Slovakia opens door for pension funds to fuel national growth

In a move hailed as a long-awaited breakthrough, Slovakia’s government has approved a plan allowing pension fund managers to invest a small share of savers’ second-pillar retirement savings in major domestic projects, from social housing to motorways.

The proposal, spearheaded by Labour Minister Erik Tomáš (Hlas), promises a new chapter in the country’s use of its €17 billion in pension assets, which have until now been largely tied to foreign stocks and bonds, according to Denník N. Under the plan, pension management companies can voluntarily direct up to 5 percent of their funds—some €800 to €900 million—into carefully vetted national investments.

“For years, we’ve only talked about it. Today, we have a real proposal,” Tomáš said. “We are finally creating the option for investments that support Slovakia’s economy.”

The first planned target is state-backed rental housing, with potential for expansion into road and hospital construction, and energy infrastructure. Oversight will rest with the National Bank of Slovakia, and current risk and diversification limits will remain in place. Crucially, no company will be obliged to participate.

“This must stay voluntary,” Tomáš stressed, adding that pension firms themselves had demanded that safeguard.

The legislation fast-tracked through cabinet without objections. Tomáš argued that economic urgency necessitated swift action, though critics have raised concerns over the shortened legislative process.

MPs approved the proposal on Thursday, 10 April.

Opposition parties expressed cautious support. Marián Viskupič of the SaS party welcomed the low-risk framework but warned: “Whenever a Fico-led government opens up the second pillar, there’s reason to be vigilant.”

Progressive Slovakia MP Štefan Kišš and former Prime Minister Ľudovít Ódor, now an MEP, were more critical, warning that diverting pension money into low-yield infrastructure could jeopardise long-term savings. Ódor pointed to past mismanagement of state-led projects and suggested the move might help the government sidestep debt rules.

Despite the political crossfire, the pension industry appears reassured. Miroslav Kotov, executive director of the Association of Pension Companies, welcomed the bill. “We will assess every investment with caution,” he said, underscoring that the proposal maintains the option to invest nothing at all.

Peter Socha, chair of Uniqa DSS, agreed: “It’s a useful expansion of investment possibilities—but only because it remains voluntary.”

Actual investments are still months away, pending internal fund rule changes and formal approval of new regulations by the central bank.

Economist Vladimír Baláž of the Slovak Academy of Sciences backed the 5 percent cap as a reasonable start. “The key is not to concentrate too much in one basket,” he said. “Let’s see what returns these projects will offer.”