Major pension fund reform in the Czech Republic: Creating a three-pillar system

Abstract

This article examines forthcoming pension fund reform in the Czech Republic. It does so in the context of the reforms that have happened in other Central and Eastern European countries. It analyses the new mandatory funded pillar and, in particular, the choices that different sections of the Czech population will have to make regarding the pillar, the contributions that will be paid to this pillar and the different types of account that will be made available. The article also analyses the changes to the voluntary pillar and, in particular, who can participate in such arrangements. The article further evaluates how funds will be established and administered, the bodies that will undertake this, the capitalisation of such bodies and where they will be entitled to invest fund assets. Finally, it examines the tax treatment of funds and the opportunities that will arise for financial institutions in relation to this sector. © 2012 Macmillan Publishers Ltd.