Attempts to roll back Poland’s controversial second-pillar reforms suffered a further blow after the Constitutional Tribunal ruled that the legal challenge in May from the Polish Confederation Lewiatan, the country’s largest private sector employer organisation, was outside the body’s competence.
According to the Tribunal, employer organisations can only make referrals concerning working conditions or relations between employers and employees.
Lewiatan has responded that it disagrees with the Tribunal’s arguments, and has filed a complaint against the decision.
On its website, Lewiatan argues that pension insurance is an intrinsic part of the employer-employee relationship, with the employee obliged to pay social contributions whilst working.
Employers, meanwhile, are obliged to notify the Polish Social Institution (ZUS) about all employees, calculate the contributions, and forward both theirs and their workers’ contributions to the social security system.
The Tribunal’s decision is nevertheless a blow for the pension reforms opponents, leaving Polish president Bronisław Komorowski’s tribunal referral at the end of January, and a class action filed in June, as the only outstanding legal challenges.
In its original submission, Lewiatan challenged the legality of the advertising ban on the pension funds between April and July, the period when members must inform ZUS if they wish to remain in the second pillar.
The response to date makes for depressing reading for the pensions industry, with only some 405,000 of the 16.7m members having signed up for the second pillar.
In a separate development, the Polish Financial Supervision Authority (KNF) has clarified that foreign companies listed on the Warsaw Stock Exchange (WSE) are to be treated, for the purposes of asset-allocation limits, as foreign investments.
As of early July, 49 of the 458 companies listed on the WSE’s main and parallel markets – accounting for 34% of market capitalisation – were foreign, with 23 listing exclusively in Warsaw.
Pension fund foreign investment, until the start of 2014, was limited to 5%.
As part of the legal overhaul, and in line with a European Court of Justice ruling in December 2011, the limit was raised to 10% this year, 20% in 2015 and 30% in 2016.
Because of the unclear wording in the new law, ING’s pension fund accumulated a total foreign issue of 12.9% of its portfolio, and PZU’s 11.4%.
However, the KNF confirmed to IPE that the two funds concerned did not have to liquidate their foreign holdings, as they have until January 2015 to adjust their portfolios, by which time the higher, 20% limit will have come into effect.