The OFE reform is necessary, but Minister Morawiecki’s presentation did not answer all questions. More details are needed to assess what will really happen to the savings of Poles.
New forms of saving for pensions presented by the Ministry of Economic Development – Employee Capital Plan (PPK) and Individual Capital Plan (IPK) are an intriguing concept. It is so favourable for the employed that most likely a significant part of the insured will decide to stay in the current system. It is crucial to remember that participation in the voluntary system does not entail an automatic increase of contributions: there is a mechanism for proportionately reducing the pension contribution paid to ZUS. A weak point of the program is the obligatory payment for investment funds managed by the National Development Fund (PFR). State management of investment funds may involve the risk if inappropriate selection of projects to be financed.
Tax deduction for capital gain generated by infrastructural bonds, together with the deduction of bank tax for assets located in government securities, should contribute to an increased domestic demand for government bonds.
– The best solution would be to completely remove the taxation of long-term investments, it would be a truly significant impulse and a clear signal for investors – emphasizes Piotr Kamiński, Vicepresident of Employers of Poland and former chairman of the Warsaw Stock Exchange.
After the gradual dismantling of the pension system over the years, a change in the OFE model is surely in order. However, moving 25 percent of OFE funds to the Demographic Reserve Fund (FRD) while giving nothing in return to those who have saved for their pensions is completely unacceptable. Even if we assume that OFE funds are a property of the state and not of the insured, according to the defined contribution principle every contribution payer is due a proportionately higher benefit. Moving one fourth of the funds to the FRD with no compensation would be flagrantly unjust.
– The basic question concerns the fate of the contributions on individual accounts, subject to long-term social contract – asks Kamiński. – As long as the whole concept is not presented in detail, every assessment will be imprecise and incomplete. Let us wait until official documents are published. However, one thing is certain – a good voluntary saving system in the so-called II pension pillar cannot be established without the cooperation of employers. They will need support to promote such a program among their employees – Kamiński stresses.