Poland’s controversial reform of the second-pillar pension system is almost ready for Parliament.
Some modifications have, reportedly, been approved, but these will provide little comfort to the beleaguered second-pillar funds (OFEs).
In the case of the controversial 75% minimum equity limit, the government appears to have compromised between the Labour Ministry and the Social Policy Ministry – which had scrapped the limit in its version of the law, presented to the government on 14 November – and the Finance Ministry, which wanted it in place for at least two years.
The 75% limit will now apply until the end of 2014, after which it will be cut by 20 percentage points each year, disappearing in 2018.
The government also appears to have scrapped the imprisonment penalty for OFE advertising.
Instead, the fine has been raised from PLN1m (€238,000) to a fixed PLN3m, which has disturbed the Polish Financial Supervision Authority (KNF).
The KNF has argued that, as the pensions regulator, it should be able to tailor such fines according to the seriousness of the transgression. The ban will now only apply between April and July 2014, the period during which fund members will have to decide whether to keep their 2.92% social contribution flowing to OFEs, switch this portion to ZUS, or not decide and be moved to ZUS.
It will also apply three months before and during the transfer windows when workers can swap between ZUS and the private system.
The decision period was earlier extended from three to four months to ease the inevitable administrative logjams.
The 16m-odd members can declare their intention by post, in person at a ZUS or Treasury office, or online.
However, access to the public administration portal is only possible after the so-called “trusted” profile is verified at a ZUS or Treasury office, which probably explains why the portal had less then 175,000 trusted profiles as of mid November.
The government has not budged on taking over all state bond assets.
According to the KNF, the averaging mechanism for doing so – transferring 51.5% of each OFE’s assets as valued on 3 September – is discriminatory, as some funds will have to liquidate otherwise profitable assets to make up any government bond shortfall.
The KNF has stuck to its consultative opinions, unlike some other consultees in this protracted process.
The Treasury Ministry, Attorney General and Justice Ministry, having raised constitutional and other objections, have since fallen in line with the official government line, leaving Poland’s president Bronisław Komorowski as the industry’s last hope, should he choose to refer this saga to the ultimate arbiter, the Constitutional Tribunal.