President signs pension overhaul, will send bill to Constitutional Tribunal
December 30, 2013
Polish President Bronislaw Komorowski
President Bronislaw Komorowski signed the long-debated legislation that will force Polish private pension funds (OFEs) to transfer about half of their assets into a state vehicle to try to cut public debt, a presidential aide said on Friday.
However, as opinions on the law are “contradictory and even mutually exclusive”, the president decided to send the bill to the Constitutional Tribunal for review, Presidential Minister Krzysztof Laszkiewicz said at press conference in Warsaw.
"Before signing the bill the president looked into various arguments. On the one hand, he had in mind a balanced budget which is a constitutional value, and on the other hand, constitutional arguments raised so often by lawyers," Laszkiewicz said. "The discussions showed that the opinions are very split and mutually exclusive, that is why the President decided that in this situation the bill should be sent to the Constitutional Tribunal."
The president is concerned about several elements of the bill, including the prohibition to invest into Treasury bonds and increasing the share of assets invested into equity, Laszkiewicz said.
According to the statement published on presidential website, the President will also motion for verifying a ban for OFE to advertise and fines for infringing this ban.
The regulations included in the bill may raise doubts as to potential infringing the following constitutional provisions: (i) trust in the state and the legislation created by the state; (ii) freedom of business activity; (iii) protection of interests regarding existing activities; (iv) freedom of obtaining and disseminating information, the statement read.
Poland's parliament earlier in December approved the law drafted by the cabinet to cut public debt to some 50% of gross domestic product from some 58%. To achieve this the government will take over and cancel 51.5% of assets, mostly government bonds, held by 13 OFEs Feb. 3. 2014 The funds are part of Poland's mandatory pension scheme and have, since 1999, received a portion of employees' taxes and invested them in stocks and bonds.
OFEs will also be banned from investing in Treasuries and Treasury-guaranteed fixed income securities, but will be freer to invest in equities and municipal and corporate bonds.
The transfer of OFE funds to national social insurer ZUS over a ten-year period ahead of a person's retirement is also planned.
During the legislative consultation process, concerns about the bill's constitutionality were raised by government agencies and a slew of private lobby groups as well.
Komorowski had earlier criticized the bill for increasing risks for future pensioners but also said that he would most likely not block the law, saying that the legislation was necessary to preserve Poland’s fiscal stability.