The "pension reform" envisaged by the government is not a reform, but a parody of the reform. In fact, it is simply a matter of raising taxes and tapping interesting income into pension funds. What could real reform with tax cuts look like? Read on and know that the just-ending events of doctors can help us with this…
V last article I solved how to meet the goals they have declared for the trade unions. It was a de facto outline of health care reform - now let's see how this health care reform can solve pension reform. The two reforms are also closely linked.
How are the reforms related? For several reasons - older people (pensioners) usually receive more medical care than others. They are state insured - the state pays health insurance for them. This state insurance is a burden on the state budget, which must also be taken into account. After all, older people are the most expensive group of "state insured".
If health insurance became an individual and private matter for each of us (combined with a certain one) form such as life insurance), we can declare the whole problem of "old-age pensioners-state insured persons" solved. From any income some combined forms private "health and life insurance" is possible to finance health care even in old age, in retirement without income from employment.
How does this relate to pension reform?
Let's sell healthcare and save pensions!
First, it would mean significant savings for the state budget. "If we sell healthcare," we will get rid of a large number of government officials, taken as a result we can abolish the Ministry of Health (his other agendas may be taken over by another ministry). This saving could easily be transferred from the state budget to a special one "pension reform" reserve.
But what will happen if we privatize healthcare? Not just that we will reduce state costs for our own operations, but we also get funds from the sale of all state-held medical facilities, VZP, and others. All I would also postpone these funds to a special reserve.
When I talk about selling state-owned equipment, I am also talking, for example, about the hospitals that hold the regions. I do not see a problem in their sale (even against the will of the regions), because the county is part of the state and its administration. The transfer of hospitals to the ownership of the regions was a de facto administrative matter, their transfer back to the central authority of the ministry and their subsequent sale is also a de facto matter of the administration.
From the privatization of health care (as outlined in previous article), the state would receive considerable resources. How to ensure that these funds are used for pension reform and are not "eaten away"?
Unfortunately, it doesn't go very well. Probably the surest solution is to create a law that combines the two reforms - initially create opportunities for privatization of health care and at the same time create a reserve pension advance (the law determines that revenues from health care privatization and CEZ privatization must be transferred to this reserve) on pension reform. Reform mega-law.
Success lies in the schedule
How about the pension reform itself? The success of the reform - at a time when we have the resources - is on schedule.
I would simply spread the reform over twenty years. There could be no valorisation of pensions until 2020 (possibly by inflation), from 2020 to their gradual reduction. The whole transformation would end in 2030.
The resulting pension would be an artificially set minimum amount, which would be the same for everyone - for example, 5000 CZK. During those twenty years, would there must have been a large reduction in today's social tax ("Social insurance"), which today accounts for 28% of total staff costs.
The amount of "5000 CZK", which is the resulting pension, is relatively small. I can imagine that its payment would be part of the state budget - a social tax would de facto not be needed. To phas it out during those twenty years would every year it was enough to reduce that tax by 1,4%.
What about other social benefits, unemployment benefits, etc.? I can also imagine this well - together with the schedule for the reconstruction of the current pension system, I would like to do the same also liquidated this support system. We would get rid of labor offices and a bunch of other government officials. This, too, is a saving that could finance the whole reform. In a slightly less extreme version, I can imagine maintaining unemployment benefits, in a short time (for example, for 3 months). But that's all. Nothing more is needed. Unemployment insurance could also be a very good product for insurance companies.
By the way, do you know that once upon a time, unions took care of their unemployed members?
Reducing the social tax creates space for private savings. All those who retired after 2030 would become lucrative potential clients of many insurance companies, investment funds, banks and more. Information on changes in pensions would ensure advertising competition for these clients, competition would ensure interesting returns. Why not? The state is spared additional costs.
After all - I see no reason why the state should subsidize all those who can make money from a possible reform with their advertising expenses with some big "awareness campaign".
So everyone would know what awaits him. Everyone would know what would happen in the next twenty years. It would be up to everyone to deal with it.
What about VAT and pension funds?
The average burden of paying VAT in the current two-rate model is somewhere between 15 and 16%. Somewhere at this level, I would calmly unify the two rates - there would be no increase in the tax burden. Note that in my proposal to reform both systems, I still avoid raising taxes. On the contrary - unlike the current government, I even reduce them.
I would definitely avoid any exceptions. I want to unify the rates not because of the increase in the tax burden, but because of simplification of the tax system. I don't feel like a god. I don't know what should be cheaper and what more expensive. What we need more and what less. That is a matter for each of us. I see no reason for any exception to the uniform VAT rate.
Pension funds need to be stopped regulated. Either way - unlike the current reform - it would probably sharpened. Apparently, they would be swept away by the competition's incredibly wide range of ways to invest and save their own money with much higher real returns than pension funds. Bad luck.
Our government is not changing anything
I do not see a single reason why a group of elects (the government or their constituents) should preach to others how to secure their old age. It's a matter for each of us. It is clear that we would have to abolish the 'retirement age'. The time when the saved (or invested) funds would start to be paid to the client is, of course, a matter of the contract between the client and the investment or savings intermediary (bank).
What did I achieve in my proposal (very rough!)? I got rid of health and pension taxes, created a reserve fund for pension reform and its specific rough outlines and schedule. Tax cuts, personal responsibility and freedom of choice are the words that characterize this proposal.
I almost got rid of the employee's salary 45% of levies from the tax base.
Whatever my proposal, whether you like it or not, it is a proposal for reform. What our government is doing is a parody of reform. All the government is doing is raising taxes and adjusting the parameters of the current system, along with the lobbying of pension funds. What our age will be is still left to the discretion of a relatively narrow group of people on behalf of the government and government officials.
What our government is doing is certainly not "right-wing reform." The CSSD would not be ashamed of the pamphlet, which they call "reform", at a time of its greatest "glory."