Polish prime minister rules out nationalisation of second pillar
POLAND – The Polish second-pillar system is set for an overhaul, of which a badly needed payout system to finance retirees next year is only a small part.
Interviewed on the Polish television channel TVP2 on 10 June, prime minister Donald Tusk confirmed that he had received the proposals for reforming the second-pillar system drafted by the ministries of finance, and labour and social policy.
He also said these would be out for public consultation shortly, leading to recommendations on the future of the second-pillar funds (OFEs).
Tusk stressed that there was no question of the state helping itself to OFE savings, as these were earmarked for future pensions.
This appears to rule out doomsday forecasts that the second pillar would be sacrificed to fund the first-pillar PAYG system administered by the Polish Social Insurance Institution (ZUS).
A ballooning budget deficit in 2009 led, two years' later, to a scale-back of contributions and to subsequent proposals by the Finance Ministry that members' OFE savings be transferred incrementally to ZUS 10 years before retirement.
Meanwhile, the deficit looks set to continue to deteriorate – GDP growth slumped to 0.4% in the first quarter, the slowest growth since 2001 – while Tusk's Civic Platform party is itself sliding in the polls.
Małgorzata Rusewicz, chairwoman at the Polish Chamber of Pension Funds, said: "The government has a fiscal problem, and taking pension assets from the second pillar would be one way to resolve this problem temporarily, which may explain why the Finance Ministry is currently working to create an environment in which such a change would be more easily accepted by the public.
"The initial driver for the formation of the first and second-pillar pension system was a recognition of the need to meet Poland's future demographic challenges. Low fertility rates and high emigration mean we are still facing the same challenges."
Tusk also alluded to a voluntary system. However, he did not elaborate whether this referred to membership of the second-pillar system, which is currently mandatory for those born after 1968, or to offering a choice of payout systems from either the private sector or ZUS.
While Tusk described himself as "not doctrinally opposed to OFEs", he was highly critical of a system whose construction he called "imperfect".
In his opinion, the OFEs' achievements – including the level of guaranteed pensions offered by the pension companies compared with their profits – was "to put it delicately, unacceptable".
The highly charged debate over the future of Poland’s pension system has put the industry in an uncomfortable position.
"We fully agree some changes to the system are necessary, but we are concerned the current discussion is not focused on what to do to increase the effectiveness and competitiveness of the funds but on whether the funds should exist at all," Rusewicz said.
"Our system is not expensive and has delivered historically very high results – on average, almost 6% per annum in real terms.
"Yet now it has been under the fire due to reasons completely beyond the issues of efficiency."