Czech Government approves major pension savings reform

The Czech government has approved a major reform of the supplementary pension savings system, aimed at increasing attractiveness for younger citizens and improving long-term returns. Key measures include doubling the state contribution for clients under 29 to 40 percent of their monthly deposit and lowering management fees to a maximum of 0.5 percent.

The reform introduces a life-cycle investment strategy, where funds for clients under 50 are primarily invested in stocks to achieve higher yields, gradually shifting to more conservative instruments as retirement approaches. Additionally, savers up to age 36 will be permitted to make a one-time withdrawal of up to one-third of their savings without losing state contributions or incurring taxes.

Finance Minister Alena Schillerová stated that the changes could result in savers receiving over one million CZK more than under the current system. However, the Association of Pension Companies has criticized the proposal, warning that the significant reduction in fees could make the business model unsustainable and lead to a reduction in service networks.