Prague Economic Papers 2006, 15(3):214-230 | DOI: 10.18267/j.pep.285

The Czech Pension System and the Perspectives of Its Reform

Michal Slavík

Faculty of Social Sciences, Charles University, Prague.

This essay describes the Czech pension system, provides a brief history of its modern transformation and mentions some of its drawbacks which should be the subject of a future policy debate. Particular attention is devoted to the third pillar and to the importance of a well-functioning capital market as one of the key conditions for the further development of funded pillars. The question of the timing of the enhancement of the funded pillars in a robustly growing economy with a limited capital market is opened. A lack of new private shares and bonds issues on the domestic capital market may be one of the arguments for postponement of the funded pillars' strengthening. A focus of policymakers who will set up the pension system reform strategy should be concentrated on comparing transitional and transaction costs of each reform alternative and on the building of an efficient regulatory and supervisory infrastructure. They should, instead of enforcing involuntary savings in pension funds, seek measures that will help to create a savings-friendly and growth-oriented economic environment.

Keywords: pension system, pension reform, social security

JEL classification: G18, G23, H55

Published: January 1, 2006  Show citation