POLL: Parental pensions? They will bring higher levies, debt and discrimination

Solidary, fair and motivating. According to the Minister of Labor Milan Krajniak (We are a family), this is supposed to be a pension for people. That is why it has decided in its pension reform to introduce a so-called parental bonus, under which parents of working children would receive a percentage of their contributions directly into their pension.

However, the Council on Budget Responsibility has the opposite opinion. In his 60-page analysis of the pension reform, he points out that the Krajniak system, with a price of more than 600 million euros, is primarily expensive from next year. Nor is it motivating completely evenly. Budgeters state that if a bonus is introduced, groups with a higher pension will be entitled to a higher parental pension, and pensioners with a large number of working children will benefit most from the introduction of a parental pension.

” Each additional benefit is beneficial for the individual if we narrow the view only to how much the individual will receive. However, an important follow-up question is which groups will finance this additional expenditure, “said Marián Šaling, an analyst at the Council on Budget Responsibility, for Pravda.

Read also Brussels has responded to pressure from Member States. They will get instructions on how to get out of the energy crisis

Paradoxically, in addition to the budget board, ministries and analysts have the opinion that there are better solutions than the parental bonus. . The ministries of finance as well as the economies are demanding that the “bonus” be completely removed from the amendment to the law. According to the Ministry of Finance, the proposal creates significant negative effects on the expenditures of the Social Insurance Agency, which will have to be financed by increasing the transfer from the state budget. The Ministry of Economy points out, in turn, that it would be financed through an increase in levies with the ambition of a further increase in levies in the future. However, in order to improve Slovakia’s competitiveness, the opposite must be done. The ministry also sees the problem in this case in the bureaucratic burden.

We asked economic analysts:

Do you agree with the statements of RRZ in analysis? What other possible amendment to the law would help to solve the often mentioned financial discrimination against women (or parents) raising children

Peter Goliaš, INEKO

A major problem with the proposed reform is that it widenes the general government deficit by more than half a billion euros in 2023 and beyond. This is mainly due to the introduction of a parental pension and, in part, the possibility of retiring after 40 years of service. In the post-crisis years, when Slovakia should reduce the public finance deficit and public debt, the amendment would bring an increase in it.

people have children. Rather, they will decide on the availability of housing and pre-school facilities, job opportunities or the level of social benefits to support the family. Compensation of parents for the upbringing of children should be introduced through higher assessment bases, from which the state pays pension insurance for persons caring for children.

Ján Šebo, economist and researcher at Matej Bel University in Banská Bystrica

Reading the RRZ study on

The CBR study confirms the assumptions of several critics of the parental bonus (parental pension), both economic, redistributive and legal.

In the case of our Orange Envelope model, with full use of the parental bonus, we have reached an annual cost of around € 625 million, with growth fully dependent on wage developments. If we reflect this in the contribution rate, then before the introduction of the parental bonus we should pay approximately 26.4% of our wages for pensions in 2024, after the introduction of the bonus it would be an immediate increase to the level of 29%. In other words, the introduction of a parental bonus would mean an increase in the rate by 2.5% of the assessment bases of all workers (insured persons).

and an unequal result. Our parents did not work and did not create pension entitlements in the parental bonus system. Therefore, the possible introduction of a parental bonus should only apply to new entrants to the labor market. Only in this way can we assess whether this tool has a real impact on the proclaimed increase in the willingness to have more children. Without this restriction, it is only an additional increase in pensions for selected groups of pensioners, ie additional redistribution from workers to pensioners without prior acquisition of pension rights. This means that the proposal is populist because it seeks to influence one group of voters without first obtaining entitlements.

If we are talking about fulfilling the right guaranteed by the Constitution of the Slovak Republic, where the upbringing of the child (period of childcare) does not have a negative effect on the amount of the mother’s pension, we should abandon the concept of parental pension and go directly to adjusting the acquisition period and personal pay point for each mother at the time the child is raised. This means that during childcare, we should raise the current system of awarding 60% of the average wage to 100% of the wage

. we acknowledge that every child and upbringing of a child in our society has the same value equal to the average wage. With this measure, we will help lower-earning mothers, but at the same time we will harm better-earning mothers. Therefore, it would be appropriate to work at the same time to enable mothers to return to work and to use public services focused on institutional care for the child during work.

Radovan Ďurana, INESS

The claims of the CBR are based on data on the pension system and the structure of contributors. There is nothing to disagree with, only alternative solutions can be discussed.

Women are not discriminated against. This is a popular mistake in public debate. On the contrary, at a time when women are not working and caring for children, that is, when they are not contributing to the contribution system, they already receive years of pension insurance free of charge. Which is free, but not free. During their parenthood, taxpayers contribute more than € 150 million a year to the social insurance company. Thus, women are not discriminated against, just their private decision to have a child means not only benefits but also costs.

Women, resp. families do not care for children because they want to raise new taxpayers for the state. Children are born for completely different reasons, and much of the benefits of parenthood, the benefits of the existence of children, belong to the family. Reducing parenthood to a financial balance of taxes and levies would be very superficial.

A young family, with two children under 5, will receive more financial transfers for the first 5 years than 50 thousand euros.

If politicians need to compensate for a private decision to have a child with financial benefits, they can be inspired in the Czech Republic. There was a single allowance for each child (regardless of the child’s activity), which will always be received by only one parent (the one who did not work). Such a system is more targeted, simpler and, most importantly, significantly cheaper.