27% of Czechs have private pension scheme
CZECH REPUBLIC - The number of privately insured Czechs rose by 52,000 to 2.792 million in the first quarter of this year, according to data from the Finance Ministry.
This is the highest growth for the last four years. The number of new clients of Czech pension funds rose by 118,000 for the full year 2003.
A total of 27% of inhabitants of the Czech Republic with a population of 10.2 million thus had a private insurance at the end of March 2004.
Czech pension funds saw their profits up 19% year-on-year at 675 million crowns (21 million euros) in the first quarter of 2004, according to data from the Czech Association of Pension Funds. The association attributes the rise in profits mainly to a rapid growth of shares at the Prague Stock Exchange. Bond prices rose as well in the first quarter.
In 2003, Czech pension funds saw their consolidated profits rise by five percent to 2.4 billion crowns. The average yield generated by Czech pension funds, however, dropped to just three percent last year, due mainly to historically low central bank interest rates and all-time low inflation in the Czech Republic.
Clients of pension funds had deposited nearly 80 billion crowns at the end of March 2004. Deposits rose four percent since the beginning of the year. An average client of a Czech pension fund deposits 500 crowns a month, or three percent of an average Czech salary.
There are 12 pension funds active on the Czech market after a wave of mergers, which has reduced their number from the original 44. A merger of another two pension funds - PF ABN Amro and PF Ceske pojistovny - is expected to take place this year.
Private pension funds entered the market in 1994. The Czech government plans to submit the main principles of the pension reform to Parliament by mid-2004. The reform should boost the role of private pension funds.