UK - The Czech government has revealed plans to set up a notional defined contribution scheme for its first pillar pensions in the mould of the Swedish system.
The proposals were set out by the ruling Social Democrat, Christian Democrat, Liberal coalition at the end of last year. The proposed reform would supplement the flat rate state pay-as-you-go pension with a payment based on contributions built up over a working life.
But these will be in a “virtual” insurance account - no actual funding will be in place.
The project faces a tough time in winning over opposition. There are many obstacles, said Martin Macha, managing director of Mercer Human Resource Consulting in the Czech Republic:
“The opposition is very strong. They do not agree with the concept as such and there will be a lot of debate from both sides of the barricade.”
Debate is also focussing on introducing employer sponsored plans and reform of the third pillar to involve employers. Macha is not optimistic that reform will go ahead:
“I wouldn’t think any mandatory insurance or private pension scheme can be expected in the Czech Republic. Legislation could be ready at the end of the year but it depends whether consensus can be achieved or not. I’m quite sceptical about that.”The Czech Republic now has 14 private pension plans, with the largest, Credit Suisse Life & Pensions, commanding 25% of the market.
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