The Czech government has proposed financial compensation for pensioners who were effectively ‘locked’ into supplementary pension savings schemes following the withdrawal of state support in 2024.

Under the amendment, the state could pay out up to a total value of CZK 60m to affected participants who incurred losses after deciding to exit their contracts early.

The proposal will also allow eligible savers to terminate their pension savings agreements without penalty.

The issue stems from a reform introduced on 1 July 2024, which removed state contributions to supplementary pension savings for individuals already drawing an old-age pension.

While pensioners were still able to contribute to these schemes, they no longer qualified for government top-ups, significantly reducing the attractiveness of the products.

However, many pensioners had entered into contracts under the previous rules and faced financial penalties if they chose to withdraw early.

In some cases, those with contracts shorter than two years risked losing not only state contributions but also part of their own invested funds.

Participants with contracts lasting between two and five years were typically able to recover their deposits but were required to return previously received state contributions.

The proposed amendment aims to address these unintended consequences by compensating affected individuals for their losses.

---