European Trade Union Institute, ETUI.

Accueil > ReformsWatch > Poland > Pension reforms in Poland - background summary

Pension reforms in Poland - background summary

An overview of pension reforms in Poland since 1999

Characteristics of the Polish pension system

  • The major pension system reform of 1999 replaced the former system based exclusively on the ‘intergenerational solidarity principle’ with a mixed system combining ‘defined benefit’ and ‘defined contribution’ arrangements. The new three-pillar system was principally defined by two mandatory pillars: ‘mandatory public’ was provided by the Social Security Institution (Zakład Ubezpieczeń Społecznych, ZUS), and ‘mandatory private’ by the Open Pension Funds (Otwarte Fundusze Emerytalne, OFE). While older citizens could choose whether to remain in ZUS or to share their contribution between the two, those born in or after 1968 were obligated to do the latter and join the two-pillar system. Finally, the reform created the third pillar (‘voluntary private’), to be effectuated in relation to company pension plans. The general system currently provides benefits for 81% of pension recipients.
  • Besides the general pension system, there is a separate system for farmers. This system relies primarily on transfers from the state budget, which constitute over 90% of its revenue. This system currently provides benefits for 15% of recipients.
  • Finally, there are special public pension schemes for uniformed services (armed forces, police, fire services, Border Guard, penitentiary services, special services), as well as for judges and public prosecutors. This system currently provides benefits for 4% of recipients.

Further pension system reforms

  • Until 2013, the retirement age was defined separately for men and women at 65 and 60 years of age respectively. In 2013, it was raised to 67 for both sexes, despite strong resistance from trade unions.
  • Following his presidential election victory in June 2015, Andrzej Duda submitted draft legislation restoring the former retirement ages (60 years for women and 65 years for men). The draft is currently (April 2016) subject to parliamentary debate. As the Law and Justice party (Prawo i Sprawiedliwość, PiS) – of which the president was a member prior to taking office – won the parliamentary elections in October 2015, the reform is likely to be adopted.
  • In 2011, the government enacted a reform that radically reduced contributions to the second pillar (OFE), from 7.3% of gross earnings to 2.3% (which, however, will rise gradually until 2017 to the level of 3.5%).
  • In 2013, a follow-up to the 2011 reform was enacted, introducing further far-reaching amendments to the system. In particular, open pension funds (OFE) were made to transfer 51.5% of their assets and all of their government bonds to ZUS, and they have been forbidden to invest in government bonds in the future. Between 1 April 2014 and 31 July 2014, every person insured in the second pillar funds had to decide whether to keep their contributions there or to transfer all of them to ZUS; contributions remaining in the second pillar will be gradually transferred to ZUS in a process beginning ten years before the person’s retirement.
  • The reforms of 2011 and 2013 resulted not only in an immense transfer of assets from OFE to ZUS (around 153 billion PLN, or roughly €36 billion) but also in a massive drop in the number of citizens insured in the second pillar. Only 2.5 million persons remain in OFE, 18.3% of the 14 million eligible for the second pillar.
Back