CZECH REPUBLIC - The Czech voluntary insurance system has been hailed a success, with participation levels comparable to Germany and the Netherlands.
According to the Association of Pension Funds of the Czech Republic, the pension funds had a total of 2,597,000 members at the end of December 2002, a rise of 3.5% over the year.
Milan Kantor, president of the APFCR is very satisfied with this level of participation, around half of the working population: “Making an international comparison, we note that a high level of participation of the Czech population in the system of voluntary pension insurance has been reached comparable with such countries as Germany or the Netherlands.”
The Czech Republic is unusual in having only a voluntary system.
The supplementary employer sponsored pension system started in 1994 and, by November 1996, 44 private pension funds had been launched, an embarras de richesses for a labour force of just five million people.
As was to be expected, the number has since been whittled down and now stands at 13. The merger of Credit Suisse Life & Pensions pension fund with Vojensky otevreny pension fund in the autumn of last year produced the largest single fund with around 600,000 members, 25% of the market. Six other funds have more than 200,000 members - ABN Amro pension fund, CMPF, ING, Ceske Pojistovny, Ceske Sporitelny and KB pension fund.
Employers’ contributions grew significantly over 2002, rising by 8% on the previous year. Both employers and employees can benefit from tax incentives and employers who make contributions can offset against tax a proportion of their payments to the mandatory social security scheme.
Participants pay in at least CZK100 (e3) monthly: for the Credit Suisse fund the average contribution is CZK370. Employers’ contributions normally amount to a maximum of 3% of salary, the tax deductible limit. At the end of 2002 the total assets of Czech pension funds amounted to CZK69bn, up from CZK55bn the previous year.
Returns generated by the funds were also significant, 31% up on the year before, said Kantor.
Around three-quarters of the funds is invested in bonds with a further 10% in treasury bills. A limit of 25% of the portfolio is placed on equity investment with a single issuer limit of 10%, but figures for 2002 show equity investments amounted to less than 7%. Mandatory pension funds are planned but currently the reform is mired in political bickering.
The Pensions Regulator (TPR) and Labour MP Stephen Kinnock and will listen to the experiences of steelworkers when transferring their pensions away from the British Steel Pension Scheme (BSPS) next week in Port Talbot.
Just Group has acquired a 75% stake in the holding company of Corinthian Pension Consulting in a bid to strengthen its professional defined benefit (DB) advisory services.
The Pensions Regulator (TPR) has exercised its production order power under the Proceeds of Crime Act 2002 for the very first time as part of a fraud investigation.
The ITN Limited Pension Scheme has named Trafalgar House as its administrator for an initial term of five years.