Polish president Bronisław Komorowski has signed off the controversial pensions reform bill, but, in an unexpected move, also referred the law to the Constitutional Tribunal.
Presidential minister Krzysztof Łaszkiewicz explained at a press conference that the key reason for signing the law was the need to preserve fiscal stability.
The removal of state bonds from the pension funds’ (OFEs) portfolios, which kicks in on 3 February, would, according to Finance Ministry projections, reduce the public debt share of GDP to 47%, from an estimated 58% in 2013.
Critics note that this gives the government spending leeway ahead of the 2015 general elections.
On the other hand, there were constitutional doubts – and conflicting expert opinion – on some key aspects of the law, including banning OFEs from investing in sovereign bonds while forcing them initially to invest heavily in equities (75% in 2014).
These articles changed the OFEs from balanced funds to high-risk plans, which could ultimately erode the trust of fund members in the state and the law.
Komorowski also wanted to settle once and for the all the question of whether the funds were public entities, as the Polish Supreme Court ruled earlier, or private ones – in which case the removal of state bonds from OFE portfolios would be unconstitutional.
Komorowski has long had misgivings about the reforms, which he described as a “backward step” for Poland’s pensions system, but his decision to sign the law and refer it to the tribunal has astonished the law’s many critics.
The opposition has accused him of acting in the interests of Civic Platform, the senior ruling coalition party, whose membership Komorowski had to resign when he became president.
Stanisław Gomułka, chief economist at the Business Centre Club and former Finance Ministry adviser, told the Polish Press Agency that, had the president delayed the signing until the tribunal’s verdict, the government would have lost only some six months in implementing the law if it proved constitutional.
The risk now is that, if the tribunal rules against the government, it would have to prepare a corrected bill – a process that could take up to two years – with the second pillar operating unconstitutionally in the meantime.
Gomułka questioned how Polish workers, who will have between April and July to choose whether to have their future contributions in OFEs or the Polish Social Insurance Institution (ZUS), can make a rational decision in these circumstances.
Jerzy Stępień, former president of the Constitutional Tribunal, echoed these sentiments on Polish Radio.
Stępień has long maintained that the law is unconstitutional.
As a former senator, he was also appalled at the speed with which the bill rushed through the legislature – the lower house completed its three readings and final vote over three days, while the upper house spent barely a day reviewing the law.
The government has no such doubts and consequently no ‘Plan B’.
The law comes into effect at the end of January.
For more on pensions in Central and Eastern Europe, see the current issue of IPE magazine.