Mandatory employer contribution to retirement savings products
The new act on mandatory employer contributions to retirement savings products, which was approved in September this year, will come into effect in January 2026. On which employers does it impose new obligations?
The law introduces a fundamental change for employers whose employees perform hazardous work classified in the third category. Employers will now be required to pay a mandatory contribution to their supplementary pension insurance or additional pension savings scheme for these employees for each month in which the employee works at least three shifts of hazardous work, if the employee so requests. For the sake of completeness, we would like to point out that a long-term investment product (DIP) is not a retirement savings product within the meaning of this act, so the employer's contribution to a DIP will not be considered the fulfilment of this obligation.
The law thus responds to the fact that the system of reducing the retirement age, introduced in 2025 for employees performing hazardous work in the fourth category (which is linked to the employer's obligation to pay increased social security contributions), does ultimately not apply to employees in the third risk category. The mandatory employer contribution is therefore intended to increase the old-age security of these employees and contribute to their possibility of drawing a pre-retirement pension.
Amount and conditions of the mandatory contribution
An employer's obligation to pay a mandatory contribution only arises based on an employee's request. The employee shall notify the employer in writing that they are exercising the right to the mandatory contribution and provide the necessary details for making the payment (e.g., the name of the pension company and the account number). The first decisive period for which the employer will be obliged to pay the contribution is the calendar month following the delivery of this request. The mandatory contribution is always due by the end of the month following the month in which the employee became entitled to the mandatory contribution.
Employees are only entitled to the mandatory contribution in the month in which they work at least three shifts of hazardous work. A hazardous work shift is defined as a shift in which the employee performs hazardous work for at least the majority of the shift. If the hazardous work shift is shorter or longer than eight hours, each hour started is counted as one-eighth of a hazardous work shift.
The mandatory employer contribution is included in the annual limit of CZK 50,000, which is exempt from income tax and social security and health insurance contributions for the employee (this also applies to the portion of the insurance premium paid by the employer).
If the employer already voluntarily contributes to the employee's retirement savings products in an amount equal to or greater than the mandatory contribution (e.g., based on an employment contract or collective agreement), this voluntary contribution is considered to fulfil the legal obligation.
Contributions up to the limit specified by law will be tax deductible for employers. Contributions above the statutory limit will normally be deductible only if the entitlement to them arises from an employment contract or collective agreement or the employer's internal guidelines.
Employers’ obligations and penalties
Employers are obliged to inform their employees of their right to the contribution and how to claim it before they start performing hazardous work. If an employee is already performing hazardous work on the date the law comes into effect, they must be informed of their entitlement within 15 days of the law coming into effect, i.e. by 15 January 2026.
The employer is also obliged to issue the employee with a payment confirmation of the mandatory contribution by the end of the calendar month in which the contribution was first paid. At the same time, they must keep detailed records about employees who have exercised their right to the contribution, about hazardous work shifts worked, the amount of contributions paid, and other related data. These records must be kept for ten years and submitted to the regional social security administration upon request.
Employers who fail to comply with these obligations face fines of up to CZK 2 million. Compliance with these obligations will be monitored by the regional social security administrations.