WARSAW, Aug 18 (Reuters) - More than 2.56 million of Polish workers opted to continue saving for retirement partly through private pension funds, social security unit ZUS said on Monday, giving an indication of the cash funds will have to invest in the stock exchange.
A law passed last year 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.
Critics say the changes amount to nationalisation and warned 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.
Workers had to inform ZUS that they wanted to stay in their OFE by the end of July, with those who failed to do so moved by default. The social security unit said on Monday that around 15 percent of them had chosen OFEs.
A ZUS spokesman declined to say whether the number was in line with the institution’s expectations. The Ministry of Finance said it would decide whether to comment on the final data later.
The number of people who decided to stay with their private pension funds may be an indicator of how much money funds will be investing on the Warsaw bourse, already hit by the pension system changes.
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.
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 reaching the 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 a 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. (1 US dollar = 3.1269 Polish zloty) (Reporting by Marcin Goclowski; Editing by Alison Williams)