Since 2024, the Czech Republic has two tax-advantaged retirement savings products: the long-standing Supplementary Pension Savings (DPS) and the newer Long-term Investment Product (DIP). Both have pros and cons — and most clients I advise well end up with both.
Quick comparison
- State contribution: DPS yes (up to 340 CZK/month), DIP no
- Tax relief: Both (together up to 48 000 CZK/year beyond 1 700 CZK/month)
- Withdrawal: DPS from age 60, DIP from age 60
- Minimum term: Both 10 years
- Portfolio choice: DPS restricted (mostly bonds), DIP free (even 100% stocks/ETFs)
- Early withdrawal: DPS loses state contributions + tax relief, DIP loses only tax relief
- Inheritance: Both yes, outside probate (via designated beneficiary)
DPS — who it's for
DPS has one huge advantage: state contribution. When you contribute 1 700 CZK/month, the state adds another 340 CZK = 4 080 CZK/year. That's a 20% instant "return" before you've invested anything. You won't find that bonus anywhere else.
Downside? DPS portfolios are typically conservative — lots of bonds, less stock exposure. Expected returns 3–5% per year. For younger people with 30+ years ahead, that's relatively low compared to what a stock ETF would deliver.
DIP — who it's for
DIP doesn't get state contribution, but offers free investment choice. You can set up a portfolio of 100% global stock ETF (VWCE, iShares MSCI World etc.) which historically returns 7–9% per year.
Second strength — tax relief. You can deduct up to 48 000 CZK per year from your tax base for DIP contributions. At 15% income tax, that's 7 200 CZK saved yearly. Over 20 years, that's 144 000 CZK of free money.
Ideal combination for most clients: DPS at 1 700 CZK/month (for state contribution) + DIP at another 2 000–5 000 CZK/month (for tax relief and stock returns). Together, maximum benefits the state offers.
Common mistakes
- Contributing over 1 700 CZK to DPS. Above 1 700 CZK the state contribution doesn't grow — and DPS portfolios are more conservative than suits long-term surplus. Put that into DIP instead.
- Avoiding DIP due to short history. DIP as a product is new (2024), but it invests in classic funds that have existed for decades. Nothing experimental.
- Keeping DPS in "balanced" fund at 30. With 30+ years to retirement, you can handle stock exposure. We'll tune together.