TAVERNIER (✉ wouter.detavernier@oecd.org).
Hervé BOULHOL (✉ herve.boulhol@oecd.org).
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The full book is available in English: OECD (2025), Pensions at a Glance 2025: OECD and G20 Indicators, OECD Publishing, Paris, https://doi.org/10.1787/e40274c1-en.
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