Population aging will undermine the financial sustainability of most pension systems. As
more retirees draw from the system while fewer individuals pay in, an ageing society is hardly
able to honor the commitment to pay social security benefits to future retirees. Yet few major
reforms have been imlemented in European countries. Czech Republic gets ready for making
changes too. This paper deals with the fact that the effect of ageing on pension system calls
for increase of the retirement age. The elderly individuals must face a problem on the labour
market. Their skills are sufficient for the emloyers no more. As the social security provisions
provide incentives to leave the labour force earlier, they do that. By increasing the retirement
age is suitable to provide incentives to stay on the labour market until the ordinary retirement
age.