Thursday, January 20, 2011

Yet More Bad News for Polish Pensions

Poland's pension system has it rough these days. First Prime Minister Donald Tusk announced his "liberal" government would partially dismantle the reformed pension system by cutting the amount of money each Pole transfers to private, but obligatory pension funds to 2.3 percent of a salary from 7.3 percent. Of course, the move isn't designed to support the budget, which has to spend billions to pay those still in the communist-era "pay as you go" system. No, he did it, very obviously, in order to secure higher pensions in the future, as some officials attest. Well, who cares if people will learn those can't be afforded in 20 years; elections are coming this autumn.

The shift has touched off an uproar on the part of the pension funds themselves, unsurprisingly, and even led to them setting up an online petition to halt the changes under a "defend your pension" slogan. But given a recent poll showed 54 percent of Poles did not understand the changes proposed by the government and 45 percent only had "more or less of an idea" I would not get my hopes up if I were the pension funds.

But bad news just keeps piling up for future pensions. Poland has begun taking an administrative turn towards a healthier society. It recently imposed a strict smoking ban that practically eliminates smoking from most bars, clubs and restaurants.

The final piece of bad news relates to vodka drinking, that is, increasingly lack of. This report notes that the once national sport of vodka drinking for Poles and other Slavs is on the downhill. By 2015 consumption is expected to drop 8 percent or 275 million litres. Beer, a not so long ago favourite substitute, is not expected to gain either. That is great news for longevity, if what my doctor tells me is true (though I don't totally trust him -- there's no way pączki are bad).

Given that pensions in Poland for the average Jan Kowalski rest on accumulated capital over working years and life expectancy at the moment of retiring (and Poles retire at among the youngest age in Europe, before 60 on average) any factor that boosts longevity is, er, bad news.

The only hope now for the level of our future pensions now lies in the ever underperforming public health care sector and the poor quality of Polish roads, which killed "only" 3,902 people last year.

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