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Polish employers confederation refers pension law to Constitutional Tribunal

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  • Old Town, Warsaw

Poland’s controversial second-pillar pension reform is now facing its first legal challenge.

Polish Confederation Lewiatan, the country’s largest private sector employer organisation, has asked the Constitutional Tribunal to rule on whether several aspects of the new law comply with the Constitution.

Lewiatan believes the transfer of 51.1% of second-pillar pension fund (OFE) assets to the Polish Social Insurance Institution (ZUS) – and likewise the incremental transfer of members’ assets to ZUS 10 years before retirement – breach several articles of the Constitution, including those covering expropriation of personal property, violation of property rights and lack of compensation.

The organisation has questioned the legality of the lightning speed with which the law was passed by the legislature and the implications for future legislative proceedings.

The lower house (Sejm) spent a mere four days on the three readings and final vote, and the upper house (Senate) even less time.

Another concern centres on changing the second pillar from a mandatory to a voluntary system, and whether the new law actually hampers workers in making their choice.

This part of the law comes into effect at the start of April and lasts until the end of July.

The funds themselves were banned from advertising as of mid-January, with the ban lasting until the decision period ends.

Lewiatan has additionally questioned whether a total advertising ban, as distinct from a ban on misleading advertising, infringes aspects such as proportionality and the rights of commercial entities to disseminate information.

The organisation also wants the tribunal to examine the law’s new investment regulations, including the ban on OFE investment in low-risk government securities and their obligation to invest a high proportion (75% this year, 55% in 2015) in higher-risk equities.

Lewiatan maintains that these regulations effectively transform the OFEs from retirement funds to investment funds, thus infringing Article 67, which guarantees citizens the right to social security.

Lewiatan’s submission is more wide-ranging than that submitted by president Bronisław Komorowski at the end of January, more than a month after signing off on the bill, and which focused essentially on the investment and advertising aspects of the law.

In February, the Constitutional Tribunal’s president asked prime minister Donald Tusk, as well as the attorney general and parliament speaker, to detail the financial implications should the law prove unconstitutional.

There are other challenges afoot as well.

Your Movement, an opposition party with 36 seats in the Sejm, supported by some members of the 16-strong United Poland, has also prepared a submission to the tribunal, but has yet to get more signatories.

Under Polish legislation, Sejm submissions need a minimum 50 members.

Separately, a Warsaw law firm is launching a class action against the State Treasury and ZUS, arguing that the new law amounts to expropriation.

More than 800 Poles have already signed up.

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