Polish roundup: Ernst & Young, OFE advertising ban, Confederation Lewiatan
As Poland’s controversial pensions overhaul starts taking effect, its Social Insurance Institution (ZUS) is gearing up to take over 51.5% of the second-pillar fund (OFE) assets, estimated at some PLN150bn (€36bn).
ZUS has awarded the mandate for advising on and auditing the transfer to Ernst & Young, which won the tender against KPMG and PwC.
According to the Polish newspaper Rzeczpospolita, Ernst & Young submitted the lowest bid, of almost PLN390,000.
Meanwhile, the software vendor Asseco Poland, as the only bidder, has won the PLN46.6m contract to modify ZUS’s IT system.
The assets’ movement will be a complex operation.
The OFEs will have to complete their portfolio valuations as of end of Friday, 31 January, for transfer on the following Monday, 3 February.
Each fund will have to cede all its Polish government bonds, and if these are insufficient to cover 51.5% of its portfolio, make up the difference with road bonds, Treasury-guaranteed securities, bank deposits and finally bonds issued on foreign markets – all within the hourly deadlines earlier specified by the Ministry of Labour and Social Policy.
The government will freeze the Polish sovereign bonds and redeem them, ultimately reducing the country’s public debt.
The first leg of the pensions overhaul legislation – the ban on OFE advertising – came into effect on 15 January.
Although the government eventually backed off from making a breach an imprisonable offence, the fines are still a hefty PLN1m-3m.
While the Finance Ministry has confirmed that press interviews and expert opinion do not constitute advertising, the law itself does not specify whether this prohibition extends to funds publicising their returns in any way – for instance, on their websites.
The website of the Polish Chamber of Pension Funds (IGTE), with the exception of some archive material, now reads “under construction”.
The advertising ban lasts, in the first instance, until 31 July – the end of the four-month period during which Polish workers decide whether to continue paying further contributions to the second pillar or switch to ZUS.
So sensitive is the government about getting across its message that ZUS is the safer option that it has even complained about the “I’m staying with OFE” television advertising campaign run between December and 14 January by the Polish private employers group Confederation Lewiatan.
The ministry argued to both the Polish Financial Supervision Authority (KNF) and the Competition and Consumer Protection Office (UOKiK) that the campaign misled the public by failing to mention the investment risks run by the funds and the cost of the system to the budget.
Neither body is taking up the complaint.
The KNF explained that its new role as OFE advertising adjudicator only took effect the day after the campaign ended, while UOKiK argued that compulsory systems such as the second pillar were outside its remit.