President sends pension overhaul to Constitutional Tribunal
February 3, 2014
Polish President Bronislaw Komorowski has sent the private pension funds (OFEs) reform act to the Constitutional Tribunal, putting into effect his declaration from late December, when the reform was signed into law, the Presidential Chancellery said on its website.
The long-debated legislation will force (OFEs) to transfer about half of their assets into a state vehicle in an effort to cut public debt.
"Works on the bill had shown divergence of opinions on legal doctrine, which, in such an important area for the citizens, needs to be unequivocally determined by the Constitutional Tribunal," the statement read.
The president motions for a review of select articles of the act: the issue of preventing OFE from investing in securities issued or backed by the Treasury, the obligation to invest a bigger portion of assets into shares while doing away with a required minimal rate of return, the advertising ban and fines for infringing that 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.
In late December President Komorowski decided to sign the bill and only then send it for review as he took into account the security of public finance, presidential minister Irena Woycicka said then.
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.