June 7, 2014 / 9:57 AM / in 3 years

Czech finance ministry proposes abolishing pension reform by 2017 -paper

PRAGUE, June 7 (Reuters) - The Czech Finance Ministry has three options for abolishing pension reforms introduced by the previous centre-right administration by January 2017, a Czech daily paper reported on Saturday.

Returning the pension system to the state was one of the main goals of the ruling Social Democrats, elected in October 2013, only a couple of months after the reforms were introduced.

The pay-as-you-go pension system has constantly created deficits, the latest a 50 billion Czech crown ($2.5 billion) deficit at the end of 2013.

The previous government allowed people to divert part of their social security payments to private pension accounts from state ones.

The aim was to help them build up savings to mitigate the risk of lower state pensions in future due to an ageing population.

The finance ministry has three options for abolishing the reforms, Mlada Fronta Dnes reported.

The first two would let people keep what they have saved in the reformed scheme, including money from the state.

The third option, which the ministry does not recommend, would take back money people had received from the state.

A finance ministry spokesman declined to comment on the newspaper report.

“The ministry takes part in a working group established to deal with the pensions and it will wait for the outcome of this group,” he said.

$1 = 20.1279 Czech Korunas Reporting by Robert Muller; Editing by Erica Billingham

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