Polish gov’t to slash pension fund contribution
POLAND - The Polish government would like to see several changes to the mandatory second pillar including contribution and fee cuts, the introduction of a life-cycle model as well as alterations to the sales procedure.
The Council of Ministers has agreed to cut the maximum pension fund contribution from 7% to 3.5% gradually over the next years.
Furthermore, the maximum management fee of pension funds is to be capped once a fund reaches PLN45bn (€9.7bn) in assets, the government said in a statement.
The reduction of the maximum contribution "was originally meant to be conducted from 2014" but an amendment to the law has brought the process forward, a source in the market explained to IPE.
The law is to come into effect from January next year, but government plans for a reform of the second pillar do not end here.
The market expert confirmed the government plans to "set up three varying pension funds with different risk levels" within one pension fund provider - similar to the so-called life-cycle model in other countries.
He explained the "balanced" portfolio, with similar risk to the current pension funds, was "compulsory for a certain period" for every pension fund member, followed by a switch to the "secure" option with reduce risk closer to retirement.
The "dynamic" option, on the other hand, is voluntary should a member "decide to bear more risk and has at least 20 years left to retirement" when they make this choice.
"If the amendment is implemented the future pensioner can simultaneously be a member of two different funds types in the same pension society, however new assets cannot be split and can be paid solely to one fund - but transfer of assets will be possible," the source noted.
Unconfirmed reports say that the introduction of the multi-fund options is currently put on hold.
The market insider added "important" changes are also considered regarding the sale of pension contracts, with new sales channels through the internet or call centres to be opened.
In the meantime, however, a poll undertaken by a large Polish daily has stirred criticism of the sales system, he pointed out.
"Half of the people moving from one pension fund to another moved to a worse performing fund," he quoted as the results of the poll. (see earlier IPE-article: Aegon loses more clients)
This has lead to discussion around ensuring there is sufficient provision of information as well as around pension fund members and their right to change to funds.
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