BRATISLAVA (Reuters) - Slovakia’s parliament approved on Thursday capping the retirement age at 64, a decision that economists say will put more pressure on future budgets as the EU member faces a rapidly aging population.
Last year the retirement age was set at 62.5 years under a law passed in 2012 that increases the pensionable age each year as people live longer - a formula praised by economists as a way to ease pressure on public finances.
“We don’t want people to retire at 70 or 72 years in the future, that’s absolutely unacceptable. We don’t want people to die behind machines,” Robert Fico, leader of the biggest party in the ruling coalition and a former prime minister, said after parliament passed the bill on Thursday.
Fico was prime minister in 2012 when the current law was introduced by his Smer party. The leftist party, which has been losing public support after the murder of an investigative journalist last year triggered mass protests, said its U-turn on the law was aimed at boosting pensioners’ social standing.
Slovakia has one of the most rapidly aging populations in the European Union.
The pension age is expected to reach the cap of 64 after 2030, according to calculations by an independent budget watchdog, Budget Responsibility Council (RRZ).
“The measure dramatically worsens long-term sustainability of public finances. It will cut the gross domestic product outlook by 9 percentage points in 2067 and raise gross public debt by 80.2 percent, or 138 billion euros ($155 billion) in 2017 prices, in the same period,” RRZ said.
Smer originally wanted to cap retirement at 65 years old but after talks with center-right junior coalition partner, the Slovak National Party, agreed to a cap of 64 years for men. Women will be allowed to retire six months earlier if they have had one child, a year earlier if they had two children and 18 months earlier if they had three children.
Slovakia’s economy is heavily dependent on car production but its public finances are in good shape for now. The government wants to reach a balanced budget this year but may abandon plans to hit a small budget surplus in 2020 ahead of a general election as it seeks to lift spending and cut corporate tax.
($1 = 0.8907 euros)
Reporting By Tatiana Jancarikova; Editing by Susan Fenton