Thursday, 28 March 2013

Private Pensions Will Not Be Provided For Whole Retirement

Elsewhere I have written about the compulsory private pension system in Poland and at how it fails to provide stable pensions, favours the financial markets and sucks resources out of the public finances. I have also looked at how the government partly reformed this system and reduced the amount of money going from the state social insurance system to the private pension schemes. 
(For example see: here, here and here)

This week new information came to light that the Polish Pension Funds Chamber is proposing that these private pensions are not paid throughout the whole period of an individual’s retirement. Instead pensioners will receive so-called ‘programmed payments’ that will be calculated according to average life expectancy. Therefore, if someone retires at 67, then s/he can expect to receive payments for  around 16 years. The most elderly in society would therefore lose their pensions at a time in their lives when they are weakest and the most vulnerable. 

The Finance Minister has responded by saying he is shocked and disturbed by this news (although he does not explain how politicians allowed such a system to exist in the first place) as pensions are a benefit that people should receive till the end of their lives. He has said that the government will be reviewing the pension system. 

It is now imperative that the compulsory private pension scheme is scrapped and that a fully funded state pay-as-you-go system that guarantees pensions to all is reintroduced.  

2 comments:

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  2. So it's not ok to lump sum the pension? My grandpa is trying to lumpsum his pension and invest it on a condo for sale in Singapore. I talked to the guys of http://www.propertyforsalerental.com/ and currently asking for their advice regarding this matter.

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Go for it - but if its abusive then it gets blocked