PM announces pension system reform

2019-04-15 16:18 aktualizacja: 2019-04-16, 20:03
Photo:  PAP/Leszek Szymański
Photo: PAP/Leszek Szymański
Poland will restructure its pension system so that it is based on three pillars - the social insurer ZUS, employee capital plans and personal pension accounts, PM Mateusz Morawiecki said at a press conference on Monday.

"We want to tidy up the pension system which is a key part of the financial security of Poles for their retirement years," PM Morawiecki said.

The prime minister said that Poland's major problem was "the lack of ability to create savings, savings for later years of life, savings for infrastructural projects, Poles' savings that benefit the entire economy."

The latest pension system reform is a response to this problem, the prime minister said.

The pension system is to be "evolutionarily restructured" and be based on three pillars - the Social Insurance Institution (ZUS), the Employee Capital Plans (PPK) and Personal Pension Accounts (IKE), the prime minister said.

The savings accumulated so far in the Open Pension Funds (OFE) - or personal pension savings managed by investment fund companies - are to be transferred to IKE accounts. OFEs hold about PLN 162 bln (EUR 37.76 bln) in pension savings. The transfer would be charged with a 15 percent fee, unless the future pensioner decides to move their funds accumulated in OFE to ZUS.

The fee is required to "maintain justice," Mateusz Morawiecki said, arguing that ZUS pension payments are taxed while IKE payouts are not.

The reform will affect 15.8 million Poles, the prime minister said.

ZUS, the state-administered insurer, is the cornerstone of the Polish pension system. PM Morawiecki has for some time been promoting his idea of PPK, to which the employer and the employee would both contribute a percentage of the wage. Under the Monday-announced reform plans, the IKE will be the only private option to replace the already half-liquidated OFEs.

The previous government already transferred a major part of OFE funds to ZUS. The crippled OFEs are now going to become history after two decades of existence.

Investment and Development Minister Jerzy Kwieciński said that the draft law will be sent for social consultation in May, the government will work on it in June and July and parliamentary work is planned for September-October so that the reform could enter into force from 2020. (PAP)