Abstract
This paper deals with the experience of third pillar reform in the Czech Republic, executed in 2013. The core of our study is formed by a comparative analysis of newly introduced supplementary pension savings and its substitute products (investment funds, life insurance) from two main aspects: product features and distribution features. The outcomes are supported by empirical sales and population penetration of the surveyed products. The results indicate that even a pension product with a very attractive product design, such as supplementary pension savings, will be hampered by its substitutes as long as its distribution features are unattractive. This is an important lesson, particularly for the discussed European solution, the pan-European portable pension product (PEPP).
Highlights
On 1st January 2013, a comprehensive pension reform was launched in the Czech Republic
It was based on four main components: (i) an increase in the retirement age based on the increasing survival age, (ii) establishment of a second pillar opt-out retirement savings product, (iii) transformation and closure of the old third pillar supplementary pension insurance system and (iv) the establishment of a new third pillar solution under the new supplementary pension savings product (Andel, 2014; Batty and Hailichova, 2012)
While most of the product features were for pension products strictly defined by law, they were designed in a very pro-client manner
Summary
On 1st January 2013, a comprehensive pension reform was launched in the Czech Republic. As such, it was based on four main components: (i) an increase in the retirement age based on the increasing survival age, (ii) establishment of a second pillar opt-out retirement savings product, (iii) transformation and closure of the old third pillar supplementary pension insurance system and (iv) the establishment of a new third pillar solution under the new supplementary pension savings product (Andel, 2014; Batty and Hailichova, 2012). The core of the reform consisting of a new second pillar solution gradually began to attract criticism from political opposition and spurred critical discussion among academia (Vostatek, 2012; Loužek, 2014; Krebs, 2013; Janíčko and Tsharakyan, 2013), prompting its deposition by the new government in 2016. Substantial changes implemented in the third pillar were mostly not reflected in the public and scholarly discourse, which is rather surprising, given the system’s massive prevalence among the Czech population.
Sign-in/Register to view highlights & summary Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
