Pension reform fails to curb spiraling costs

The Sejm commission working on the Hausner plan approved changes yesterday which will have disastrous effects on the scheme and wipe out the expected savings. The commission was considering a key bill examining changes to pension indexation. The Hausner plan envisaged indexation taking place only once every 2 to 3 years, when consumer prices had risen by 5%. However, the commission lowered the threshold to 3%. With this year's surging inflation, indexation would likely take place next year, pushing up the deficit and public debt, which will be close to the constitutional limit of 60% of GDP. In addition, the deputies approved the costly equalization of pension and disability benefits from the so-called "old portfolio", namely those awarded in the years 1993-1998. By 2011, this change will increase public expenditure on benefits by zł.3.6 billion a year. Polish Social Democracy (SDPL) deputy Jolanta Banach admitted that as a result of changes approved yesterday, public spending would actually increase, rather than be curtailed. (Gazeta Wyborcza, p.17) T.J.