POLAND - The Polish social ministry believes the current second pillar pensions regime is still too expensive, but officials are still struggling to reach a consensus on how to cut these costs.
The Polish prime minister halted plans in February to transfer money out of the second pillar system an back into the first pillar, but the in-fighting is continuing as the latest round of talks showed the social ministry still thinks it is a good idea. (See earlier IPE story: Polish PM halts pension reform wrangling)
“As the second pillar funds invest up to 60% or 80% of their assets in bonds, government bills and other securities issued by the State Treasury or the National Bank of Poland, the system has become an expensive duplication of the PAYG system,” officials at the social ministry told IPE.
The press office stressed any suggestion of lowering transfer rates from the social security system to second pillar pension funds from 7.3% to 3% was “for now only a preliminary proposal” which is currently being debated by the “Tripartite Commission for Socio-Economic issues”.
However, no consensus was reached once again in yesterday’s session concerning the lowering of contributions as the step is still opposed by the pension funds themselves as well as by worker representatives who fear the dismantling of the second pillar system introduced in 1999.
Social Minister Jolanta Fedak has argued the cost of transfers to the second pillar will exceed PLN666bn (€172bn) - or more than 30% of the current GDP - within the next 50 years, and add to an already increasing state deficit if the system is not reformed.
Another meeting on the subject of second pillar contributions is scheduled for early April.
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