Polish appointment cheers industry
Agnieszka Chlon-Dominczak has been nominated as vice-minister in charge of pensions at the ministry of labour and social policy. Her nomination brings to an end a period of uncertainty over the pensions policy to be pursued by the government formed after last October's general election.
A failure by previous administrations to address key issues has left the Polish private pensions industry a growing backlog of matters that require urgent attention.
Pensions industry sources were concerned that while the new prime minister, Donald Tusk of the liberal Civic Platform (PO) party, had appointed a minister of labour and social policy and several deputy ministers to head up the ministry's several policy areas, there had been no nomination to oversee pensions.
"There are a number of urgent issues that need to be addressed," Chlon said. "The most crucial is that the first pensions paid from the funded system will be paid out in 2009."
The private mandatory pension system was introduced in 1999 but there is still no law on annuities.
The previous conservative government had drafted proposals that foresaw the creation of private specialised annuity companies. However, it failed to consult the industry on the plans and no legislation was tabled before the election.
"Among the questions [to be considered] are whether there is sufficient time to create separate institutions and how much would it cost," said Chlon. "In addition, we have to take into account that there would be start-up costs associated with establishing these companies and at the end of the day they would be charged to the participants of the system. So we need consultations with and feedback from the market."
Marek Góra, a professor at the Warsaw School of Economics and one of the fathers of Poland's pension reform, said: "We need detailed rules on what, how and who will eventually pay out of the capital accumulated in individual accounts. And the providers will have to know in advance whether they will play a role - they will have to be licensed, they will have to prepare their infrastructure. I think there is still enough time but only if we give this legislation absolute priority. It should be passed by parliament, signed by the president and all procedural issues completed by March at the latest."
The government's delay in filling the vice-ministerial role caused concern to industry players, both because of the need to prepare for the payout phase and for the message it sent about the government's willingness to continue the reform.
But Chlon's appointment has reassured the market.
"This nomination gives hope that pension market regulation will be adjusted to the current challenges," said Dariusz Stanko of the Polish Chamber of Pension Funds (IGTE). "There is a lot to be done, and Chlon is recognised as being an expert in this field and is known to be open to dialogue. We anticipate that it signals an intention to complete the pension reform because the annuity market is a logical continuation of the reform process. Pension funds cannot work
without having this step clarified."
"She was a key member of the team that prepared the blueprint of the pension reform," said Góra. "She undertook much of the analysis and was active in negotiations with politicians. From the beginning she was very talented and very motivated."
The holder of a doctorate in economist, Chlon was formerly director of the department of economic analysis and forecasting at the ministry. She was also a consultant for the ILO, the World Bank and the OECD.
Meanwhile, Artur Kluczny has been named vice-chairman of the Polish Financial Supervision Authority (KNF) with responsibility for pensions and securities.