CZECH REPUBLIC - Ceske sporitelny (PFCS), the second-largest Czech pension fund, saw its profits double in 2007 and has consequently set the return rate at 3.07% for the last year compared to 3.04% the year before.

Czech pension funds have to guarantee a certain rate of return for their clients with their own capital, so funds set the rate accordingly every year at their general meetings, according to market conditions, inflation rates and the fund's profits.

The largest fund by client number, Ceske pojistovny (PFČP), recently set it rate of return at 2.4% for 2007 compared to 3.3% the year before. (See earlier IPE story: 2007 returns fall to 2.4% for PFČP)

Ceske sporitelny, a subsidiary of the Austrian Erste Bank/Sparkassen Group, reported a profit increase of 46% to CZK776m (€32m).

"The profit, which is the highest in the pension fund's history, was generated through a well-selected investment strategy, increased business dynamics and growing volume of financial assets under management," the CZK25.2bn fund noted in its annual report.

Assets were primarily invested in Czech and other OECD countries' government debt as well as some equities.

"At a time of high inflation and hazards on the capital markets we proved to our clients that we can still generate attractive returns," said Jan Divis, chief executive of the pension fund.

By increasing its contacts with employers, the fund signed up 7,310 new companies which contributed to the total client increase of 48,000 last year, making it the second-largest pension fund in the Czech Republic.

With a total of 634,000 clients ,it has now overtaken the size of the Axa pension fund with 577,000 clients.

Last year also saw the introduction of life-cycle funds to the product range of Ceske sporitelny.

The product - based on a decreasing risk in the portfolio the closer a participant gets to retirement - is offered alongside the traditional supplementary pension.

"This is the company's response to the unresolved reform of the pension system," the fund stated.

The new life cycle funds allow investments in commodities and a greater exposure to shares than traditional pension products.

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