Seminar «Thinking About Pension Systems for the 21st Century: A Few Remarks Based on the Polish Example»

Pensions (not only) strongly depend on demography. Ideas behind pension systems originate in the late19th century. The end of the demographic transition (late 20th century) has changed the situation. Traditional approach is not effective any more. That requires not only parametric adjustments but fundamental rethinking of basic concepts. Pension systems in Italy, Latvia, Poland and Sweden are examples of implementation of new ideas.

The paper addresses the Polish case. However, this is a conceptual paper not dealing with particular details of any system. The paper focuses on differences in perception of arrangements and their real meaning, and consequences of that. The key issue analysed is the economic meaning of participation in a pension scheme. In particular quasi-tax vs. quasi-saving financed contributions to schemes are analysed in the context of both universal public pension schemes (UPPS) and voluntary-additional private ones. That leads to problems of accounting regimes for long-term liabilities in particular with respect to public finance and private finance.

Behavioural context matters for pensions that have a counterintuitive nature. People commonly confuse micro (individual) and macro (entire population) perspective as well as longer-short (a couple of years) and pension-long (many decades) periods.

The current old-age (OA) pension system in Poland entirely replaced the previous one. Moreover, the current one has very little in common with the previous one. Public perception is a hostage of thinking along lines of the previous system. In particular the current system ex-ante says the truth on the expected relative level of future payouts. Not being dependent on a type of pension system that leads to suboptimal or even irrational behaviour of the people and political pressure on politicians to do “something”. The system is protected by its rules that are based on automatic adjustment. As such they lead to the best possible outcome for participants both in their activity and post retirement phases of life.