How much is paid for pension insurance and how is the amount determined?

How the levy system works

Pension insurance is part of a wider social security system that ensures people have an income even when they can no longer work, whether because of age, illness or the loss of a partner. The system is funded on an ongoing basis. This means that contributions from current workers are immediately used to pay pensions to current pensioners.

Unlike private savings, it is not an individual account where your money is deposited. Everyone pays according to their income and the state redistributes the money according to need and legal rules. This ensures the stability of the system and solidarity between generations.

Who pays the pension

In terms of the law, there are three main groups of pension payers:

1. Employees and employers
2. Self-employed persons (self-employed persons)
3. The State – for certain groups of the population who are not themselves gainfully employed

Each of these groups has different calculation rules and administrative responsibilities.

How the amount of levies is determined

The amount of the premium depends mainly on your income – the higher your earnings, the higher your contributions. But there are also limits to prevent extreme differences. For example, the so-called maximum assessment base sets an upper limit on the income on which insurance premiums are levied (in 2025, it is CZK 2,234,736 per year). Pension insurance is no longer payable on amounts above this limit.

This keeps the system in balance: while high earners pay more, their pensions are also capped.

How much is paid by whom

For employees, contributions are dealt with automatically. The employee does not pay the contributions himself, his employer takes care of everything. The employer pays the social security contributions as a whole, including the pension contributions.

The amount of the insurance premium is determined as a percentage of the assessment base, which is usually the employee’s gross wage or the profit of the self-employed person. Contributions are made from this amount to three components: pension insurance, sickness insurance and state employment policy (i.e. unemployment benefit).

These contributions are paid monthly and are administered by the Czech Social Security Administration (CSSA).

Employers

Employers pay insurance premiums for their employees according to the type of work they do. For regular employment, the employer pays 24.8% of the employee’s gross wages, of which 2.1% for sickness insurance, 21.5% for pension insurance and 1.2% for state employment policy.

For paramedics and firefighters of company units , the rate is higher and amounts to 28.8% of gross wages, of which 2.1% for sickness, 25.5% for pension and 1.2% for employment. This rate is gradually increasing and will reach 29.8% in 2026.

For hazardous jobs (e.g. with physically dangerous conditions), the current pension rate is 26.8% of gross wages, of which 2.1% sickness, 23.5% pension and 1.2% employment. Here too, according to the ČSSZ, there will be a gradual increase – to 27.8% in 2026, 28.8% in 2027 and 29.8% from 2028.

Employees

Each employee contributes 7.1% of their gross wages, of which 0.6% for sickness insurance and 6.5% for pension insurance.

In total, the employer therefore pays 24.8% and the employee 7.1%, so in total the state receives about one third of gross wages for social security.

Self-employed persons

Self-employed workers have no employer to pay their contributions and therefore pay their own pension contributions. The amount is calculated on the basis of the so-called assessment base, which is 50% of profits (income minus expenses). 28% of this amount is deducted as a premium.

For example, an entrepreneur with an annual profit of CZK 400 000 has an assessment base of CZK 200 000, on which he pays CZK 56 000 a year. If he has a lower income, he still has to pay a minimum deposit, which for 2025 is approximately CZK 3 852 per month.

If the self-employed person also participates in sickness insurance, she pays an additional 2.7%.

For whom does the state pay pension insurance?

Some groups of people are covered by pension insurance even if they do not pay any contributions themselves. These are called ‘replacement periods’ – typically periods of parental leave, caring for a dependent, registering with the Job Centre or receiving a disability pension. These periods are counted for pension entitlement and the amount of the pension, even if no contributions are actually paid. For the sake of simplicity, it is said that the state pays the premiums for these people.

This ensures that these people do not lose the necessary insurance period and are entitled to a pension even though they are not working at the time.

Who is insured voluntarily

If someone is not currently contributing to the scheme, for example, they are between jobs, studying or working abroad, they can sign up for voluntary pension insurance. This will ensure that they do not miss out on the years needed to qualify for a pension. Voluntary insurance can also be paid retrospectively. Voluntary insurance then pays 28% of the assessment base.

What happens if you don’t pay your insurance

If the employer does not pay the insurance premium, this time remains credited for pension insurance purposes – the law considers it to be a period of insurance even if the employer has not fulfilled its obligation. However, this can be a problem for the employer, who faces penalties and fines. That’s why it’s important to check regularly to make sure that the CSSA is recording all employment correctly.

For self-employed persons, the situation is even more serious. Failure to pay advances means not only a debt to the state, but also penalties and a reduction in the insurance period. Without these years, you may then miss out on the necessary time for your pension, or your pension may be significantly reduced.

How contributions affect your pension

The amount of your future pension depends on two key factors – the period of insurance and the assessment bases, i.e. the income on which contributions were paid. Each year of insurance increases the percentage of the pension, and higher earnings are reflected in the calculation of the pension amount.

The state provides an element of solidarity; although people with lower incomes have lower contributions, the amount of their pension is reduced more slowly than for higher incomes. This reduces social disparities between different groups of people.

Summary

Pension insurance is a compulsory levy that provides an income for people of retirement age and is part of the social security system. It operates on a pay-as-you-go basis – contributions from current workers are immediately used to pay pensions to current pensioners. It is paid by three groups: employees and their employers, the self-employed (self-employed) and the state on behalf of selected groups (e.g. parents on parental leave, unemployed or caring for dependants). The employer contributes 24.8% of the employee’s gross wages (21.5% of which for pension insurance) and the employee 7.1% (6.5% of which for pension insurance). The self-employed pay 28% of half of their profits, but at least the minimum advance, which in 2025 is CZK 3,852 per month. Voluntary insurance can be paid by people who are not currently working in order to maintain the required period of insurance. The premium is determined on the assessment base, and there is a maximum limit (in 2025 it is CZK 2 234 736 per year) above which no more premiums are paid. Non-payment of insurance leads to debts as well as a reduction in the insurance period, which can reduce future pensions. The amount of the pension then depends on the length of the insurance period and the amount of income on which premiums have been paid, with the system taking into account solidarity between income groups.