||The Czech pension system is going through an extremely important phase of its development. While the underlying trends are as worrying as elsewhere in developed or transition countries, the short term accounts look balanced and radical reform does not seem imperative. In this article we argue, however, that the pension system's long term properties are more important than its immediate characteristics, and that pension reform would promote the development of the Czech economy. It would better prepare the Czech Republic for the future when almost one half of its adult population will consist of pensioners. As we have argued, a funded pension system would lead to higher economic growth and would leave the state with a proper role to play: guaranteeing a decent, albeit modest, income level for the poor. Such a reform nevertheless would require a very clear set of rules and a strong regulatory authority to guarantee the prudent behaviour of pension fund management. The Czech experience seems to suggest that a strong financial network is unlikely to emerge without a substantial and radical pension reform that would divert a major part of pension savings to the private pension funds. We, therefore, examine suitability of existing private pension funds' network and its main flaws.