Why convert your old pension savings to a new one?

At the very base, both variants are equivalent. The state contribution, the employer contribution option, tax relief and the single withdrawal option at age 60 apply to both options. The old pension savings, the so-called transformed funds, allow a retirement pension (the option to withdraw half of the saved funds) after 15 years of saving. This option is not available in the new supplementary pension scheme (SPS).
The main and fundamental difference in the two options is the strategy with which the participants' savings are evaluated. The transformed funds guarantee non-negative appreciation, which is mandated by law. The consequence of this is that transformed funds do not beat inflation in terms of appreciation, and so the value of the saver's money is actually reduced. Supplementary pension savings may even be in the red over a period of time, but it allows a more dynamic strategy (with a higher share of equities) to be set up, and this set-up is the only way to beat inflation in the long term.

The model example shows more closely how much difference between the two options can occur:
If the client saves CZK 1,000 per month (he receives the highest possible state contribution of CZK 230) for 30 years in a conservative strategy (corresponding to the old transformed funds), then he will save a total of roughly CZK 510 thousand (own contribution of CZK 360 thousand, state contribution of CZK 82 thousand, appreciation of CZK 74 thousand).
If, with the same parameters, the client saves in a dynamic strategy, then he will save about CZK 1.24 million over the same period (own contribution 360 thousand, from the state 82 thousand, appreciation 800 thousand).
The difference in appreciation is abysmal - more than 700 thousand. CZK.

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