CURRENT PROBLEMS OF THE CZECH STATE-CONTRIBUTORY SUPPLEMENTARY PENSION INSURANCE
Jan Molek, Martin Šimák, Petra Molková
University of South Bohemia, Faculty of Health and Social Studies, Department of Legal Branches, Management and Economy, České Budějovice, Czech Republic
Korespondenční autor: Jan Molek (molek@zsf.jcu.cz)
ISSN 1804-7181 (On-line)
Full verze:
Submitted:4. 8. 2010
Accepted: 23. 9. 2011
Published online: 15. 12. 2011
Summary
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 of 31 December 2010 the pension funds kept files of approximately 4.54 million participants, with savings amounting some 216,109 billion crowns. In the long run, the pension funds show stabilized financial results (however, in return for low revenue). Although the pension funds have always reached positive or at least zero appreciation of clients’ savings (as it was required by law), once you have included the inflation rate, the situation becomes very different. Regulatory restrictions on the side of the state, along with high costs on the side of the pension funds are the main reasons why the revenue allotted to the participants more or less only oscillates around the inflation rate.
The state-contributory supplementary pension insurance in its current form does not fulfil its primary function. Moreover, without significant support provided by the state the scheme is not even capable of competing with life-cycle mutual funds or other substitutes offered on the financial market. If, for the future, the supplementary pension insurance is intended to be a part (to be one of the pillars) of the pension scheme, fundamental reform is needed. Therefore, besides the analysis of the status quo, this article deals with a framework determination of necessary reform measures as well.
Keywords: pension; retirement; pension fund; supplementary pension insurance; private pension scheme; participant’s contribution; state contribution
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