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Poland

8 January 2018

Poland: the restoration of a lower statutory pension age

Poland’s statutory pension age has been restored. The retirement age has been brought back to 65 years of age, for men and 60 years, of age, for women. The previous government had introduced a phased increase of the retirement age to 67 years by 2020 for men and by 2040 for women. The key question however is, whether pensioners have sufficient income to use the created retirement opportunities. Moreover, in the long term increased labour market participation is needed to keep the pension system sustainable.

The current government launched a draft bill in the winter of 2015 to reverse retirement reforms carried out in 2012 by the former Civic Platform (PO) government. The bill would bring the retirement age back to 65 years of age for men and 60 for women, down from the projected and increased retirement age to 67 for both sexes. The former government had argued that raising the retirement age was inescapable as the country would be facing a demographic crisis, with the number of pensioners set to rise in proportion to people of working age. The trade unions have always campaigned against the increase of the retirement age as decided in 2012. The proposition to push the age of retirement to 67 years for every worker in order to overcome the social budget crisis evoked a huge social debate. Trade union Solidarność proposed in 2012 a national referendum on the pensions; and together with the All-Poland Alliance of Trade Unions (OPZZ) protests were organised.

 

In the meantime, the restoring of the lower retirement age became effective from the 1st of October 2017, women will have the possibility to retire at 60, and men at 65. However, the lower statutory pension age has not been welcomed by everyone. Critics fear that the measure will result in an increase in the number of pensioners in debt.

 

The OECD has published a report with graphs that show the impact of the restoration of the statutory retirement age of 65 years for men and 60 for women. Retiring at the reduced statutory pensionable age lowers the benefits. The pension is determined by lifetime contributions and remaining life expectancy at the time of retirement. Retiring earlier lengthens the expected remaining life and reduces pensions by around 6% per year. Lower pensions will result in a higher number of people, especially women, relying on minimum pensions, which in turn weakens the financial balance of the public pension scheme. Contrary to the regular earnings-related pensions, minimum pensions are not fully covered by past contributions and require additional financing sources. Population ageing is accelerating and the OECD expects that, as a result, the country’s old-age dependency ratio will move from below to substantially above the OECD average. Increasing labour market participation will be a key issue to keep the pension system sustainable. 

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