New Pension Savings Regulations: What to Expect From July?

Beginning in July, the Czech Republic’s state support for pension savings will undergo significant changes. Those desiring higher state support for their pension savings from July onwards should inform their pension company by the end of June. The terms of state support are changing, with the threshold for drawing the contribution rising from 300 to 500 crowns monthly. Also, the upper limit of the participant’s deposit above which the state contribution will no longer increase is being raised.

Traditionally, the contribution was paid from a deposit of 300 CZK per month, while at this amount, the monthly support was 90 CZK. The maximum contribution was set at 230 CZK for a monthly deposit of at least a thousand crowns. However, starting in July, an individual will achieve the highest state support with a deposit of 1700 crowns, and the state will add 340 CZK, just like any higher deposit.

The increase in the monthly deposit to 500 crowns, to be able to get at least a hundred crowns monthly from the state, will affect up to a million people, according to Jan Sedláček, a spokesperson for the Pension Companies Association. More people have so far deferred a thousand crowns to achieve maximum state support. If they want to newly collect 340 CZK from the state instead of 230 CZK, they should also adjust the amount of the deposit and inform the pension company about it.

Pension companies emphasize that if a participant wants to start drawing increased state support from the start, i.e., from July, they must inform them of the change in their deposit amount by the end of June. If a client increases their monthly contribution in June without notifying the pension company, i.e., simply starts paying a higher amount, the value of the original contribution is calculated for the claim to state support.

Lastly, state contributions will no longer be received by pensioners from July. According to the Ministry of Finance, this will affect about 750,000 out of 4.2 million pension company clients. Some pension companies offer compensation to pensioners if they do not terminate contracts. However, certain conditions sometimes need to be met for this.