October 10, 2013 / 6:58 PM / 6 years ago

UPDATE 1-Poland reveals long-awaited details of pension overhaul

* Pension funds to shift assets to state in Feb 2014 -draft bill

* Parliament likely to approve new legislation

* But president may question it (Adds details, presidential aide)

By Marcin Goettig

WARSAW, Oct 10 (Reuters) - Polish state-guaranteed private pension funds will be required to transfer 51.5 percent of their assets to the state in February next year, the draft legislation of the government pension overhaul showed.

The new legislation is likely to be passed by parliament, but may face some opposition from the president, who agreed to meet an opponent of the pension overhaul on Friday.

According to the draft bill published on Thursday, the pension funds will be banned from investing in treasury debt and state-guaranteed bonds following the transfer of assets to the state pension vehicle ZUS on February 3.

In line with earlier comments from government officials, the funds will also be required to gradually transfer the assets of workers’ to the state starting 10 years prior to retirement.

The funds held assets worth 292 billion zlotys ($94.27 billion), or 18 percent of 2012 gross domestic product in September. Of that, 124 billion zlotys was in Polish treasury debt and 18 billion in state-backed bonds.

The funds, following the transfer of assets, will be required to hold 75 percent of their assets in stocks until July 1, 2014, when their investment policy requirements will be loosened, the draft legislation also showed.

However, the funds will not be allowed to invest more than 10 percent of the assets in foreign-currency denominated assets, up from 5 percent currently.

This limit will be raised to 20 percent in 2015 and to 30 percent in 2016, a level postulated in a ruling of the Court of Justice of the European Union.


The government is likely to have little difficulty pushing the changes to the pension system through parliament after its leftist opposition said it would vote for it.

But last month a presidential aide said parts of the plan, especially the ban on investment in treasury bonds, were questionable, in a sign President Bronislaw Komorowski could throw the bill back to parliament.

The president has the option of sending bills back to parliament or sending them to the constitutional tribunal, a move which at least would slow the legislative process.

The aide, Irena Woycicka, said on Thursday that the president agreed to meet Jerzy Buzek, a former prime minister and opponent of the overhaul on Friday to talk about the changes to the pension system.

Buzek, in a joint letter with a central bank policymaker have rejected the plan, saying it was “harmful for the economy” and “makeshift”.

For the past 14 years, Poland has had a hybrid pension system, with part of workers’ contributions diverted from the state pay-as-you-go system to private pension funds, known collectively as the second pension pillar.

Prime Minister Donald Tusk’s government said this system was too costly for public finances and failed to deliver additional benefits for future pensioners. He said the changes should make pensions safer.

According to the draft bill, the changes will lower Poland’s public debt by 9.2 percent of GDP and reduce annual borrowing needs by 20-25 billion zlotys in the years 2014-2017. ($1 = 3.0975 Polish zlotys) (Reporting by Marcin Goettig; editing by Ron Askew)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below