There is no good decision on funds accumulated on OFE

On June 1, a new law is to come into force, which will ultimately liquidate open-ended pension funds. It will take place on January 28, 2022, and the money accumulated on them will be transferred by default to Individual Retirement Accounts or, at the request of the account holder in OFE, to the Social Insurance Institution (ZUS).
“We already know today that these changes will take place without public consultations. In June the law will enter into force, and in January next year the first transfers of our money will already be made,” Dr. Edyta Wojtyla, an economist from the WSB University in Poznań, said.
She added that for the average Pole, changes mean the loss of some of the resources saved in funds. Future retirees will decide whether they want the funds accumulated in OFE to go to individual retirement accounts or to a special account at ZUS.
"The first option will be the default, i.e. if the future pensioner does nothing, the entire pool of funds accumulated in OFE will be transferred to IKE. This option, however, means the loss of 15 percent of savings, which will be collected in January as the so-called transformation fee,” the WSB economist explained.
Redirecting funds to IKE will mean, however, that they can be inherited in the future. Once you reach retirement age, you will be able to pay them out in full or in installments.
“ In the second option, you should take some steps and declare your willingness to have the funds transferred to the ZUS account. This is a slightly different solution because no fee will be charged at this point, but in the future, when paying pensions, they will be taxed with the pension tax. Then we do not have the opportunity to choose all the funds after reaching the retirement age and we also do not have the option to inherit this amount for our relatives,” the economist added.
The choice is therefore difficult, because in each of the scenarios the tax office charges a tribute. Additionally, there is no guarantee that the entire pension system will not have to undergo thorough reform due to the dramatic demographic situation. According to the Central Statistical Office, in 2020 the population of Poland decreased by approx. 115,000 people. This was due to, inter alia, the highest number of deaths since World War II (486,000) and the lowest number of births in 17 years (355,000).
“There is no 100 percent guarantee that we will recover these funds, even minus the transformation fee, and even less there is no guarantee that we will have more of them,” the economist stressed.
(Newseria)