Pension bomb ticks louder
As European Union member states deliberate over their own emerging pension-system crises, social security professionals predict that Poland's three-year-old scheme will be able to avert a potential demographic disaster caused by Europe's ageing population.
While this may come as a shock to the many vocal critics of the country's operationally inefficient pensions system, market watchers say they are not so worried about negative demographic effects because the government has already met this dilemma head-on when it instituted the three-pillar scheme in 1999, which includes a pay-as-you-go plan, but also allows workers to invest in privately managed funds.
That's a stark contrast to the situation in the EU countries.
The European Commission's Council of Ministers has published a draft report assessing the member states' abilities to confront the challenge of an increasingly ageing population overloading outdated social security systems, which in their present forms would drain state budgets and threaten older citizens' livelihoods.
The report concluded that most countries' systems need wide-ranging redressing in the form of raising the retirement age by five years, promoting the extension of working lives or adjusting sizes of benefits and contributions. Among EU members, the ratio of people over 65 to those of working age is expected to double between now and 2050.
Should Poland's new system work as planned - also the subject of rigorous debate - an ageing population won't be problematic.
"The advantage of Poland compared to the EU is that it has already tackled this problem," said Mateusz Szczurek, senior economist at SG Bank.
Also, he pointed out that the country's demographics differ from many parts of Europe.
"We don't have a population ageing as rapidly as the one in Northern Europe," he said. He added that despite high unemployment, there is a greater number of new young people entering the workforce in Poland, a phenomenon which would keep the pay-as-you-go pension account comparably more liquid.
There is, of course, still some debate on the issue.
"In Poland it's not that much of a problem," said Sławomir Solarz, deputy director of pension industry regulator KNUiFE's research, social communication and information department. "But there has been some discussion about demographics, which for the EU is quite a significant problem."
He explained that the regulator is at present debating how to distribute payments between men and women, given that women tend to work less and live longer. Also, he said that KNUiFE is considering whether the state will pay for the differences in contributions between the sexes, or whether it will be paid from the system itself.
Ageing citizens and the active workers who currently pay their bills, however, are not home free, as many pension fund managers, who invest the capital from the second-pillar contributions, are happy to reveal. Inefficiency on the part of national insurer ZUS and misguided legislation, much more than demographics, threaten the country's pension system.
While this may come as a shock to the many vocal critics of the country's operationally inefficient pensions system, market watchers say they are not so worried about negative demographic effects because the government has already met this dilemma head-on when it instituted the three-pillar scheme in 1999, which includes a pay-as-you-go plan, but also allows workers to invest in privately managed funds.
That's a stark contrast to the situation in the EU countries.
The European Commission's Council of Ministers has published a draft report assessing the member states' abilities to confront the challenge of an increasingly ageing population overloading outdated social security systems, which in their present forms would drain state budgets and threaten older citizens' livelihoods.
The report concluded that most countries' systems need wide-ranging redressing in the form of raising the retirement age by five years, promoting the extension of working lives or adjusting sizes of benefits and contributions. Among EU members, the ratio of people over 65 to those of working age is expected to double between now and 2050.
Should Poland's new system work as planned - also the subject of rigorous debate - an ageing population won't be problematic.
"The advantage of Poland compared to the EU is that it has already tackled this problem," said Mateusz Szczurek, senior economist at SG Bank.
Also, he pointed out that the country's demographics differ from many parts of Europe.
"We don't have a population ageing as rapidly as the one in Northern Europe," he said. He added that despite high unemployment, there is a greater number of new young people entering the workforce in Poland, a phenomenon which would keep the pay-as-you-go pension account comparably more liquid.
There is, of course, still some debate on the issue.
"In Poland it's not that much of a problem," said Sławomir Solarz, deputy director of pension industry regulator KNUiFE's research, social communication and information department. "But there has been some discussion about demographics, which for the EU is quite a significant problem."
He explained that the regulator is at present debating how to distribute payments between men and women, given that women tend to work less and live longer. Also, he said that KNUiFE is considering whether the state will pay for the differences in contributions between the sexes, or whether it will be paid from the system itself.
Ageing citizens and the active workers who currently pay their bills, however, are not home free, as many pension fund managers, who invest the capital from the second-pillar contributions, are happy to reveal. Inefficiency on the part of national insurer ZUS and misguided legislation, much more than demographics, threaten the country's pension system.
