The Czech government has approved a proposal for significant changes to the country’s voluntary pension savings system. If the legislation is approved by Parliament and signed by the President, most of the new measures could take effect from January 1, 2027.
The proposed reform focuses primarily on encouraging younger generations to start saving for retirement earlier, improving long-term investment opportunities and reducing certain pension fund fees.
Higher state support for young savers
One of the most significant proposed changes concerns people under the age of 30.
Under the current proposal, the state contribution for eligible pension savings could increase from 20 percent to 40 percent of the monthly contribution. For a person contributing CZK 1,700 per month, the maximum state contribution could therefore rise from CZK 340 to CZK 680 per month.
The proposal would also make pension savings more accessible for younger participants. For children under the age of 18, the minimum monthly contribution required to receive state support could decrease from CZK 500 to CZK 100.
In addition, young adults who have been saving for at least 10 years could gain greater flexibility in accessing part of their savings. Under the proposed rules, they could withdraw up to one-third of their accumulated savings and investment returns between the ages of 18 and 36 without a penalty.
A new approach to pension investments
The reform would also introduce changes to the way pension savings are invested.
Pension companies would be required to offer new clients a life-cycle investment strategy as the default option. Under this approach, a larger portion of savings would be invested in more dynamic assets, such as equities, during the earlier stages of a person’s working life.
For savers under the age of 50, at least 75 percent of their pension savings could be invested in dynamic assets. As retirement approaches, the investment portfolio would gradually shift towards more conservative investments.
Clients would still have the option to choose a different investment strategy.
Lower pension fund fees
Another important part of the proposal concerns pension fund fees.
For most pension funds, management fees could be limited to 0.5 percent of assets per year, while performance-based fees could be removed. According to the government’s proposal, the changes are intended to help improve long-term returns for pension savers.
However, pension companies have expressed concerns about the proposed fee limits, arguing that lower fees could affect their ability to cover operating costs and actively manage investment portfolios.
Changes for existing pension products
The reform would also gradually affect existing participants in older pension products.
Transformative pension funds, which are still used by a significant number of Czech pension savers, are expected to close by the end of 2036. Remaining participants would then be transferred to conservative supplementary pension funds.
The Ministry of Finance estimates that the proposed changes could significantly improve long-term retirement savings. However, actual investment returns will naturally depend on market performance and individual investment conditions.
What could this mean for employees and employers?
If approved, the reform could make voluntary pension savings more attractive, particularly for younger employees.
For employees, the proposed changes could mean:
- higher state support for younger pension savers;
- greater access to long-term investment strategies;
- potentially lower pension fund fees;
- increased flexibility in managing retirement savings.
For employers, the changes may also increase employee interest in pension-related benefits and long-term financial planning.
Companies offering supplementary pension benefits may therefore wish to monitor the development of the legislation and consider how future changes could affect employee benefit programmes and internal HR communication.
What happens next?
The proposed legislation still needs to pass through both chambers of the Czech Parliament and receive presidential approval.
For this reason, the final form of the reform may still change before the new rules come into force.
FChain will continue to monitor important legislative and employment-related developments in Czechia and provide updates on changes relevant to employers, employees and international businesses operating in the country.
This article is intended for general informational purposes only and does not constitute financial, legal or tax advice.
