The new centre-right cabinet has pledged to make deep changes in the current pay-as-you-go pension system to relieve pressure on a system that could collapse as the population ages rapidly in the years ahead.
'There must be more private money going into the pension system,' Necas told a news conference.
'All people of this age (in their 30s and 40s) will have to engage more in their pension security.'
Talks on pension reform will come to a head next year, when the coalition government needs to agree and push through legislation to launch the reforms from 2012.
Necas said his party, the right-wing Civic Democrats, would propose that the overall payroll social security tax is cut by 3 percentage points to 25 percent.
People would be given an option to direct another 3-4 percent of the 25 percent into either a private or a state-run pension fund to build up savings for retirement.
Contributions sent to the pay-as-you-go system, used to directly pay out pensions to current pensioners, would be reduced accordingly, Necas said.
The resulting shortage of funds in the pay-as-you-go system would be covered by a rise in the lower bracket of the value-add tax rate, which is now 10 percent, as well as by privatisation revenue and dividends from state companies.
The government has won praise from investors and rating agencies with its plans to slash the budget deficit to 3 percent of gross domestic product in 2013 from around 5.3 percent this year, and revamp the health and welfare systems to make them sustainable in the long run.
Necas said the country of 10.5 million had 2.3 million people over the age of 60 last year. This would grow to 3.8 million in 2050, he said, while the ranks of working people who pay the social security tax would shrink to 3.85 million from 4.9 million.
The proposal is less radical than some other plans presented by a panel of experts, which called for a five percentage point reduction in the social security tax.
The Czechs pay some of the highest social security taxes among countries in the Organisation for Economic Cooperation and Development.
(Reporting by Robert Gazdik, writing by Jan Lopatka; Editing by Susan Fenton) Keywords: CZECH PENSIONS/ (firstname.lastname@example.org; Reuters Messaging: email@example.com; +420-224 190 474) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.