May 24, 2018 / 3:27 PM / in a month

Slovak ruling party seeks to cap retirement age at 64

BRATISLAVA, May 23 (Reuters) - Slovakia’s ruling Smer party said on Thursday it would propose a constitutional change to cap the retirement age at 64, reversing a decision that had tied it to average life expectancy.

Last year’s retirement age was set at 62 years, 76 days and it will be extended by 63 days this year under a law passed by previous Smer-led government in 2012 and keep rising every year as people live longer.

The automatic extension has been praised by economists and opposition parties as a way to stabilise the budget in the long run. But Smer now proposes halting that progress and breaking the link to rising longevity.

Slovakia faces a rapidly ageing population as the ratio between pensioners and working people will narrow from 22 pensioners to 100 working people to 60 pensioners to 100 working people in 2066, according to EU statistics office Eurostat.

Smer, a leftist party, originally wanted the cap at 65 years but now wants it lower after talks with centre-right junior coalition Slovak National Party.

A third coalition partner, the centrist Most-Hid party, does not back the measure but some opposition lawmakers said they were open to negotiations. Smer would need 90 votes in the 150-member parliament to pass the law as a constitutional measure.

According to calculations by an independent budget watchdog Budget Responsibility Council (RRZ), the pension age is expected to reach the cap of 65 after 2038.

The cap would lead to a higher number of pensioners and lower pensions and may have a negative impact on the strained labour market, RRZ said.

Slovakia, whose economy is driven by car production, has been one of the better budget performers in the euro zone and its public debt load is expected to fall to 46.5 percent of GDP in 2019 from 49.3 percent seen this year.

The government wants a public finance deficit of 0.8 percent of GDP this year and a balanced budget in 2020. (Reporting By Tatiana Jancarikova Editing by Matthew Mpoke Bigg)

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