Polish pension funds return 2.3% - report
POLAND - Poland's 16 pension funds saw an average rate of return at 2.3% in September, which was the best result in seven months, according to Analizy Online, a company which monitors the Polish pension fund market.
The highest rate of return, 2.77%, was posted by Skarbiec Emerytura OFE, which was followed by AIG OFE, with 2.76%.
Total assets of Poland's pension funds hit a record high of 56 billion zlotys (12.9 billion euros) at the end of September. The funds' assets rose five percent from August, which was one of fastest growths in recent months.
According to Analizy Online, the high growth in chiefly due to transfers from the state social security office, the ZUS, which makes regular payments to funds as part of the Polish pension reform program started in 1999.
Poland's pension funds invest most of their funds to fixed-income securities. Up to 40% may be invested in stocks.
The Polish pension system underwent major reform in 1999, when state pension expenditures skyrocketed due to a number of policy changes expanding early retirement options and unfavourable demographic trend.
The reform is aimed at gradually replacing the current pay-as-you-go system to a partially private system. Contribution from wage is compulsory to Polish workers born after 1969. Poles born between 1949 and 1969 can decide whether or not to participate in the new system. Poles born before 1949 remain covered by the old pay-as-you go scheme.
As of September 2004, Poland allowed tax-free benefits in individual retirement accounts to owners after the age of 60. The Polish government hopes this step will help compensate for shortfalls in the current private pension savings scheme. Analysts expect some two million Poles will set money aside in individual retirement accounts yet in 2004.