Early pensions are back in fashion, the number of applications has tripled. Hundreds of euros are at stake, behind it are

The conditions for the advantageous departure into early retirement have, admittedly, been tightened, but it is still worth submitting an application this year. The Social Insurance Agency is already recording an increased number of those interested in this benefit. Employers are calling for further adjustments; according to them, the labour market needs older people too. HN brings an example of the amount a worker who earned an average wage throughout their life can obtain from departing into early retirement this year.

Interest in early pensions is rising again. In the week from 25 November to 1 December, the Social Insurance Agency recorded almost 1,700 applications. This is not such an onslaught as at the end of last year, when people took advantage of the favourable possibility of departing into earlier retirement already after 40 years worked. Still, it is more than three times as many as in the weeks before.

The freshest data for last week, which the Social Insurance Agency provided to HN, so far speak of 859 applications. According to the agency's spokesman Martin Kontúr, this figure is, however, not yet final. Even now it is already noticeably more than the weekly totals during the preceding months.

„The stated situation is a consequence of the inconsistent handling of the problem related to departure into early retirement. A higher number of departures into retirement will increase the already large problems of employers on the labour market and potentially make the workforce in the most affected professions more expensive,“ assessed for HN the Secretary General of the National Union of Employers, Martin Hošták.

An insufficient solution

According to the Association of Employers' Unions and Associations, after the changes that reduced the attractiveness of early pensions the situation has, admittedly, improved, but Slovak companies continue to struggle with a significant shortage of qualified labour, which can complicate the running of operations.

On the labour market there is a combination of a decline in the workforce and at the same time record unemployment, which makes it harder for companies to find suitable workers.

„On the labour market it will be necessary, as a consequence of demographic developments, to attract the widest possible range of persons, including older workers. The issue of a shortage of workers has been on the table for quite some time, and the situation, from the point of view of employers, is worsening each year, also as a consequence of its long-standing non-resolution,“ said the spokeswoman of the Association of Employers' Unions and Associations, Miriam Filová.

The Secretary General of the Association of Industrial Unions and Transport Andrej Lasz recalled that in combination with other factors, such as the adopted consolidation package, companies are signalling that next year they plan to scale back activities, while departing employees will often not be replaced. This can affect not only their operation, but also the overall stability of the economy.

The need for a more decisive measure

This year's legal regulation of the early old-age pension stipulates that an insured person can go into retirement earlier than two years before reaching retirement age, but no longer after 40 years worked, as was pushed through by the government of Eduard Heger. Under the new rules it is necessary to obtain the required period worked, which increases by two months depending on the year of birth of the insured person, and is determined as the difference between the general retirement age for the specific year of birth and the number 23.

More important, however, is the financial tightening. Until 15 May this year it applied that for each month of earlier departure into retirement the benefit was, after 40 years worked, reduced by only 0.3 percent, whereas with a standard earlier pension the reduction for the same period was 0.5 percent. From mid-May these conditions were unified, i.e. the advantageous 0.3-percent reduction was abolished.

„The Ministry of Labour should, however, adopt a decisive measure that would forever remove the problem with departure into early retirement. We are prepared to discuss its form,“ Hošták said for HN.

According to employers, in this context an effective solution would be to allow early pensioners to work to a greater extent, at least during a transitional period. „Such a measure would ease the pressure on the labour market, support the retention of the workforce, and part of the expenditure on pensions could be compensated by contributions from their income,“ Lasz added.

More advantageous conditions

The growing onslaught of applications for early pensions is understandable. If a person decides to depart into early retirement, it is more advantageous if they manage to submit the application by the end of this year. This year, in fact, newly awarded pensions are being increased by a generous 14.5 percent. This is the year-on-year level of pensioner inflation still for the first half of last year.

The second important parameter when considering when to apply for a pension is the so-called current pension value. This is the amount of pension for one year that a person worked at the average wage.

This value increases each year according to how the average gross earnings of workers in Slovakia rise. Its increase, however, constitutes only 95 percent of the percentage by which the average wage rose in the third quarter of last year. This change was pushed through by the then Minister of Labour and Social Affairs, Milan Krajniak.

For 2025 the current pension value will increase by 5.5 percent. The average wage in Slovakia in the third quarter of this year rose year-on-year by 5.8 percent. After Krajniak's change, however, only 95 percent of this increase will be taken into account, which constitutes the mentioned 5.5 percent.

Early pension this year

This means that when someone applies for an early pension by 31 December this year, after it is awarded it will be increased by 14.5 percent. If they apply for the same benefit, for example, on the second of January, thanks to the higher current pension value it will rise by only 5.5 percent. The difference thus constitutes nine percentage points, which represents tens of euros per month.

For example, a worker who earned an average wage throughout their life and worked 43 years would this year be entitled to a regular old-age pension in the amount of 764 euros. If one year remains until they reach retirement age, the benefit will be reduced to 714.34 euros. The pensioner would thus lose 49.66 euros.

All newly awarded pensions are, however, this year being increased by 14.5 percent. In this case the benefit would thus rise to 817.90 euros. This is an increase of more than 103 euros. In addition, from 1 January 2025 pensions will increase by 2.1 percent. The resulting amount of the early pension would thus next year reach 835.10 euros.

The 13th pensions come into play too

If, however, the same worker applied for an early pension, for example, on the fifth of January next year, the only small plus would be that their pension would not be reduced by 6.5 percent, but only by six percent, since fewer days would remain until they reach pension age. Overall, however, this decision would harm them.

Thanks to the higher current pension value, the amount of their basic pension before reduction would reach 806 euros, i.e. 42 euros more than this year. From this sum six percent would be deducted, which represents 48.40 euros. They would thus arrive at an early pension amount of 757.60 euros.

Next year, however, all newly awarded pensions are being increased by only 2.1 percent. The resulting amount of the early pension would thus reach 773.50 euros. That is almost 62 euros per month less compared to the amount of the early pension to which the pensioner would be entitled if they applied for the benefit still this year. By departing into early retirement still this year the applicant gains 739 euros annually.

One must not forget either that the government of Robert Fico introduced more generous 13th pensions. Those who apply for an early pension by the end of this year will receive the 13th pension in the full amount of 606.30 euros. The act does not in fact address whether you are a pensioner the whole year or only on New Year's Eve. In both cases you receive the full amount of the benefit.

If we add to this the mentioned 739 euros that an early pensioner gains annually on the higher pension amount, this is together 1,345.30 euros. By this sum you will be better off in our example if you decide to go into early retirement still this year.

Article taken from the APZD website.