Government Plans To Improve Pension Investment

The Czech government plans to introduce a new long-term investment product that will be a tax-supported form of retirement security. The long-term investment product (DIP) will be created when the third pension pillar is revised in January to adjust the amounts of state contributions to retirement savings. The government wants to motivate people to invest more actively and secure their finances for retirement.

Most experts believe that the new product will increase public awareness of the need for savings and that relying solely on state pension payments is insufficient. Jan Brejl, the Managing Director of Partners Financial Group, said that introducing a tax-advantaged product would undoubtedly increase public awareness about the need to save.

The DIP will provide attractive alternatives for people who do not want to invest in the predefined investment strategies of pension companies. It will allow them to use a broader range of investment tools, such as stocks, bonds, shares in investment funds, or derivatives used to hedge interest or currency risks.

According to Zbyněk Stanjura, the Minister of Finance, the new product will offer a modern tool to citizens to invest their savings in products with the potential for higher returns in the longer term. Some financial companies have confirmed that they will use this option. Moneta Money Bank spokesperson Zuzana Filipová said the DIP is on their priority list. If the proposal is passed, they will offer it to their clients from the beginning of next year.

The DIP, along with the new alternative participant fund, is a step in the right direction, according to Václav Podzimek, the founder of the Alethes investment fund. However, he cautioned that more significant freedom also entails more significant responsibility. Many people may suffer losses despite saving due to their lack of knowledge and experience in assessing the risk of individual investment products.

The changes planned in the third pension pillar aim to make retirement savings more attractive. The government is also considering the creation of a state pension fund. The alternative participant fund will have a more freely defined investment strategy, allowing people to invest in riskier products that can achieve higher returns.