RPT-Czech house backs pension reform bill

                                
 (Repeats story published late on Wednesday)
                                
 By Jan Lopatka
                                
 PRAGUE, March 12 (Reuters) - The lower house of the Czech
parliament approved a pension reform bill on Wednesday in the
first out of three readings, endorsing a key policy step of the
shaky centre-right coalition government.
                                
 The cabinet aims to raise the pension age to 65 years by
2030 from 63 and set the ground for a further reform that would
give people larger control over their future pensions by basing
them more on private savings.
                                
 Prime Minister Mirek Topolanek has staked his future on the
reform, which follows personal and corporate tax cuts, a sales
tax hike and restrictive steps in the central European country's
welfare and the health systems.
                                
 "Raising the retirement age is surely an unpopular thing
from the short-term perspective," Labour and Social Affairs
Minister Petr Necas told the lower house.
                                
 "However it is undoubtedly a change to the benefit of
citizens, current and future pensioners, because raising the
retirement age will contribute most to the stabilisation of the
pension system."
                                
 The bill will now go into committees for thorough discussion
and a final vote is expected in about two months.
                                
 The Czechs lag behind other central European ex-communist
countries that have mostly revamped their pensions.
                                
 Czech pension payments are expected to reach 306 billion
crowns ($17.34 billion) this year, nearly 30 percent of the
central government budget, and are expected to grow fast as the
population ages. The government plans further reform steps in
the next two years.
                                
 The government changes have won endorsement from financial
market analysts and the Fitch agency, which raised its credit
rating of the country by one notch to 'A+' earlier this month.
                                
 But the reforms have also raised tension in the ruling
coalition and angered the labour unions which went on a strike
alert, a rare sign of labour unrest in the country with 6.5
percent economic growth and unemployment at just 5.9 percent.
                                
 Viktor Kotlan, chief of institutional asset management at
Ceska Sporitelna, said raising the retirement age was a bit too
little too late, and further steps were needed.
                                
 "What has being done at the moments does not have any right
to be called a reform, it is a parametric adjustment so we avoid
a total collapse," he said, adding that key steps would be
untying the hands of pension funds and allowing people divert
part of their social tax to pension savings.
                                
 The coalition leaders were due to meet late on Wednesday to
discuss a range of issues that have split their ranks. These
include the impact of reforms on the poor as well as calls for
new nuclear power plants or the appointment of controversial
former Deputy Prime Minister Jiri Cunek back into the cabinet.
                                
 Analysts have said the coalition was rattled by the disputes
but that the junior parties -- the Christian Democrats and the
Greens -- had no incentive to let it fall as the consequent
power vacuum could lead to a grand coalition of the senior Civic
Democrats and the opposition leftist Social Democrats.
 (Additional reporting by Jan Korselt and Pavel Mahdal, editing
by David Christian-Edwards)