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Special Report

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Czech pension fund clients rise to 2.86m

CZECH REPUBLIC - The number of privately insured Czechs rose to 2.86 million as of September 2004 from 2.74 million in December 2003, the Finance Ministry has said.

The number of new clients of Czech pension funds rose by 118,000 for the full year 2003.

Clients deposited a total of 3.2 billion crowns (101.8 million euros) in their pension saving accounts in the third quarter of this year. In 2003, clients deposited a total of 12 billion crowns in their pension saving accounts.

Government subsidies amounted to 800 million crowns in the third quarter. Together with government subsidies, the total balance on Czech private pension accounts was almost 95 billion crowns at the end of September 2004.

A total of 28% of inhabitants of the Czech Republic with a population of 10.2 million has a private insurance. There are 12 pension funds active on the Czech market after a wave of mergers, which has reduced their number from the original 44. Private pension funds entered the market in 1994.

Experts say the future growth will depend on the pension reform. Without a radical reform, the number of pension funds could stop at around 3 million, they say.

At the start of 2005, the Finance Ministry will prepare an amendment to the law on private pension scheme that should motivate people to save more over a longer time. The amendment should increase the limit for contributions by employers.

The Czech government plans to change the current pension system. An expert group consisting of all parliament parties should have ready several variants of the reform by the end of May 2005.

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