Raiffeisen penzijní společnosti (RPS), the Czech pensions subsidiary of Austria’s Raiffeisenbank, is pulling out of the republic’s pensions market, citing the new government’s plan to abolish the second pillar.

RPS will be transferring its clients to Penzijní společnost České pojišťovny (PSČP), with the transaction, pending regulatory approval, set for completion in the second half of 2014.

The Austrian bank has had a long-standing cooperation with Česká pojišťovna in pensions.

Raiffeisenbank only entered the Czech pensions market in late 2012, when the system was being radically overhauled.

The existing third pillar, which offered a single, guaranteed “transformed” fund, was closed to new members in November 2012 and replaced by so-called “participation” funds of different risk profiles but without a minimum guarantee, while the minimum contribution rate that qualified for an additional state contribution was trebled.

RPS was also one of the six companies to participate in the newly created voluntary second pillar, a system the Social Democrat-led coalition intends to abolish by 2016.

At the end of 2013, according to data from the Association of Pension Funds of the Czech Republic, RPS had 1,037 out of a total 91,027 participation fund members, and 12,163 second-pillar members out of a total 81,962.

PSČP, part of Italian majority owned Generali PPF Holding, had the highest number of second-pillar accounts (29,220), the second highest number of participation fund members (23,552) and a leading 26% of the 4.9m transformed fund membership.

Tomas Kofron, RPS spokesman, said: “Last year, as a new pension company, we managed to get a 14% market share in the second pillar, and we managed to get a highest yield for our clients.

“Nevertheless, the actual political situation does not allow us to further develop our investment, and therefore we will continue with a strong partner.

“We will continue to offer our services in long-term finance planning via other products such as mutual funds.”

Vladimír Bezděk, chief executive at Česká pojišťovna’s pension company, told IPE: “Our company is the long-term leader in the Czech private pension market.

“I am convinced we are able to offer attractive returns on the deposits and special services, including online service of accounts, to our new clients.

“Along with the acquisition of the client base of Raiffeisen Pension Company, there is also significant expansion of our company’s distribution capacity through the branch network of Raiffeisenbank.”

The value of the transaction has not been disclosed.