We Will Work for 67 Years

Time to Start Moaning?

There will not be a retirement age referendum. Most Poles will work until they reach 67 years of age. The ruling coalition wants to allow earlier retirement, but for the price of a very low pension. The compromise between the Civil Platform (PO) and the Polish Peasant Party (PSL) ends the crisis in the coalition. The negotiations between PO and PSL activists about raising the retirement age lasted over one month. The aim of the compromise is that the retirement age for women and men be made equal and be gradually increased until it reaches 67 years. However, if one wants to, the would-be pensioner can retire earlier: women at 62 years old and men at 67 years old. This is the so-called ‘partial pension’. In order to receive it, one has to agree to one more condition, that it have the appropriate pension contributions. With regard to women this amounts to 35 years’ worth of contributions, and in the case of men 40 years’ worth. According to calculations made by Łukasz Wacławik, a specialist in social insurance, a man who earns PLN 3,500 will receive PLN 841 monthly on a partial pension, or PLN 1,578 if they work for another two years. If he does not take a partial pension and works until he is 67 years old, he will receive almost PLN 200 more, that is, in total, PLN 1,766. Moreover, a woman who earns PLN 3,500 monthly will receive PLN 736 partial pension. After five years, when she switches to a normal pension, she will receive PLN 1,245. If she works until 67 years of age, she will receive PLN 1,682. The agreement made between PO and PSL resulted in their voting against the rejection of a motion by the Solidarity Trade Union calling for a referendum in regard to the raising of the retirement age. Over a few thousand unionists went to the debate in Warsaw.
Gazeta Wyborcza

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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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Lower Open Pension Funds

Insurance Gains

The money that we have to pay to the Open Pension Funds (OFE) will be reduced. Currently, this amounts to 7%; however, MPs are working on a new act which stipulates a 50% reduction in this commission. The changes are supported by MPs from the government coalition of Civic Platform and the Polish Peasants Party (PO and PSL, respectively), as well as the largest opposition party Law and Justice  (PiS). Yesterday, the Family and Social Policy Committee and the Public Finance Committee recommended that the government proposals should be adopted without any alterations. If work on the act proceeds at such pace, then, theoretically, the new regulations will become legal between August and September.

“It is highly probable that the act will come into force before the summer recess in the Polish Parliament,” says  Joanna Kluzik-Rostkowska, the former Minister of Labour and Social Policy. At present, the Open Pension Funds collect from a maximum of 7%, e.g. Generali and Polsat, to a minimum of 3.9%, e.g. Allianz, from the pension contributions that they receive from our salaries by means of the Social Insurance Institution (ZUS). These are not small amounts because, for example, a person who earns approximately PLN 3,000 net per month pays over PLN 300 to the Open Pension Funds. From this amount PLN 21 goes to the pockets of people who manage a given fund; therefore, in reality only around PLN 280 works towards our future pension. Pursuant to the bill, the Open Pension Funds will be allowed to collect no more than 3.5% from the contributions, which in the example given above means PLN 10.5 instead of PLN 21. According to calculations by Finamo which offers financial counselling, after the reduction of the commission, a person who earns PLN 3,000 net will annually pay PLN 130 less to the Open Pension Funds than now. The more somebody earns, the greater benefits he or she may reap from the new regulations.
Dziennik

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Work for PLN 500

Job Search

“Polish people threatened by rising unemployment are pouncing on low-paid jobs,” says Gazeta Wyborcza. Offices, shops, cleaning and security guard companies are besieged by potential employees. The newspaper also says that Municipal Offices are recruiting for interns sometimes offering them no more than PLN 500 net. In the Municipal Office in Nowa Sól there were six applicants for one job. Furthermore, in one of the branches of the Social Insurance Agency (ZUS) there were 178 candidates for one job. Also supermarkets do not have any difficulty finding employees, and cleaning and security guard companies are besieged by numerous applicants. At the end of the previous year, the situation looked entirely different because Polish citizens were unwilling to work for PLN 1000 net per month. This was due to the fact that there were much better offers on the market and salaries were rising at a record-breaking rate, last year by 11% on average. Currently, however, a job for PLN 1000 per month is in demand. “Trade unions wonder whether employers are not trying to use the difficult situation on the labour market in order to unduly reduce salaries,” writes Gazeta Wyborcza.
Wirtualna Polska

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Retirement: who should be first?

 

“It is unacceptable that Polish women should receive subsistence pensions,” says Civic Platform. “It is public knowledge that they receive lower wages and take maternity leave and thus are deprived of the possibility of earning fair pensions.” Therefore, the government plans to reduce men’s pensions and increase women’s pensions in return. Prime Minister Donald Tusk is now faced with one of the most challenging tasks in his political career, namely completing the pension reform. The fact that the reform was originally undertaken by Law and Justice, and resulted in an abysmal fiasco, adds to the gravity of the problem. At the moment the social insurance institution (ZUS) is the only institution paying out pensions, however, in 13 months’ time Poles will also be receiving pensions from the retirement funds which are governed by their own peculiar rules. In practice it means that the pension rates are directly proportional to the money collected. Already 13.2 million Polish people have joined these retirement funds and the money collected since 1999 amounts to PLN 140 billion. Women will lose most in the face of the new rules for the calculation of pensions due to the fact that they retire 5 years earlier, take maternity leave (during which time their retirement fund premium is lower) and usually obtain lower wages. All things considered, their pensions may possibly only amount to 60% of men’s pensions. Civic Platform claims to have found a solution. The idea is to calculate the average lifespan, which is a crucial factor in pension planning, and establish the rate of pensions accordingly. Statistically, women live 5 years longer than men. “If it had not been for our idea, women would fall victims to this pension scheme. We mustn’t consent to subsistence pensions for women,” says Zbigniew Chlebowski, head of the parliamentary club of Civic Platform. Marek Góra, one of the fathers of the pension reform, is of the same opinion. He says, “we mustn’t make pension rates dependent on gender.” According to Mr Góra, everybody should be treated equally since there are numerous factors decisive in lifespan aside from gender, such as education, general well-being or a person’s genes. Since it is impossible to take all of these into account, we shall not base decisions solely on one of them. Przemysław Gosiewski, former deputy Prime Minister of the previous government, did not consent to the aforementioned idea. In his opinion the losses incurred by men are out of proportion to what women gain. Teresa Guzel, director of the ZUS department, is of the opinion that politicians are now faced with a difficult problem. They are in quandary about whether or not to sympathize with women and consequently increase their pensions. Guzel claims that the entire problem would be non-existent if men and women retired at the same age.
Gazeta Wyborcza

Ombudsman Questions Pensions

The Commissioner for Civil Rights Protection argues that both men and women should retire at the same age. The ombudsman is going to lodge an appeal to the Constitutional Tribunal against the regulations governing the pension law. The formal application is almost complete, waiting to be officially submitted. Jan Kochanowski, the Commissioner for Civil Rights Protection, will take the final decision on Monday or Wednesday of next week after he consults experts about the issue. Presently, retirement age is 65 for men and 60 for women. Kochanowski is of the opinion that women should retire at the age of 65, the same as men. He is expecting that public opinion will react positively, since, in his view, there are no rational arguments justifing the present age gap. Many countries have already introduced uniform pension age, or is planning to do so.  According to the ombudsman all women would benefit from the decision as they could decide themselves whether to retire earlier or not. Women would be legally entitled to choose, not depriving those who want to work longer of such a possibility. The present earlier retirement age entails a shorter time of being covered by social security. This leads to lower pensions received by women, which are 34% lower than pensions received by men.
Rzeczpospolita