Two-thirds of Czechs save for retirement. Often wrong

This follows from a survey conducted by the Ipsos agency for OVB Allfinanz. According to him, 63.6 percent of people save money in traditional supplementary pension insurance. This has the advantage that people will not lose their money, but they will not appreciate it too much. At most, they earn around inflation. Very often, but even deep below it.

A quarter then use supplementary pension savings, which allows them to choose even riskier options. For example, dynamic funds had an appreciation of around twenty percent last year, balanced around fifteen. On the other hand, in cases of difficulties in the financial markets, people can lose money more easily. Therefore, it is recommended to switch to more conservative funds with a lower yield, but also a lower level of risk, a few years before retirement.

More than 47 percent of those surveyed then save in savings accounts, less than a quarter even save money for pension only in a current bank account and a fifth in building savings. Over eight percent on term deposits.

“None of these tools can help accumulate the necessary amount of capital in the long term, they usually don’t even beat inflation, and people thus lose the value of their saved money rather than increase it,” said OVB Allfinanz business director Richard Beneš.

The only advantage of high inflation

In the last two years, it was possible to achieve an annual appreciation of nearly seven percent on savings accounts or term deposits. But this was mainly due to high inflation, which caused the Czech National Bank to increase the base interest rates. This was basically the only advantage of high price growth.

The rates on “storage” and “term loans” also depend on the basic interest rates. Recently, however, central bankers have been reducing rates again, and this also affects savings products.

At the same time, starting this year, the state expanded the possibilities by which Czechs can save for their old age with a long-term investment product. This includes both new and existing financial products that enable the creation of savings for old age. At the same time, it significantly expands the opportunities in which one can invest with the right to tax relief, and brings the possibility of combining individual products.

Banks and investment companies offer, for example, the possibility to save in mutual funds, shares or bonds. Here, too, the degree of risk, appreciation, or fees for investments differ.