Kontakt 2014, 16(3):e177-e186 | DOI: 10.1016/j.kontakt.2014.06.001

Development of the state-contributory supplementary pension insurance in the Czech RepublicLegal and Economic Issues in Medicine and Social Sciences - Original article

Jan Molek

Jihočeská univerzita v Českých Budějovicích, Zdravotně sociální fakulta, katedra právních oborů, řízení a ekonomiky

The state-contributory supplementary pension insurance is a popular product in the Czech Republic. According to the Association of Pension Funds of the Czech Republic, as at 31 December 2012 ca. there were 5.15 million registered participants in pension funds (as at 31 December 2011 it was ca. 4.60 million of participants) who had deposited ca. CZK 246.594 billion (as at 31 December 2011 it was ca. CZK 232.052 billion). Pension funds have been showing stable management, however, at the cost of low income. Since its reform was enforced by the government in 2013, supplementary pension insurance has remained a part of the pension scheme. It has become a so called "Pillar III" and the law describes it as supplementary pension savings. The Amendment to the State-Contributory Supplementary Pension Insurance Act, whose target is to reinforce the role of supplementary pension insurance in the creation of total savings for retirement age contains a number of positive elements. The question is whether the amendment will actually meet expectations, i.e. to make the supplementary pension insurance a functional "Pillar III" of the pension scheme as the state-contributory supplementary pension insurance does not fulfil its primary function yet and de facto it is not even capable of competing with life-cycle mutual funds or with other substitutes offered on the financial market without being significantly supported by the state.

Keywords: Pension; Pension fund; Supplementary pension insurance; Participant's contribution; Amount of state contribution; State contribution; Participant to the supplementary pension insurance; Savings assessment; Supplementary pension savings

Received: October 31, 2013; Revised: April 10, 2014; Accepted: June 3, 2014; Published: September 30, 2014  Show citation