Reform of the pension funds. Is proposals arouse public trust? – Polish Radio

Additional savings, according to the calculations of the Ministry of development, will be able to raise the retirement even half Photo: Glowimages

After the so-called. “Jump on OFE” – in the Funds remaining approximately 138 million zł (at the end of May 2016.), Of which 103 billion zł invested in shares of companies listed on the WSE. That’s one-fifth of all domestic companies listed on the Warsaw Stock Exchange.

The next big change OFE

Although the Deputy Prime Minister and Development Minister Mateusz Morawiecki said today during a conference “Strategy for Responsible Development – program Building Capital” on the WSE (4.07.) that it was not and has no plans to nationalize the Open Pension funds, however, this quarter funds will be nationalized – assesses the guest radio Ones Adam Czerniak, an economist Policy Insight and the School of Economics.

first, the measures of the Open Pension funds – stock portfolio, which remained there – is to be transferred to the Demographic Reserve Fund (25 percent.), and the third pillar, to individual accounts (75 proc.). What does this mean for OFE?

– this means that they simply will not. Because this is the full amount – 25 per cent. and 75 per cent to 100 per cent., or OFE already nothing will. These approx. 100 billion zł are shares of Polish companies listed on the Warsaw Stock exchange. So everything that OFE invested in stocks, which is just 75 percent. will go to the new investment funds – calculates Adam Czerniak.

TFI take PTE

So the share portfolio of OPF is to be “under the Act transformed Individual Pension Accounts for all 16.5 million participants OFE “. Does this mean that the OPF will be converted into new investment funds?

– Very likely, yes. That just at the moment the individual fund managers OFE called. (PTE company PTE) will be transformed into a new legal entity, that is, TFI, and will continue to invest in the Warsaw Stock Exchange. While all the rest, or 25 percent. measures approx. 35 billion zł simply be nationalized, although it will be the “quarter-nationalization”. Because certainly these shares on the WSE will go directly to the citizens, because by then the units will belong to us. It will not be as measures OFE public funds – will be our only private funds. While those 35 billion zł remain as public and not here, at least in the present Plan, any gratification. These measures simply will go to the Demographic Reserve Fund, and in no way will be whether it is posted on the sub-accounts in ZUS, or in any other way will increase our future retirement. As a result, what are the measures of which the loss, as future pensioners, we need to count – comments guest radio Ones.

One will be used to pay current pension benefits.

– Or also to finance part of the investment in infrastructure the state, or to guarantee loans to state-owned companies. Here, applications can be very much, especially the management of the FRD, which is now within the framework of the Social Insurance Institution, will take over the Polish Development Fund, which is responsible for the implementation of infrastructure investment, driven by investments Polish economy. Measures that are already stored in the FRD, more than $ 20 billion, in the future will supply the Polish Development Fund – says Adam Czerniak.

Employee Plan Capital

And there’s another important change proposed at the conference by Deputy Matthew Morawiecki: the government wants to write down the employer’s employees in their employees to PPK, or employee Equity Plans (over 19 employees). Smaller companies can also choose Individual Plan Capital. The change involves automatic saving of employees between 19 and 55 years of age. Subscriptions will be widespread, but the program will be able to withdraw within three months of its creation. A PPK will manage the Polish Development Fund.

– And there will be an encouragement. Because of the money that will go to the PPK it will be money that at the moment we pay to Social Security, but also, precisely in order to encourage workers and employers to this to such accounts founded and that in this system the other – the state will reduce the contribution to the Labour Fund by 0.5 percentage points. (Now on FP hits 2.45 per cent. Of our salary) and it will be directed to the PPE, thereby increasing of the 0.5 percentage point. our overall retirement savings. Which is still partly we will save the Social Insurance Institution. However, if you do this, it is up to 7 percentage points. with this we will be able to spend on saving the Employee Equity Plans – draws attention to guest radio Ones.

If the employee chooses to remain in the program, the Ministry of Development promises exemption from pension insurance. The employer and to be exempted from social security contributions and gain above. funding in the amount of 0.5 percentage points. Labour Fund contributions. The employer’s contribution will also count towards your deductible.

The employee’s contribution to the Employee Equity Plan is expected to be 2 percent. It will also be able to declare to 2 percentage points. additional premium, and when settles PIT nonworking person in the household – a further 2 percentage points. The contribution from the employer is 1.5 per cent., With the possibility of voluntary additional 1 percentage point. Their participation will also state whose contribution will be 0.5 percent.

The investments in bonds and lottery REITs

Plan Development Ministry assumes that future pensioners will have the opportunity to invest in different funds, including real estate and bonds.

– this is a little afraid, especially PPK at least in the first phase of development will be managed by the Polish development Fund, whose objective is not to maximize profit, or pensions, only supporting the Polish economy and financing investment projects that the market for this funding can not be found, or that for them is difficult. And that automatically means that if the PPK this type of investment will be financed in this way, the return on capital, which is our future retirement savings will be lower. Therefore, you will need to very carefully, twice converted, whether we will pay off in the PPK invest our retirement savings – explains Adam Czerniak.

When you retire you will pay a one-off one-fourth of the funds collected. The rest would be paid in installments. The aim of the proposed changes is in fact encourage Poles to greater long-term savings, which is required of every economy.

– Temu will serve above all other instruments that were presented during the conference on the Warsaw Stock Exchange, namely, among others, exemption from tax on long-term savings. And it will be probably the biggest incentive, because it will not be that Belka tax (instead of 19 will be 10 per cent.) For long-term savings, over 12 months. There will also be called. bonds lottery-yield, and will also be instruments REIT – investment in infrastructure projects, especially in commercial real estate. So these forms of saving some will, and it will be designed to ensure that our savings rate has risen and fund economic development – notes guest Ones Adam Czerniak, an economist Policy Insight School of Economics.

Current estimates indicate that the first pension will be represented about 30 per cent. last salary. Additional savings, according to the calculations of the Ministry of development, will be able to increase it by half. The reform is expected to begin January 1, 2018 year.

Sylwia Zadrożna, mb