POLAND - The Polish government has decided not to proceed with plans to direct less money into the pensions second pillar.

A spokesman for the prime minister said the government will focus on how to get pension funds, collectively known as OPF, to increase future income and make the system more sustainable.

Political jostling among senior government officials surfaced towards the end of last year when some ministers suggested reforms could be introduced to decrease the contributions received by the mandatory second pillar pensoin schemes by the amount funds invest in government bonds, and instead leave those assets in the pensions first pillar (See earlier IPE story: Poland to ease pensions investment rules)

However, a government announcement said "the government [has] made the decision not to change the rate of old-age pension insurance contribution transferred to OPF for the moment".

In a statement on the recovery of the Polish finances last week, Michal Boni, the chief adviser to the prime minister, noted pension reform was "one of the most important tasks for the cabinet" to address.

Aside from hiking the retirement age as well as "barriers to early retirement", he said any reforms need to also include the second pillar.

"Solutions should be forced on open pension funds, which lead them to become more competitive with each other and achieve greater rates of return."

He added a mere increase in the funds' performance by 0.5 percentage points per month would lead to a PLN200 (€48.80) pension increase each year. (See earlier IPE story: Polish pension assets pull in high average growth)

The government will also "radically accelerate" the process of privatising 680 companies, as part of the measures to stabilise the country's financial situation, as "the state plays too great a role" in the Polish economy, according to officials.

An earlier privatisation of the major Polish insurer PZU became a bone of contention between Dutch insurance group Eureko and the Polish government, ablthough a deal was finally agreed last year. (See earlier IPE story: Eureko secures exit from Polish PZU row)

If you have any comments you would like to add to this or any other story, contact Julie Henderson on + 44 (0)20 7261 4602 or email julie.henderson@ipe.com

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