Tuesday, July 12, 2016

Privatized retirement savings Poles – Puls Biznesu

“Puls Biznesu”: Why all this change – the replacement of OFE by individual retirement accounts (IRA), which will act as investment funds? There are more and more voices that is just an excuse to shift 35 billion zł from the OPF to the Demographic Reserve Fund (DRF), which will finance the current pension commitments or spend the money on new spending.

Paul Boris, president of the Polish Development Fund PFR: After the recent changes in OPF do not fulfill their role today is not actually part of the capital of the pension system. Proposed by Prime Minister Morawiecki proposals for change will be beneficial for the participants pension funds. Now they have no impact on the funds’ investment policy and there is no competition between them. Elderly people are exposed to the same investment risks as younger people. According to the proposal of OFE money would be saved on the IRA, but in the third pillar. There, everyone will be able to choose the investment policy tailored to their needs and preferences in the context of new and competing institutions that will open investment funds. Each TFI will be able to offer such services. When OFE took off, people thought that there gathered their private capital. But only now actually carried out would be their real privatization under the third pillar of the pension system. But you can not afford to have been consumed before, that is, they need to be protected from payment before reaching retirement age. After retiring each of us will be able to pay a one-off 25 percent. accumulated capital. The remaining 75 percent. It is to be provided to us on a monthly basis as part of the pension. We have a chance to create a day-to-day real third pillar pension because the rise there of 16.5 million accounts, which may further encourage saving on a larger scale within IKE.

What will happen with the money, which will go to DRF?

the creation of a real financial buffer that will think about the stability of the pension system in the long run. After the transfer of the open pension funds are found there 55 billion zł, which will be able to be invested in the economy, eg. On the Polish stock market or in bonds for large infrastructure projects. On the one hand, increasing economic potential, on the other hand FRD increases the value of its assets.

How will secure the money before the appetites of politicians to finance their budget deficit?

Such rules established by law, and you may want to start on this subject some debate. FRD in the long term is used to finance deficit of the Social Insurance Fund. It, therefore, is to secure the money for the moment when we really needed. Variously it is regulated in the world. I like the model of Norway, where the fund Norges no regulations stipulating that can finance the state budget to the annual profits of the institution, or pay a kind of dividend to the budget.



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