WARSAW (Reuters) - The Polish finance ministry has proposed allowing Poles to contribute more to their pensions, the future operator of the system said, a move that could help offset a shortfall in payments caused by a decision not to raise the retirement age.
Under the plan, which the operator said could generate up to 20 billion zloty ($5.5 billion) in additional savings, Poles would be able to voluntarily pay 2-4 percent of their gross salary on top of the obligatory monthly payments already made.
The government of the Law and Justice (PiS) party recently scrapped its predecessor’s plans to raise the retirement age to 67. This means there will not be an automatic increase in the amount of money Poles will have paid into their pension pot.
The new plan, announced late on Tuesday, envisages employers paying up to 4 percent of a worker’s salary into the pension scheme. The state would also grant every future pensioner who joins the scheme 240 zloty a year plus 250 zloty one-off greeting bonus.
“We expect some 8 million Poles may join the scheme, which would translate into 20 billion zloty of additional savings a year,” Pawel Borys, head of the state-run development fund PFR which is to coordinate the scheme, told Reuters.
The scheme is expected to come into effect in January 2019 and the contributions will be managed by private asset management firms, Borys said.
“We can estimate that around one third of the proceedings will be invested on the Warsaw stock exchange, which will give it a boost, and another third may be invested in Polish treasury bonds,” he added.
On Tuesday the Warsaw bourse hit its highest level since the end of 2013 as investors rushed to buy banking stocks, encouraged by the sector’s rising profits in the third quarter and expected interest rate rises in 2018.
($1 = 3.6557 zlotys)
Reporting by Marcin Goclowski; Editing by Gareth Jones