Czech Private Pension System: A Review
Czech Private Pension System: A Review

Summary/Abstract: Czech private pensions are dominated by a simple savings product that cannot be purchased any- more even though it meets the current criteria to a much greater extent than the retail products based on mutual fund investments, which were previously recommended by the neoliberal pension theory. Pension reforms, orchestrated mostly by lobbyists, led to a significant deformation of the pension savings market, created different systems of strong state support and resulted in high-cost products receiving the actual support of the state. Rules applicable to pension products are unfairly differenti- ated, which is equally true in respect of the beneficiaries, sponsors (employers) and scheme providers. With the number of the prospective pensioners exceeding the number of economically active persons, the private pension system can be characterized as a “soft” compulsion scheme, or “the second pen- sion pillar”, according to the World Bank’s classification. A reform is needed to unify the rules and sup- port low-cost products and providers.

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