Polish PM Kick Starts Pensions System Reforms

26 August 2010 (PLANSPONSOREurope.com) Polish Prime Minister (PM) Donald Tusk has criticized private companies involved in Poland’s national insurance scheme and warned if they do not starting acting on behalf of the nation and not just themselves then radical changes will be introduced, according to Polish newswire Thenews.pl. 

Tusk said at a press conference yesterday that he wants more of the funds that Poles pay into the system coming back to them in the form of payments. 

At a meeting with the heads of Open Pension Funds (OFE) yesterday, PM Donald Tusk said that those who drafted the pension system before reforms in the late 1990s, did not expect that in a few years it will become so controversial, mainly due to malfunctioning of OFE. In the PM’s opinion, OFE should take some responsibility for the pension system and treat future and current pensioners’ interest as the most important. Tusk called for the OFE to provide Polish pensioners with financial security and satisfaction.  

“This meeting may be a turning point if we start respecting the prerequisites adopted by the pension system’s authors that pensions should be high and safe,” said Tusk.  

The PM said that it is easier and cheaper to reform the existing pension system than to build a new one. “We don’t want to demolish, if we can repair,” said Tusk and proposed a quota and not a percentage-based valorization of pensions.  

According to the newswire, the heads of the OFE came up with their own ideas of how to reform the pension system – make open pension funds more effective and increase pensions by 5-10% without taking too much risk. One of the ideas is to introduce multi-fund system which will differentiate investments according to a client’s age, a fund’s results and a current situation on the market.  

Labour Minister Jolanta Fedak, who proposed controversial changes to the OFE regulations, is absent. Fedak wants to decrease the monthly retirement contribution to the open retirement funds (OFE) from 7.3 to 3 percent, which could yield 13 billion zloty (over 3 billion euro) in savings. Moreover, Fedak proposed to increase the retirement age, which could give up tens of billions zloty in the long term. 

Katherine Blackler
editors@plansponsoreurope.com