Czech President’s Pension Veto Undermines Cabinet, Premier Says

Czech President Vaclav Klaus’s veto of bills overhauling the pension system may destabilize the government at the time it lacks a parliamentary majority, Premier Petr Necas said.

Klaus vetoed two laws today needed to implement a system that will redirect part of compulsory payments from the pay-as- you-go pension program into private accounts. The government failed to secure a political and expert consensus for the change while the financial crisis exposes the risks of privately managed retirement savings, Klaus said in a statement.

Necas’s government is seeking to boost private savings as the aging population is increasing the deficit in the state system where workers pay for pensions of the retired. The Cabinet can overturn a presidential veto with 101 votes in the lower house of parliament, a majority it failed to secure in a vote on tax increases earlier this month.

The opposition’s objections to the pension changes are “in reality only excuses to not do anything,” Necas said in a statement. “Mr. President is certainly aware that some of his steps, which are based on the opposition’s arguments, aren’t helping the government’s political stability.”

Necas is battling a revolt inside his Civic Democratic Party against a plan to raise the sales levy and increase taxation of the highest earners.

The government, which lost its parliamentary majority in April amid personnel and budget rows, fell seven votes short of the 101 needed on Sept. 5 to override a veto by the Senate of a package of measures needed to raise state revenue and cut spending. Klaus had urged lawmakers not to endorse Necas’s tax plan before the failed vote.

To contact the reporter on this story: Peter Laca in Prague at placa@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.