Prague, July 7 (CTK) – The Czech pension system’s second pillar, within which people can send a part of their compulsory pension insurance to private pension funds, will be scrapped next year, under a bill proposed by the centre-left government, which the Chamber of Deputies approved in first reading Tuesday.
The clients who joined the second pillar after its launch in 2013, will receive their money back.
The right-wing opposition TOP 09 and Civic Democrats (ODS) blocked the government’s plan to have the bill definitively passed in a speedy regime in the first reading.
However, TOP 09 failed to push through the rejection of the bill, which will be discussed by the lower house budget committee now.
“I don’t understand the plan to abolish something that is a kind of a reform,” said MP Jitka Chalankova (TOP 09).
Other opposition deputies asked the cabinet to present an alternative to the second pillar. Otherwise, its scrapping would be irresponsible, they said.
ODS MP Vladislav Vilimec said the second pillar’s abolition would undermine people’s trust in the observance of rules by the state. He said it was a mistake that the second pillar was based on the voluntary entry principle.
Deputy PM Pavel Belobradek (Christian Democrats, KDU-CSL) said the second pillar was only aimed at well-off people who can afford save money in pension funds.
The second pillar of the pension system was introduced by the previous rightist government of Petr Necas (ODS).
As from 2013, people could send 3 percent of their compulsory pension insurance contributions, that otherwise go to the state pay-as-you-go pension system (first pillar), to private pension funds if they added another 2 percent from their own money.
About 85,000 people used the opportunity.
Still before it came to power in early 2014, the Social Democrats (CSSD) envisaged their plan to scrap the second pillar.
The present cabinet of the CSSD, ANO and the KDU-CSL pledged to scrap it in its coalition agreement.
Under the bill approved Tuesday, the pension funds will be scrapped as from July 1, 2016 and their liquidation completed by early January 2017.
The clients may have their money transferred to their accounts, sent by post or transferred to the third pension pillar, which is a system of voluntary additional pension savings.
