Changes in Retirement Funds

Making Money?

A serious change in the Polish retirement system is here to stay. Most of our pension contributions will stay in the Social Insurance Institution (ZUS) because the Ministry of Finance wants part of the contributions, which have so far been transferred to the Open Retirement Funds (OFE), to remain in special accounts in the ZUS. As much as PLN 13 billion annually is at stake here. The Ministry of Finance admits that the main aim of this move is to reduce the public deficit. How it will work? Currently, our pension contributions go to the Social Insurance Fund and from there part of the money is transferred to the Open Retirement Funds. Nevertheless, the Polish government wants to change it so that only 40% of the hitherto contributions are passed to the OFE and the remaining 60% of the PLN 22.5 billion of the annual contributions that has so far been remitted to the OFE would stay in the Social Insurance Institution in special accounts. This is the part that the Open Retirement Funds are currently obliged to invest in safe treasury bonds.

Why does the government wish to introduce this change? If this PLN 13 billion remains in the ZUS, the State Treasury will not have to issue bonds for this amount. This sum is equal to 1% of the GDP, whilst Poland has to reduce the public deficit to a level below 3% of the GDP by the end of 2012. Should pensioners worry about this change? Mr Rostowski, the Minister of Finance, reassures everyone that they do not have to be concerned. What is more, he claims that leaving the money in the ZUS will bring more profit because at present the OFE charge commission on this part of  the contribution. “The Open Retirement Funds collect premiums for this money as if it was not a 100% safe investment, but rather a risky market decision. It would be better if this money stay in the pockets of future pensioners,” says Mr Rostowski. According to the Ministry of Finance, profits can amount to as much as PLN 500 million annually and, what is more, the interest rate of the special account in the ZUS will be equal to one of the bonds. Representatives of the Open Retirement Funds have a different opinion and they are worried that if the government takes the money away from them, this may result in a change in the investment strategy into a more aggressive one, which in turn may lead to diminution in future pensions.
Dziennik

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PKP Declares Bankruptcy

End of the Line?

Polish State Railways (PKP) are facing a tragic situation. PKP Regional Railway Services, which for many Polish people is their only connection with civilisation, will soon cease to exist. The Supervisory Board wants the Management Board to declare bankruptcy within a week. As a consequence, only small railway companies and Intercity will be left. The Supervisory Board wants the Management Board to declare the bankruptcy no later than on 6^th November 2009. According to the monthly Rynek Kolejowy (Railway Market), the aim of the bankruptcy is to facilitate reaching an agreement with the obligees and the future re-establishment of the company from scratch. However, there is only one problem, i.e. pursuant to provisions of the Bankruptcy and Recovery Act as of the 8th September 2000, every company that was established on the basis of this Law cannot declare bankruptcy. Due to the fact that PKP Regional Railway Services was set up pursuant to this Act, attorneys of the company have a tough row to hoe because they have to declare insolvency of a company which cannot legally go bankrupt. If PKP Regional Railway Services collapses, this will be a tragedy for numerous passengers because many trains will cease to shuttle to and from small towns cutting them off entirely from the outside world.
Dziennik

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Dilmah to Open T-Bars

Poland - New Market?

The company Gourmet Foods, which imports and distributes Dilmah tea, will open a “t-bar” in Warsaw, the first outlet of a new tea shop chain. It is highly probable that the first t-bar will be opened in Warsaw this year. Gourmet Foods plans to develop the tea house chain under the name “t-bar”. “For the time being, we will establish only one tea shop and if customers like the idea, we will open other outlets. In the future, we would like to create a chain of tea houses in Poland,” says Mr Paweł Dudziak, communication coordinator of Gourmet Foods. If we manage to succeed, t-bars will be the first chain of tea shops in Poland, similar to those which already exist on the coffee market. As Ms Agata Zarębska, analyst of the food service market, notes, currently there are only independent tea houses or chains such as, Czas na herbatę (Tea Time) in Poland, which specialise mostly in selling tea to go. “In our shops, customers will be able not only to drink tea, but also eat and read, whilst the sale of take-away tea will just be an additional element of the business,” explains Paweł Dudziak. He also adds that the idea will most certainly turn out to be a success. “After analysing the hitherto sale of Dilmah tea, we are sure that t-bars will prove to be a success, especially since similar tea houses have already been operating in all the bigger cities in Europe, for instance, in Milan or France,” says Paweł Dudziak.
Gazeta Prawna

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Driving Licences to Cost the Earth

Happy Days to End?

If you want to have a driving licence, you should hurry up because next year the price of driving courses will skyrocket. The Ministry of Finance has decided that driving schools will be obliged to pay 22% VAT; therefore, the courses may cost as much as PLN 300 more than now. The Ministry of Finance has begun adapting Polish law to EU law, and, as always, it will end with a price increase. “The draft amendment provides that education services will still be exempt from Value Added Tax. However, according to the new nomenclature of the European Union, the activity of driving schools is not included in the catalogue of education services,” says Magdalena Kobos, the press spokesperson for the Minister of Finance. Owners of driving schools do not conceal the fact that the plans of the government will result in an increase in the prices of  courses. As a consequence, future drivers will have to pay from PLN 200 to 300 more. The draft has already been approved by the government and will now be analysed by the Polish Parliament. If everything goes according to plan, the new regulations will enter into force on the 1^st of January 2010.
Dziennik

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Holidays in Instalments

Sun, Sea and... Secure Loans

In order to receive a loan of PLN 7,500 for holidays abroad, it is enough to show one’s ID. Due to the 20% decrease in demand for foreign trips, travel agencies have been compelled to seek new methods of stimulating sales. The online travel agency Travelplanet.pl has decided to offer credit-sale. The loans are granted in cooperation with Getin Bank. “The nominal interest rate amounts to 9.9.% annually. Moreover, the customer also has to bear the costs of commission which amount to 3% of the granted loan,” says Wojciech Sury, representative of Getin Bank. Another expense is insurance which customers are obliged to buy in the event they do not present surety from three persons. Furthermore, the repayment can be divided into 3-12 instalments. Travelplanet only verifies what type of loan tourists need by taking into account their income, whilst the other operations are carried out by the bank. “If customers meet all the requirements, they can receive a loan during one visit to the travel agency. What is more, applicants do not have to show any income certificates in order to receive a loan up to PLN 7,500,” says Wojciech Sury. “The product was launched on the market two weeks ago and already several people have bought trips using these instalments,” says Bożena Garbińska, member of the Travelplanet.pl board. Other travel agencies such as eSKY.pl and Fly.pl are planning to introduce credit-sales also.
Gazeta Prawna

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Polish PayByNet

Paying via Computer

Banks in Poland are launching a new payment system which will function both in internet stores and public institutions. For the time being, the PayByNet system allows users to purchase goods in electronic stores in an easy and fast way, however, before long, we will be able to apply this system also in order to pay taxes, fines and other financial liabilities in public institutions. The system, operated by the National Clearing House, delivers to a bank a defined transfer; therefore, it is not necessary to fill out any forms. All you have to do is click after which a message is immediately sent to the internet store. The PayByNet system is currently being implemented in the biggest Polish internet book store Merlin.pl, and it has already been in operation in Lataj.pl, which sells airline tickets. Other e-shops are also planning to introduce the system.

“PayByNet eliminates one of the main problems for e-commerce, namely the reservation of goods in anticipation of payment processing,” says Artur Wojtczuk, Internet Payments Manager in the National Clearing House. So far, the system has been used mostly in e-commerce; however, it has recently become the first payment service implemented on the Electronic Platform of ePUAP Public Administration Services that will allow us to pay outstanding fines and liabilities. The Regional Office of Silesia and City Hall of Piotrków Trybunalski have been the first public institutions to implement PayByNet. “We anticipate that more customers will make use of this service,” says Marietta Balda, who is responsible for e-payments in Nordea Bank, the first bank to launch this system. Apart from Nordea Bank, the system has been introduced also by Citi Handlowy, whilst other banks such as Millennium, BPS, Kredyt Bank, Inteligo and BZ WBK are planning to implement it very soon. “We are currently at the stage of establishing the terms and conditions and we plan to launch this services at the beginning of 2010,” confirms Wojciech Kaczorowski from Bank Millennium.
Rzeczpospolita

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What Is a Credit Card?

Credit Card

According to the research project “The State of Financial Knowledge of Polish People” conducted by Maison Research House and the research agency Pentor, 62% of Poles consider their knowledge of finance as rudimentary or very poor, 67% do not know what a credit card is and 60% of respondents do not possess a nest egg. “The results of the study show that it is indispensable to undertake high-impact actions that will improve the financial knowledge of Polish people. We have proof now that it is necessary to prepare a National Strategy for Financial Literacy,” said Sławomir Sikora, President of Bank Handlowy. In accordance with the results of the research, 80% of those studied do not control their outgoings. Moreover, the study revealed that 40% of Poles do not wonder how their financial situation might look when they retire. What is more, 57% of Poles do not realise that having a credit card is tantamount to having a loan in a bank, and 61% of respondents cannot calculate the earning power of a bank deposit.
Wirtualna Polska

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Favourable Changes in PIT Act

Better Forms

It is plausible that in Autumn a law will come into force which will relieve people who work full time in one place from the necessity to fill out and later send Personal Income Tax (PIT) forms to the tax office. “According to government estimates as many as 2 to 5 million tax payers will take advantage of this change,” said Prime Minister Donald Tusk after a government meeting on Tuesday. “We precipitated works on changes in law which will make the life of millions of tax payers much easier,” said Tusk during the press conference. “This refers to people who receive their income from only one source, i.e. those who work in one place and currently have to fill out and send PIT forms,” explained the Prime Minister.

The PM highlighted that employees themselves, and not the administration, will decide whether they will fill out and send PIT forms or leave it to their employers. “If, however, employees want to fill out and send PIT forms on their own, then they have to inform their employers about this fact,” said Tusk and stressed that otherwise, employers are automatically obliged to send the PIT form of their employees together with any additional information that tax payers previously filled out. This will include information concerning possible tax allowance for internet, children, as well as information to which non-profit organisation the tax payers wish to donate 1% of their tax. “In order to simplify this procedure and free PIT tax payers from this inconvenient and unnecessary obligation, it is indispensable to introduce certain legal changes,” said the PM. This concerns an amendment to the PIT Act prepared by Minister of Finance Jan Rostowski and which was accepted by the government during Tuesday’s meeting. “We hope that this law will become effective this Autumn,” said Tusk.
Wirtualna Polska

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Unemployment Rises

Unemployed Europe

Unemployment in Poland hit 8.2% in June 2009. However, for the sixteen countries of the Euro Zone unemployment hit a record 9.4%. Compared to Euroland, Poland’s 8.2% does not look as bad as it could be. Poland’s Central Statistical Office (GUS) places unemployment in Poland at 10.7%, however, GUS uses different markers to calculate these statistics. The average rate of unemployment for all the EU states was 8.9% (a rise of 0.1% from May, and a 2.0% rise from June last year).  This means that over 5 million people have lost their job in the European Union over the past twelve months. Ironically, these statistics bode well for Poland’s workers as unemployment does not seem to be rising at the same level in Poland as it is in the EU. Additionally, Poland’s economy seems to be coping better with the crisis than most EU states.
Gazeta Wyborcza

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Social Lending Competition

Money Lending

Seeing that banks are reluctant to give loans, Poles count on their compatriots and search for financial assistance on the internet. Hitherto, Polish people have borrowed PLN 22 million using internet services. Furthermore, the turnover in this new sector increases on average by 15%-20%, whilst the average interest on loans oscillates between 14% and 19%. Polish people take out loans from three social lending services operating in Poland, namely Kokos.pl, Finansowo.pl and Smava.pl for such things as: holidays, rehabilitation equipment, new computers, as well as in order to set up their own company. Social lending is becoming increasingly popular in Poland mostly due to the fact that banks have tightened their lending policy, yet despite the financial crisis, there are still numerous people who are willing to lend their money to others, hoping that this will augment their wealth. Some social lending services are currently taking the offensive expecting that if they put more emphasis on ensuring higher security, they will develop and thus draw in more customers.
Dziennik

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