The government has announced several proposals that would affect employee retirement savings. The most controversial measure would make enrollment in the second-pillar defined contribution (DC) pension system voluntary once again, reversing 2019 reforms that established automatic enrollment of employees under age 40. A separate proposal already approved by Parliament would abolish, over time, tax incentives for employee contributions to voluntary third-pillar retirement accounts.
Proposed second-pillar DC account reforms include the following:
Regarding the third-pillar voluntary personal DC system, under separate legislation awaiting the president's signature, tax relief for contributions to accounts established after 2024 would be abolished, while tax relief for accounts established before 2025 would continue through 2034.
The pension system, established in 2004, is based on a first-pillar DB pension, comprising flat-rate and earnings-related points-based benefits, complemented by occupational second-pillar DC accounts and personal third-pillar DC accounts, both managed by private providers. Rates of compulsory contributions to the second pillar (initially diverted from first-pillar contributions) changed often in the first 10 years for various reasons. In 2014, second-pillar enrollment became voluntary, only to be made compulsory again in 2019 for workers under age 40, with the possibility to opt out. At issue throughout the evolution of the system has been the adequacy of second-pillar plans weighed against lower funding (and benefits) for the first pillar as well as the cost of state subsidies. According to the government, the latest reforms would provide more individual freedom to save for retirement, supported by new tax incentives and ideally employer contributions. Critics of the reforms argue that they would undermine the level of private savings for retirement. Only 19% of employers surveyed by WTW in 2024 provide supplemental retirement benefits for employees, but that is up markedly from 2% in 2019. The introduction of new tax incentives for employers, if approved, may make providing retirement benefits more attractive for companies.