Pension savings - comparison 2026

What is pension savings and why is it important

Pension savings is a voluntary system where you can save and build your own retirement reserve. The Czech public pension (first and second pillar) will be lower in the future, so without personal savings many Czechs will face a decline in their standard of living. DPS is a legislatively supported tool that allows you to prepare effectively for this.

Since the 2013 reform, the DPS has been a standard part of the pension system in the Czech Republic. Every citizen from the age of 18 can join a DPS with any provider (insurance company, pension fund, bank). It is not a state obligation but a personal decision.

Reform 2024 and new conditions for DPS

In 2024, a significant reform of the DPS was implemented. The state contribution increased from 20% to 30% of the monthly contribution, up to a maximum of 1 700 Kč per month (previously 900 Kč). The minimum savings period has been shortened to 15 years (previously 15 years only for the old system). The state contribution is now calculated automatically without the need for registration with the tax office.

Tax depreciation has also increased, self-employed individuals and business owners can deduct a contribution of up to 48 000 Kč per year (6 % of income, with a maximum gross income of 600 000 Kč). This is a significant advantage for business owners with higher incomes.

State grant: how it works

If you save at least 300 Kč monthly, the state contributes 30% of your amount. Example: saving 1 000 Kč per month results in a 300 Kč state contribution. The maximum state grant is 1 700 Kč monthly, meaning that if you save 5 667 Kč (or more), the state will only provide 1 700 Kč. The state contribution is calculated separately for each month - if no payment is made in a given month, no contribution is received for that month.

The state grant is automatically credited to your account with the DPS provider. You do not need to take any action; it is automatic and requires no additional registration (since the 2024 reform).

Tax deduction for self-employed individuals and business owners

If you are a business owner or self-employed, you have an additional advantage: a tax deduction. You can deduct contributions to the DPS up to 6% of your income, with a maximum of 48 000 Kč per year. The tax deduction reduces your taxable income, saving you on tax (typically 15% of the deduction, amounting to up to 7 200 Kč annually).

Example: you are a self-employed individual with an annual income of 1 million Kč. You can contribute 48,000 Kč to your DPS, which is deductible from your income. This reduces your tax by 7,200 Kč (15% of 48,000). Additionally, you receive a state contribution: (48,000 ÷ 12) × 30% = 1,200 Kč per month, i.e., 14,400 Kč annually. Total benefit: 7,200 + 14,400 = 21,600 Kč per year from tax and state advantages alone!

Employer's work contribution: free money

Many large Czech companies contribute to their employees' DPS. Typically this amounts to 300-1 000 Kč per month (it is tax-advantageous up to 50 000 Kč annually for the employer). If your employer contributes in this way, it represents added value, these are extra funds for you.

The employer's contribution is calculated separately from the state contribution. If the employer contributes 500 Kč and you save 1 000 Kč, the state adds 300 Kč. In total, there is 1 800 Kč on your account monthly for your contribution of 1 000 Kč.

How to choose the right fund

Every provider (ČSOB, Allianz, Conseq etc.) offers multiple funds with different strategies. Dynamic funds contain more shares, while conservative ones hold bonds and term deposits. Choosing the right fund is crucial:

• If you are more than 20 years away from retirement: Choose a dynamic fund (higher equity exposure, higher returns, higher risk)
• If you are between 10 and 20 years old: Select a balanced fund (a mix of stocks and bonds)
• If you are under 10 years old: Select a conservative fund (primarily bonds)

During the investment period you can change funds: usually up to 4-6 times a year without charge. It is important that the fund has low fees (management fee around 1-1.5 % per annum) and good historical returns.

Age as a primary factor

The simplest rule: the younger you are, the more dynamic fund you should choose. Example of age-based strategies:

• 20-30 years: 100% dynamic fund (100% equities, 0% bonds)
• 30-40 years: 90% dynamic / 10% conservative
• 40-50 years: 70-80 % dynamic / 20-30 % conservative
• 50-60 years: 50% dynamic / 50% conservative
• 60+ years: 30% dynamic / 70% conservative

Historical yield and fees

Compare funds based on:

• 10-year historical returns: Ideálně > 5% per annum for dynamic funds
• Annual fees: Prefer < 1,2 % (nižší = více peněz vám zůstane)
• Volatility: For more conservative investors, even if they should be < 8 % ročně

So-called target-date funds (automatic adjustment)

Some providers (e.g., Conseq, NN) offer "target-date" funds that automatically adjust with age. If you choose "Target 2045" (retirement in 2045), the fund gradually shifts from dynamic to conservative. This eliminates the need to manually switch funds. Beneficial for passive investors.

Change of fund during lifetime

It is never too late to make a change. Typically, you can switch funds 4-6 times a year without a fee. If you see that a fund is underperforming (returns are significantly below average), do not hesitate to switch. Transferring from an old DPS to a new one (switch) is made without tax consequences.