RPT-Czech govt party open to pension reform compromise

                                
 (Repeats story published late on Thursday)
                                
 * Civic Democrats call for state-run pension fund
                                
 * Say reform of pensions is key, ready to compromise

                                
 By Robert Mueller
                                
 PRAGUE, Jan 6 (Reuters) - The leading Czech government party
is willing to compromise with coalition partners on how to
reform pensions in order to win approval for the changes it sees
as central to the agenda, it said on Thursday.
                                
 The Czech Republic, like many other European countries, has
an ageing population and a low birth rate which are set to swell
the proportion of pensioners, putting an increasing strain on
the budget. 
                                
 Pension reform is key to making the country's relatively
solid fiscal position sustainable in the long term and an
important factor for its credit rating. 
                                
 Prime Minister Petr Necas said his centre-right Civic
Democrats favoured setting up a system based on voluntary
pension savings, rather than the compulsory system proposed by
conservative coalition partner TOP 09.
                                
 "We do not prefer compulsory fund saving, we are unambiguous
defenders of voluntary saving," Necas told a news conference.
                                
 "But if that should cause the collapse of an agreement on
pension reform, we are, under some circumstances, willing to
agree to compulsory pension savings."
                                
 TOP 09 proposed in late November that part of the compulsory
contribution to the pay-as-you go system should be shifted away
from the state into pension funds. [ID:nLDE6AT284]
                                
 Necas said his party was ready to support a compulsory
opt-out of several percentage points from the 28 percent social
tax to be diverted to a pension fund if a state-run fund is
established, with a conservative investment strategy.
                                
 The next stumbling bloc within the coalition is expected to
be how to finance the shortfall in budget revenues left by
diverting some income to funds.
                                
 Both Civic Democrats and TOP09 have agreed to cover the
estimated 30 billion crown ($5.4 billion) gap by unifying the
two rates of value added tax, now at 10 and 20 percent, at 19
percent, and by using income from dividends paid by state-owned
companies, mainly power firm CEZ <CEZPs.PR>.
                                
 But a junior coalition partner, the centrist Public Affairs,
has said it was against raising the lower value added tax rate
applied mainly on food and medicines.
                                
 The government aims to reach an agreement on pension reform
in the coming months and push it through parliament before the
end of this year.
                                
(Writing by Jana Mlcochova; Editing by Ruth Pitchford)