The list of Polish state institutions criticising the government’s proposed second-pillar pensions overhaul gets longer by the day.
The Attorney General’s Office has described the plan to transfer all sovereign, state guaranteed and central bank assets from the pension funds (OFEs) to the Polish Social Insurance Institution ZUS as a “classic expropriation” and unconstitutional.
The Office, while representing the State Treasury’s legal interests, is an independent body.
It believes the OFEs, as legal persons, are the owners of the accumulated contributions, with that ownership guaranteed by the Polish Constitution.
To date, the pensions industry has claimed the monies belong to the members, while the government insists they are state property.
The Office also highlighted an inconsistency in the non-governmental securities the funds would be allowed to buy.
These include bonds issued by Bank Gospodarstwa Krajowego (BGK), which channels most of the EU funding granted to Poland and finances large infrastructure projects.
The OFEs have in the past been the biggest purchasers of BGK road bonds.
As the Office points out, BGK is a state-owned bank and thus part of the Polish Treasury.
The Polish Statistics Office (GUS) has noted that, under new Eurostat accounting methodology (ESA 2010), which comes into effect in on 1 September 2014, the state bond transfer would not affect the ratios of government deficit and public debt to GDP.
This undermines the Finance Ministry’s argument that the main purpose of the reform is to improve public finances.
The Justice Ministry has warned that the timetable envisaged in the draft bill between the publication of the law and its enactment is too short, while both the central bank and the Insurance Ombudsman have concerns about the impact of a ban on state bond investment on future pension returns.
The prime minister’s Chancellery has questioned why the penalties envisaged under the proposed OFE advertising ban – a fine of PLN1m (€234,000) and up to two years’ imprisonment – are so much more punitive than those imposed on other banned advertisements, notably tobacco.
Given the proposed ban, the Polish Chamber of Pension Funds and Konfederacja Lewiatan, the Polish private sector employers’ confederation, plan their joint mass media campaign between November and mid-December.
They have some ground to make up.
According to a recent study by the Kronenberg Foundation and Citi Handlowy bank, only 13% want the OFEs to continue investing part of their social security contributions, while 51% want to hand the full amount to ZUS.
1 Reader's comment