Poland to launch AE pension reforms

                               

Poland is planning on launching a reformed pension system from the beginning of 2018, The Warsaw Voice has reported.

As part of the reforms 25 per cent of the OFE pension fund assets will be moved to a state fund and 75 per cent will be handed over to private accounts, the Polish Development Fund (PFR) chief Pawel Borys has said.

"The program should start from the beginning of the year," Borys said in the interview. "If we manage to make employee pension plans universal and reform OFE funds, millions of Poles would start to save meaning [PLN 10-20] billion in fresh capital."

Under the plans, workers would be automatically enrolled into a corporate pension scheme, of which 2 per cent of their gross earnings would be paid into the new private funds. There would be a three-month window in which they can opt-out. As part of the reform, employers would match the 2 per cent contributions. The reforms are similar to those in the UK.

Borys added: "Right now works are in their final stage at the Ministry of Family Policy and the Ministry of Development and will certainly head to parliament soon”.

Details published in July 2016, confirmed in a policy outline adopted by the cabinet in January, calls for around 75 per cent of OFE AuM to roughly match the current equity allocation to be owned directly by pension savers and managed privately. The remaining 25 per cent will be managed by the state's Demographic Reserve Fund and the value will be written to the social security funds of savers.