The Polish government has stepped in to deny press reports that the government planned to merge the 12 second-pillar pension funds (OFEs) into one entity.
Yesterday, Marcin Zieleniecki, deputy minister of family, labour and social policy, told the Polish Press Agency (PAP) the concept had not been discussed, even in the loosest of terms.
According to the merger story, published in the Polish daily Rzeczpospolita on 27 May, unnamed government sources stated that the new fund would be under the control of the State Treasury and run by either PZU, the Polish insurance and financial group in which the Treasury holds a 34.2% stake, or the state-owned bank BGK.
The article, which cited efficiencies as the primary rationale, was widely disseminated by the Polish press, with the speculation intensified by the fact the government has, by law, to conduct a three-year review of the pension system in 2016.
The last review, conducted in 2013 by the previous government of prime minister Donald Tusk, saw the second-pillar converted into a voluntary system, while the OFEs were stripped of their sovereign bond holdings and forced into investing heavily in Polish equities.
The removal of sovereign bonds enabled the then-government to reduce public debt as a share of GDP.
With the current Law and Justice (PiS) government facing its own budget challenges, most notably financing its programme to provide PLN500 (€114) a month for every second and subsequent child, the OFEs’ net assets of PLN141.3bn (€32.8bn) as of end-April have long been seen as a tempting resource.
The PiS government’s intention to support Poland’s large coal mining industry also lent credibility to the notion of a state-run second pillar obliged to invest in assets that a privately run entity would have shunned.
Zieleniecki stressed that the pensions review would not start until August, after the closure of the current transfer window at the end of July.
As of late May, some 25,000 had decided to switch their 2.92% from their sub-account at Poland’s Social Insurance Institution (ZUS) to an OFE.
Zieleniecki told Bloomberg the government could consider widening the OFEs’ investment possibilities as their current, Polish-equity-focused portfolio structure was generating poor results.
The Polish Chamber of Pension Funds earlier commissioned a report from PwC, since submitted to the government, detailing potential new investment classes for the OFEs.