Czech pension professionals have voiced concerns over the proposed 0.5 per cent cap on fees for pension companies.

The Czech government has previously announced plans to introduce a life cycle strategy for the pension system, preferential treatment for younger people, reforms to the old pension system, and a 0.5 per cent fee cap.

While the first three proposals were broadly welcomed by those at the cabinet debate, the proposed fee cap was met with opposition.

The Association of Pension Companies of the Czech Republic (APSCR) warned that a 0.5 per cent fee would not cover the costs of investments and would result in pension companies increasing their investment in cheaper overseas ETFs.

APSCR president, Radek Moc, warned that low income from fees could put some companies under threat of liquidation.

"The real cost of supplementary pension savings is 0.64 per cent, but the fee is lower,” he stated.

“This will necessarily lead to market consolidation, only larger players with economies of scale will have a chance of survival.”

According to Moc, there were three alternatives to capping pension company fees at 0.5 per cent.

"Either do something with the fee to allow pension companies to run a loss-free business, that is, increase it, or reintroduce a performance fee in some form," he said.

“The second way is that third-party costs do not have to be covered by the management fee, and the third is automatic enrolment. And a three-year start-up period would certainly help with everything.”

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