CZECH REPUBLIC - The Czech lower house has signed off on reforms that will see the introduction of a second pillar, bringing the country's compliance with the IORP Directive one step closer.
In a vote in the Czech Chamber of Deputies on Wednesday, the ruling coalition parties gave support to a bill that will see 3 percentage points of current first pillar contributions diverted to the new private second pillar, as long as employees contribute a further 2% of salary toward any payments.
The reforms have been heavily criticised by Czech unions, which argue that diverting funds from the state first pillar will damage its long-term viability.
The reforms must also still be agreed in the country's senate.
The IMF has previously endorsed the proposals, saying that market effects would help the second pillar grow - despite the fact it is currently voluntary.
The proposals come several months after the European Commission brought sanctions against the Czech government for failing to implement the IORP Directive.
At the time, a spokeswoman for the commissioner for internal market and services Michel Barnier said: "The Commission hopes the Czech authorities will amend their legislation to bring it fully into line with EU law."
Austria's Erste Group had previously voiced concerns that a lack in interest in the second pillar would see it reintegrated into the first pillar, mirroring developments in Hungary.