One in seven Czechs understands pension reform principles

Prague, Aug 30 (CTK) - Only one in seven Czechs can understand the basic principles of the government pension reform, according to a poll conducted by the STEM/MARK agency and released to CTK Thursday.

Only 14 percent of the population on average know the rules of entering the second pension pillar, while 70 percent admit that they do not know them.

The second pillar of the pension system, which will be voluntary, counts with transferring some money from the state pay-as-you-go pension system to individual accounts with private pension funds.

The poll shows that Czechs are better informed about the possibility to withdraw from the second pillar as 21 percent of correctly answered that the decision to enter it would be irreversible and people cannot abandon the system later.

On the contrary, the highest share of the polled do not know how many percent of the gross salary would go to the second pension pillar.

Under the reform bill, people will be able to transfer 3 percent of their social insurance, now amounting to 28 percent of the gross salary, to individual accounts with private pension companies under the condition that they add 2 percent from their own money.

Consequently, the clients of the future pension companies would send 5 percent of their pay to pension funds.

Only 4 percent of respondents understand this principle. Many more people are of the view that they would pay only 3 percent of the gross salary.

The best informed group in the population include the people who have already taken out an additional pension insurance. Their average success rate in the test was 23 percent compared to the general average of 14 percent.

The pension reform introduces the possibility to join the second pillar voluntarily but only for citizens under 35 years. Those aged over 35 would have a chance of entering it only in the first half of 2013.