Last year, dynamic funds earned 17%, while conservative funds lost money

All balanced and dynamic participant funds of supplementary pension savings were profitable last year. On average, balanced funds appreciated their participants’ deposits by 4.9 percent and dynamic funds by 16.9 percent. They thus outperformed in the previous year’s inflation, which averaged 3.8 percent, by a margin. This was reported by the Association of Pension Companies of the Czech Republic.

The mandatory conservative funds, which by law have to invest very cautiously, i.e., almost exclusively in government bonds, paid extra on interest rate increases by the CNB and ended the year mainly in the red. On average, it amounted to 3.6 percent.

“Pension savings, especially its dynamic and balanced funds, once again confirmed that it is a perfect long-term tool for financial security in old age and the protection of saved money against inflation,” said Aleš Poklop, president of the association.

According to him, portfolios based on the equity component can make people’s money appreciate much better than very conservative funds of the old pension insurance or conservative funds of the new pension savings.

1.4 million people have supplementary pension savings

According to data from the Association of Pension Companies, the number of participants in supplementary pension savings funds increased by 129,000 in the first three quarters of last year, with a total of 1.41 million people saving at the end of September. The volume of their contributions rose to CZK 94.6 billion.

New supplementary pension contracts could be concluded until November 30, 2012. From January 2013, only additional pension savings contracts can be concluded. What is different is the need to choose an investment strategy.

The new funds no longer guarantee that a possible loss will not reduce the client’s savings, nor will they pay out half of the money saved after 15 years. On the contrary, they offer a possible higher appreciation.