Polish c.bank governor Belka supports pension changes
WARSAW Nov 5 (Reuters) - Poland's looming pension changes are justified and need to be implemented despite the fact that parts of the overhaul raise "technical" concerns, central bank governor Marek Belka said on Tuesday.
The plans to return large parts of previously privately run pension assets to the state has prompted protests from within the industry and unnerved some on Polish financial markets since their announcement earlier this year.
Government bodies including the banking watchdog, state solicitors' office and the government's legislation centre have also now expressed concern that it could be unconstitutional.
Belka reiterated that the current system, which combines private and public mechanisms of saving for one's future pension, added an unnecessary burden onto state finances and yet failed to benefit future pensioners.
"We definitely support the government's solutions," Belka was quoted as saying by state news agency PAP.
"Changes to the pension funds system are necessary. Without them the budget policy would need to be radically tightened over the next several years - by 2.8 percent of GDP in 2014. That is unimaginable - how negative this would be for the economy."
The bill pushing through the changes is expected to pass in parliament but an increasingly divided public debate on the reform may lead to some softening of the legislation before President Bronislaw Komorowski is asked to sign it into law.
Poles pay 19.52 percent of their gross salaries into the pension system to finance current pensioners and their own future pension benefits.
A small portion of this is sent to private funds that invest it on capital markets, making them key investors on the Warsaw bourse with 292 billion zlotys ($94.4 billion) in assets under management.
Warsaw now plans to transfer bonds held by these funds onto the state's balance sheets - a move that would effectively reduce the country's debt relative to gross domestic product and give the government scope to borrow and spend more to revive the ailing economy.
The planned overhaul has also unnerved high-profile public figures, such as ex-premier Jerzy Buzek or the co-author of Poland's transition from a centrally planned to a market economy two decades ago - Leszek Balcerowicz.
"We did formulate a range of questions that are technical in character, however," Belka said. "I think some of them will be addressed either now or during future work on the reform." ($1 = 3.0938 Polish zlotys) (Reporting by Karolina Slowikowska; editing by Patrick Graham)
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