The Political Economy of Pension Reform
Edited by Martin Rein and Winfried Schmähl
Chapter 12: Public and Private Mix in the Polish Pension System
- ´-Domin Agnieszka Chlon ´czak INTRODUCTION Poland introduced its pension reform in 1999, following many months of discussion and negotiations. The new pension system in Poland is based on a multi-pillar principle, with two mandatory pillars – pay-as-you-go and funded – and a third, voluntary, one. This structure follows the model recommended by the World Bank in the ‘Averting the Old-Age Crisis’ report from 1994.1 Mandatory elements of a multi-pillar scheme are usually built around two dichotomies: a public pay-as-you-go system, usually based on the deﬁned beneﬁt principle, and a private funded system, based on the deﬁned contribution principle. However, if we investigate the exact nature of the mandatory pension system, there is more scope for a mixture of private and public components, within both pay-as-you-go and funded parts. The aim of this chapter is to present a mix of private and public elements in the reformed pension system in Poland. In the ﬁrst section of the chapter, a description of the reformed pension system in Poland is presented. The second section describes the process of changes in the pension scheme, while the third presents an analysis of the forces at play that contribute to the continuing evolution of the mix. A fourth section concludes. THE PENSION SYSTEM IN POLAND – AFTER REFORM Experts – demographers and economists – from the very beginning of transition, stressed the need for the reform of the pension system. The aging process in the Polish population was accelerating and the share of older people (above 65)...
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