In recent years, changes to the pension system have focused almost exclusively on adjustments to its parameters. However, the scope for further mandatory interventions of this kind appears to be largely exhausted if broader societal consensus is to be maintained. Strengthening the third pillar therefore emerges as a viable path forward, particularly for individuals with longer investment horizons and higher incomes.

Key takeaways:

• The Czech pension system is historically and institutionally based almost exclusively on pay-as-you-go financing, which is becoming increasingly vulnerable to adverse demographic trends.
• The absence of significant capital reserves and the low share of capital income among pensioner households substantially limit the system’s long-term stability.
• Low participation of younger age cohorts in the third pillar exacerbates the long-term fiscal and social risks associated with population ageing.

Policy Paper – Martin Zeman

The analysis is in PDF under the link below.