Czech Pensioners Face Risk of Losing Savings Contributions

From next July, people with an old-age pension will no longer receive state contributions to their pension savings. This could affect up to a million seniors. In addition, about a quarter of a million of them risk getting stuck in a trap: they could leave the unfavorable system, but by doing so, they would lose all state contributions granted, amounting to thousands of crowns. Some of them could even lose all their savings.

The catch is in the conditions for a one-time settlement from pension savings. In addition to reaching 60, it requires at least five years of savings. “Exactly this condition will not be met by a quarter of a million pensioners as of 1st July. So if they want to leave the system, they will only get a so-called dismissal – the state will take all state contributions that it sent them during their savings period,” warned Aleš Poklop, president of the Association of Pension Companies.

Furthermore, these people would have to return any tax reliefs. Worse off, according to Poklop, those who would want to leave the system will not have saved even two years. Such pensioners are expected to be in the records of pension funds by about 80,000 in July 2024. Poklop warned that when terminating contracts shorter than two years, the participant will not receive anything, not even their own money, which they have already sent to pension savings.

Poklop called on lawmakers to adjust to the harsh conditions. According to him, a fair solution to the situation would be introducing a five-year grace period, which would allow people with an already concluded contract to save under the originally agreed conditions.

The planned changes are part of an amendment that adjusts state contributions to pension savings. The chamber has already approved it, and now it is to be discussed by the Senate. “I agree that postponing this change by five years would be most appropriate. But I don’t feel there would be a will to make this change,” Lucie Jurníčková, product director of the Rentea pension company, told Novinky.