Five Families, five pension funds

Probably the only kind of state pension system that can survive in the long term is a streamlined one that relies on a social-security tax that is only large enough to assure workers a bare existence when they retire. If retirees wanted meat with their rice and beans, they'd need to put extra money aside to pay for it. Czech pension reform goes in a completely different direction. It's creating a massive transfer mechanism that takes money from consumers' pockets in the form of higher VAT and shifts it into mandatory pension funds. Česká pozice wondered whether this wasn't dreamed up by the "godfathers" so that the pension funds could be tunneled later. Perhaps it's only a coincidence that five private funds are being planned, and there are Five Families. A quick show of hands at an event of the Nordic Chamber this week found that no one was thinking of pension reform in terms of higher VAT and what it will do to demand for their wares. It might be time to reevaluate the true nature of Czech pension reform.