WARSAW Aug 1 Just 10 percent of Polish workers had opted by the deadline on Thursday to continue saving for retirement partly through private pension funds, social security unit ZUS said on Friday.
A law passed last year and aimed at keeping Poland's public debt within the government's own limits gave 16.7 million people the choice of staying with the pension funds, known as OFEs, or having all their fees diverted to the state-run scheme.
Future pensioners had to inform ZUS that they wanted to stay with their OFE by Thursday or be switched by default. The social security unit said 1.58 million people had done so.
"The number will be higher, as only this morning we registered another 143,000 letters," Magdalena Mazur-Wolak, a client specialist at ZUS, said. "I think that we'll be able to give final data in the second half of August."
Introduced 15 years ago to complement the ZUS scheme, which continued to collect most Polish employees' pension savings, OFEs invest their cash in government bonds and local stocks.
After amassing around 300 billion zlotys ($96 billion) for long-term investment they became key market players, especially for the Warsaw bourse, the biggest in the European Union's emerging east, whose expansion they helped to fuel.
ZUS does not invest for its future pensioners.
But since funds held by OFEs are state-guaranteed, they also add to Poland's public debt, which last year came close to breaching limits set out in the country's constitution.
Facing an economic downturn, the government made OFEs transfer all the treasury bonds they held - around half of their assets - to ZUS last year and passed the law requiring pension savers to say if they wanted to keep investing in the funds.
The finance ministry has said the change was necessary to keep the Poland's public finances on a stable footing. It helped cut Poland's public debt by about 7 percent of gross domestic product and will make it easier to keep the budget deficit below the EU's 3 percent of GDP ceiling in 2015.
But critics say the changes amount to nationalisation and warn they will cap stock market growth, hurting the economy's long-term prospects. The central bank warned last year that related changes might also hurt the corporate debt market.
Share trade volume on the Warsaw stock exchange fell by over a fifth in the second quarter from the previous three months, to below 47 billion zlotys.
The bourse's revenue fell by 20 percent quarter on quarter, to 69.3 million zlotys, while the benchmark WIG index is down 2.4 percent so far this year, compared to a 6.3 percent increase in MSCI's emerging markets index.
ZUS estimates that annual payments to OFEs will be around 1.8 billion zlotys from now on - less than a third of what they received in the first half of 2014 alone.
"From the point of view of the capital market this is a structural change on the demand side, and for a few months also on the supply side," said Slawomir Kozlarek of Warsaw-based stockbroker DM BZ WBK.
"I'm talking about changes in investment strategies. OFEs will head for liquidity, so they'll have to do something with the illiquid shares they now own." ($1 = 3.1297 Polish zlotys) (Reporting by Anna Koper and Adrian Krajewski; Editing by Catherine Evans)