Warsaw, 18th March 2019
POSITION OF THE UNION OF ENTREPRENEURS AND EMPLOYERS ON THE PROJECT DATED 5th MARCH 2019 OF A ONE-OFF MONETARY BENEFIT FOR RETIREES AND PENSIONERS IN 2019
During the convention that took place at the end of February, the ruling party presented several new programme postulates, which then started to be collectively called “Kaczyński’s five”. These proposals boil down to transfers addressed to precisely selected social groups, of a social nature attractive from the point of view of the upcoming elections. These groups are: families with children, young people, people living outside larger urban centres, the elderly. We view the package of proposals presented during that convention as definitely negative. In our opinion, it does not contain any postulates constituting a stimulus for development. We see it rather as an attempt at a simple political bribery, undertaken in the tumultuous period before two election campaigns: to the European Parliament and the Polish parliament.
The aims of the presented project is to carry out the promise addressed to the last of the above-mentioned groups and that is the payment in 2019 of a one-off benefit for pensioners in the amount of PLN 1,100 gross. As it appears from the justification, the cost of this proposal will amount to almost PLN 11 billion. It is impossible to refer to the content of the project without evaluating the promise itself, because the basic function of the act is to simply be implemented. Thus, the Union of Entrepreneurs and Employers recognises the so-called “thirteenth retirement pension” as a harmful, expensive, and immoral attempt to persuade senior voters to support the ruling party during the election. This one-off benefit will not contribute to solving the structural problems stifling the Polish pension system at all that related to its pay-as-you-go nature and the terrible demographic situation.
Pursuant to the afore-mentioned factors, the Polish pension system is currently in the state of a real crisis, additionally deepened by imprudent political decisions. Lowering the retirement age led to the necessity to pay benefits to 300,000 new, additional retirees in 2018, which translated to a further cost of about PLN 7 billion. We must stress that this reform, significantly increasing the burden on the pension system, was carried out under the conditions of full awareness what the forecasts of the Social Insurance Fund had been. They show that even assuming a higher retirement age, in 2060, the group of people of working age would have shrunk from just over 63% to less than 54% of the population, whereas the percentage of people receiving benefits was expected to have increased from 18.5% up to over 30%. In conditions of lower retirement age, the situation is to be even worse – as little as 48.4% of the population in the working-age group is to pay contributions to a group of 35.8%. The result thereof? A deficit of the pension fund exceeding PLN 80 billion.
We see certain analogies between the proposal presented in the discussed project and the re-reduction of the retirement age. Both actions are of a populist nature and are irresponsible attempts to profit politically in the short-term from the satisfaction of the “recipient group” – be it the possibility of earlier benefits or a one-off payment in cash – regardless of both long- and short-term economic consequences. We believe that proposals such as this one-off payment of an additional benefit are almost outrageous in a situation where no concept of systemic pension reform has been announced that would address the challenges and risks that are publicly known.
The very content of the legal act sent for consultation is a source considerable astonishment. It is not a standard solution when justifying the need to introduce a given law to refer already in the first sentences to the party convention (sic!) and to the need to fulfil the promises that were made during it. The content of the following sentences rather matches pre-election media messages than argumentation to a draft normative act. A number of measures undertaken by the government were named whose aim was to improve the financial situation of the poorest care beneficiaries, citing, among others, the increase of the lowest pension or higher benefit indexation. Not a single sentence can be found in the justification containing any argument whatsoever in favour of the project being approved in the form presented. No data was provided indicating the need to pay out such a benefit. On the contrary, for the greater part of the “substantive” justification, the legislator recited government measures whose consequence were pension increases. At the end, it was concluded that the payment of a one-off benefit “will meet the expectations of the majority of pensioners”. Admittedly, it is a shockingly concise justification for the necessity of introducing a solution costing the budget as much as PLN 11 billion. In practice, therefore, the social partners have no way of addressing any argument for passing the bill, because no such argument has been made – neither in the project’s justification nor in its impact assessment.
The “thirteenth retirement pension” will not contribute to improving the financial situation of pensioners. A one-time benefit will be an attractive “gift” for voters, but in a time perspective longer than one month, it will not affect their situation in any way. The presented project, aimed solely at the fulfilment of a one-time financial pre-election promise, seems to be completely irresponsible. In connection with the above, we evaluate it negatively, once again calling for proper debate about the future of the pension system and its final shape.