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Rethinking the Welfare State

The Political Economy of Pension Reform

Edited by Martin Rein and Winfried Schmähl

In this book a distinguished group of contributors discuss the changing political economy of pension reform. They focus on those countries which have launched a significant reframing of their pension system. Each chapter provides a detailed review of recent pension reforms and offers institutional evidence of the extent to which these reforms suggest a redirection of the welfare state towards a more public-private mix of policies. The countries were selected to represent the variety of new directions which mature industrial countries as well as countries in transition have taken.
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Chapter 12: Public and Private Mix in the Polish Pension System

Agnieszka Chłoń-Domińczak


- ´-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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