Changes in the pension funds. Mateusz Morawiecki reveals plans – Onet.pl

 
  Photo: PAP
 
 
  Deputy Development Minister Mateusz Morawiecki, during a press conference at the headquarters of the Warsaw Stock Exchange
 
 
 

It started on Saturday from an Yaroslav Kaczynski at the congress of Law and Justice. The new-old president of PiS said then that “the money that remained in the OPF can be the basis for important new projects that will build the strength of economic policy and will support the Polish households.”

thought president on Monday developed the Deputy Prime Minister and development Minister Mateusz Morawiecki presenting Foundation Programme Capital construction, which has, among others, encourage us to save for retirement. This will be the biggest reform of 1999, which will also open pension funds. Mateusz Morawiecki denied that it is a nationalization of OFE, but the proposed changes mean dirt reconstruction model of their functioning.

OFE – the current model of functioning

Deputy Morawiecki argued OFE that in its current form does not make much sense. On account of pension funds goes just 2.92 percent. Our gross salary and is only for people that have made declarations about the desire to further savings in pension funds. Almost all transferred funds OFE invest in equities. In 2015 it was exactly 83 per cent., Even though in 2010 only 36 percent.

this drastic change is the result of the reform of 2013. Provisions relating to pension funds changed the PO-PSL coalition. After its introduction funds can no longer buy Treasury bonds and securities guaranteed by the State Treasury (which is why almost all transferred funds OFE now invest in stocks). In February 2014 years of 51.5 percent. units of account in the account of each member of OFE were redeemed. Funds have to report to ZUS in assets corresponding to the sum redeemed units – it was almost 154 billion. As a result, public debt declined by approx. 7.6 percentage points. GDP.

After the reform of 2013 years the meaning of the funds on the financial market has slowed down markedly. Sam portfolio of pension funds since February 2014, and is a much more aggressive. Translates into financial results, more dependent on the situation on the stock market.

although in the first quarter of 2016 years all OFE were “in the black” that they are committed to change. Chamber of Commerce of Pension Funds advocated retouching rules and expand the catalog of instruments in which it could invest pension funds (see box opposite). On Monday Funds learned which way will the government went reform.

The changes in the OFE – plans Mateusz Morawiecki

• the reform involves the transfer of money from the OPF to the third pillar and the Demographic Reserve Fund . 75 percent. OFE assets, ie approx. 103 billion accumulated in the form of Polish shares transferred would be on Individual Retirement Accounts (Pillar III) of all the 16.5 million participants in pension funds. Each of the participants would get an average of approx. 6.3 thousand. Golden.

 
     
• For the Demographic Reserve Fund trafiłoby approx. 35 billion, which today OFE invest in bond or keep in cash. Transfer of funds to FRD would serve to strengthen the financial buffer of the pension system.

 
     
• According to the ministry of development, some of FRD funds may be used to finance the costs of tax incentives for the construction of the third pillar.

 
     
• OFE would be converted into shares of Polish investment funds operating under the Act on investment funds. Pension companies would become investment fund companies.

 
 

Resort development indicates that it is far preliminary proposals. “The concept, which will now be worked out, will probably rely on the transfer of the funds on individual pension accounts of participants and” important new venture, which will build the strength of our economic policy “. The political intention is clear and further work will be conducted within the framework of inter-ministerial consultations and social “- said in a press release of the Ministry of Development.

the proposed changes are expected to enter into force on 1 January 2018 year. – It’s hard to call it reform. It is rather the movements that are used to hide some of the budget items in a way that apparently does not increase public debt – tells us prof. Marek Gora of the Warsaw School of Economics. – It’s quite a confusing concept, I do not know how they would encourage saving. On the contrary, the public may feel that someone again stirred OFE, so take some long-term is uncertain. This effect I fear the most – Professor adds. Mountain.

What other highlights Tomasz Bańkowski CEO of Pekao Pioneer PTE. – The mere reduction of assets of 35 billion, which have hit the Demographic Reserve Fund, it may cause some pension funds will lose profitability. Increase the risk of investment OFE – explains.

– If the plan is consistently implemented, and people on their sub-accounts will have 75 percent. funds from the OPF to end up on the nationalization of the Funds, the biggest problem in our capital market. The current situation, what did the government of Donald Tusk, a caricature of the reform in 1999. If the proposed changes are the nucleus of the third pillar, it should be assessed them positively – adds Maciej Bitner chief economist WiseEuropa.

Capital Construction program – pillars of the reform

the reform OFE is just one of several pillars of the announced Capital Construction Programme.

• The program involves primarily the introduction of a general system of voluntary occupational pension schemes. To the Employee Equity Plans (PPK) would be enrolled employees of companies employing minutes. 20 people. Smaller companies would have the choice of whether to join the PKK, or use the Personal Equity Plans (IPK). The employee would have the ability to opt out of the program.

 
     
• To encourage participation in the program everyone joining him employee will receive 250 gold payments Welcome. Sam may declare if he wants to save – from 2 percent. to 4 per cent. contributions, which are exempt from the compulsory pension contributions. The employer may declare a contribution of 2 percent. to 3 percent. employee’s salary, which is exempt from social security contributions. The employer will also receive funding contributions amounting to 0.5 percent. from the Labour Fund.

 
     
• PPK for the first 24 months will be managed by the Polish Development Fund.

 
     
• The reform will be introduced in stages. The programs have become operational from January 2018, and the first stage will include the 2.8 million employees of large companies employing over 250 people. From July 2018 until joining programs medium-sized businesses, and from January 2019 – small and micro-enterprises.

 
     
• Resort Development estimates that fiscal incentives will issue approximately 2.2 billion for the first 2 years of the program and 1.7 billion in subsequent years.

 
     
• The reformed (simplified) to be a rule of action IRA (Individual Retirement Accounts) and IKZE (Individual Retirement Accounts Security).

 
     
• To rise to Public Funds Real Estate (PFN) as the Polish equivalent common in many markets funds REIT. These funds, in the form of a special joint stock companies listed on the Warsaw Stock Exchange, would invest in residential and commercial fixed income.

 
     
• Treasury would begin issuing bonds bonus for individual investors.

 
     
• A new feature would also be infrastructure bonds. Emit these agencies and funds of the State Treasury or local governments, in order to finance key investment projects.

 
     
• Taxes on capital income individuals from long-term investments (over 12 months) would be reduced from 19 per cent. up to 10 percent.

 
 

Changes to OFE – expert recommendations

Some of the proposed changes was recommended by the experts. Over the past few weeks we have written, among others, on the guidelines of the Society of Polish Economists, who believed that the state should subsidize Poles’ savings, the report PwC, the authors estimated that the support OFE could be financed infrastructure projects, innovation or housing for rent, and finally the idea of ​​the Financial Supervision Commission, which concluded that the gap in the third pillar could be complemented by the launch of Retirement savings Accounts, aimed primarily at low income earners Poles.

Each of these ideas – also taking into account the government’s proposals – have a common denominator. It is used to encourage Poles to long-term savings. With this it is fragile, but the research “Awareness pension Poles”, conducted in May by prof. Janusz Czaplinski and prof. Mark Mountain, shows that the tendency of Poles to saving for retirement would increase more than three times, if the system was introduced, in which the employee contributions dopłacałoby state. This solution favored 68 percent. from us.

The government predicts that one of the positives of Capital Construction Programme would raise the growth rate of GDP per year around . 0.4 pts. percent. We have more savings, more investment economy and the stock market is to get a boost. After announcing plans to open pension funds, on the Warsaw Stock Exchange reigned but red.