ZUS head vows to turn agency around
Leslaw Gajek, the new president of the embattled Social Insurance Office (ZUS), said last week that he was determined to overhaul the organization, which has been broadly criticized for failing to adequately manage this year's pension reform.
Plagued with lower tax-collection rates that were envisioned under pension reform, ZUS has suffered liquidity problems throughout the year as it tried to make payments to the privately managed pension funds that kicked off last spring. That constant cash shortage was one reason why the agency's supervisory board fired former ZUS President Stanislaw Alot at the beginning of October.
"I am interested in bringing ZUS through this crisis," Gajek said. "That is why I am here."
Among Gajek's objectives is to push through the implementation of ZUS's new computer system, which was designed to aid in the introduction of pension reform earlier this year by creating individual accounts for every taxpaying citizen. That system, designed by Prokom, was also supposed to track how much money participants in the reformed system, estimated to be 8 million people, were to flow to the privately managed funds every month. The remaining working and retired populace stayed with the old, pay-as-you-go system.
Another goal Gajek stated was to turn what is considered to be a bloated, inefficient organization of 40,000 into a customer-friendly agency. Other short-term goals include improving the agency's ability to make pension payments, increase tax-collection rates, push through the introduction of a new computer system and cut internal costs at ZUS offices. Gajek refused to discuss whether ZUS's financial state would improve next year, until proposals for overhauling the organization were heard by the Council of Ministers on Tuesday.
ZUS's inability to balance outflows to the funds with its existing pension obligations forced it to take out a zl. 2.8 billion ($667 million) loan from banks this year as well as a zl. 4 billion ($952 million) loan from the government. That is in addition to the zl. 5.8 billion ($1.38 billion) in government subsidies the body was already slated to receive in 1999.
Much of ZUS's problems this year have been caused by the agency's inability to collect tax payments from companies. Collection rates for social security payments stand roughly at 91-92% now, drastically off the almost 98.9% rate assumed by the Finance Ministry when it calculated the level of subsidies ZUS would need this year. ZUS itself, however, had assumed that it would collect 98.4% of payments. Those collection rate assumptions have been changed throughout the year, however, as it became clear that ZUS would not meet the numbers.
Gajek said that, according to very rough calculations, companies currently owe ZUS several billion zloty. He vowed to go after delinquent entities. Some of Poland's largest employers are among those non-payers, including Polish State Railways (PKP) and many of the coal mines.
"Today, the fee collection rate is low due to a lack of efficiency in the computer system," Gajek said. "That is why ZUS has been in so much trouble this year." He added that he hoped the Prokom system would be up and running properly sometime in 2000.
Problems with Prokom's system have resulted in ZUS lacking a workable computer system for most of this year. Until bugs with Prokom's systems are worked out, Gajek said the agency would revert back to its old computer system, which was used until 1998.
"Thanks to reintroducing the old system, the (collection) rate should improve," said Ryszard Petru, an adviser to Finance Minster Leszek Balcerowicz. "And right now there is practically no system functioning there."
Former ZUS head Anna Bankowska, who was appointed under the Democratic Left Alliance (SLD) government deposed more than two years ago, signed the original computer contract with Prokom. The cost of that system has never been disclosed.
