Poland’s Pension Asset Shift Upheld By Top Court

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Pension360 reported this week on the imminent court decision coming on Poland’s 2014 pension overhaul, which shifted the assets of private pension plans to the state.

On Wednesday, the country’s high court weighed in, and upheld the legality of the reform.

From Reuters:

The decision means that Poland will not face a significant rise in public debt, as some had feared, especially lawmakers in the Law and Justice (PiS) party which won a parliamentary election last month and is now forming a new government.

The pension reforms introduced by the previous centre-right government in 2014 shifted assets from the privately owned pension funds to the state balance sheet. The move reduced Polish public debt by about 8 percent of gross domestic product GDP, giving Warsaw greater scope to borrow and spend.

The transfer moved 153 billion zlotys ($39.34 billion) of bonds from the funds to the state-run Social Security Office (ZUS), effectively halving the value of assets managed by the private funds.

[…]

The Tribunal confirmed on Wednesday that most aspects of the reform were legal, including the asset transfer to ZUS and a ban on bond investments imposed on the private pension funds.

The reforms were advantageous for the Polish government from a public debt standpoint; but the shift had repercussions – including the Warsaw Stock Exchange’s main index losing 10 percent of its value since the reforms.

 

Photo by Joe Gratz via Flickr CC License

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