Second pillar draws far fewer than expected

Fewer than 75,000 people signed up for a recently-introduced private pension scheme, the so-called second pillar, ahead of a July 1 deadline for individuals over the age of 35. Pension funds originally expected half a million people to join. The number of the clients is based on the data of companies offering private pension schemes. Czech Pension Funds´ Association head Karel Svoboda said all pension funds would take care of clients who joined the second pillar and none of the funds planned to end activities. Mr Svoboda said it would be a major mistake to cancel the second pillar without a real alternative.

Since January individuals have been able to redirect three percent from their social insurance payments to the pay-as-you-go state system to private funds if they add 2 percentage points from their own money. Outgoing Czech Prime Minister Petr Nečas charged that many people were influenced by a statement of the opposition Social Democrats in which they promised to cancel the second pillar if they win the next elections.

Author: Jan Velinger