CZECH REPUBLIC - Annual contributions into the Czech third pillar are set to reach CZK24bn (€850m) this year, said Jiri Rusnok, head of the association of pension funds.

A combined asset value of all 10 pension funds reveals funds saw an 18% increase based, according to Rusnok, on a CZK5bn rise in assets for Q1 alone.

Pension fund membership has also increased by 105,000 people to 3.71 million since year-end 2006, equalling 60% of the workforce in the country.

The Czech supplementary pension system consists only of third pillar pension funds. However, several employers are contributing to their employees' private retirement arrangements.

In the first quarter 18,000 employees received contributions from their workplaces for the first time, bringing the number of employees getting financial support for their pension savings to 860,000.

Rusnok also noted Czech pension funds maintained conservative investment strategies as over 77% of assets were invested in bonds. Equity investment, however, made up 7.4% of the total allocation while the rest of the fund were held in current accounts or mutual funds.

Statistics quoted by the Czech news agency CTK show returns of pension funds in 2005 were around 4%. Final figures for 2006 are not available yet but it is anticipated returns will be found to be above the inflation rate of 2.5%.

Pension fund profits for the first quarter of 2007 were CZK1.4bn, up from CZK1.07bn the year before. Profits for the full-year 2006 were CZK4.14bn slightly lower than the CZK4.57bn for 2005.