CZECH REPUBLIC - Czech pension funds returned 2% on average last year, just before the advent of a new pensions system.

The fourth quarter did little to boost returns at the country’s nine pension funds, as the average return at the end of the third quarter had already been roughly 1.8%.

The worst performer for 2011 was the Generali pension fund, which returned 0.4%, while the best was Allianz, which returned 3.2%, according to the Czech pension fund association.

On average, Czech pension funds - which combined manage just over CZK230bn (€9.2bn) in assets for 4.6m participants - invested 90% in bonds, 3% in equities, 1% in real estate and the rest in cash.

In the wake of a new pension reform bill - passed without the signature of the president and against the will of the upper house of parliament - Czech pension funds will be closed or transformed into third-pillar schemes, while new ones are created within an opt-in second pillar. 

While the reform has had its share of critics, the pensions industry has been broadly supportive.

Karel Svoboda, managing director of the CZK29bn ČSOB Penzijní fond Stabilita, which returned 2% last year, said: “In spite of the fact the pension reform that is now being implemented in the Czech Republic is a result of a compromise that had been reached after a long and complicated discussion between the individual political parties, trade unions and employers, the pension reform is a step in the right direction.”

He added that the reform would “eventually be accepted” and confirmed that ČSOB would be offering “three or four” funds under the new system with different risk profiles.

Similarly, Tomas Matousek, chief executive at the CZK57bn Penzijní fond České pojišťovny, which returned 1.7% in 2011, noted that his group would offer funds under the new second pillar.

“All the major present market players are preparing for the reform,” he said.

And Jiri Rusnok, director of pensions at ING in the Czech Republic, confirmed that his company was also gearing up for the shift towards the new multi-fund structure in the third pillar.

He added, however, that ING had not yet decided whether it would offer funds under the new second pillar.

“We are considering this option very seriously, and we are taking the necessary preparatory steps to be ready to join the new pillar,” he told IPE.

The CZK25bn ING pension fund returned 2.2% last year.