Poland expects new pension scheme to boost its bourse

WARSAW, Aug 29 (Reuters) - Poland’s stock exchange may get a capital boost of at least 12 billion zlotys ($3.5 billion) a year from a new pension scheme approved by the government this week, state-run investment vehicle PFR said on Wednesday.

The Polish government adopted on Tuesday the Employees Capital Pension Scheme, which will allow Poles to contribute more to their pensions.

Under the plan, employees will be able to voluntarily pay 2-4 percent of their gross salary on top of their obligatory monthly payments, while the employer will pay up to 4 percent of the worker’s salary into the pension scheme.

The scheme is expected to come into effect in January 2019 and the contributions will be managed by private asset management firms.

“The implementation of the scheme (PPK) will give a strong stimulus to the development of the Warsaw Stock Exchange as a real financial centre in our region of Europe,” said PFR in a statement.

“It is assumed that after inclusion of all statutory groups of employees in the scheme, the total impact of the savings accumulated in the PPK on the capital market should amount to at least 12 billion zlotys per year,” it added.

The Warsaw bourse, the biggest in central and eastern Europe, competes mostly with the Vienna stock exchange.

The Polish bourse has been trying to recover following a massive retreat of investors after a pension funds reform in 2013.

Back then, the previous government took control of private pension funds’ bond holdings to offset public debt, which resulted in a significant outflow of capital from the bourse.

Some policies of the ruling Law and Justice party (PiS), which came to power in 2015, added to investors’ nervousness.

The stock exchange blue chip index WIG20 has fallen 3 percent since the start of the year, after a 26 percent gain in 2017. But turnover on the bourse has been falling, and so has the number of new listings.

$1 = 3.6682 zlotys Reporting by Agnieszka Barteczko; Editing by Mark Potter