Slovakia has managed to muster a constitutional majority passing a bill that would have a detrimental effect on the stability of the Slovak public finances in the long run. The measure is the constitutional limit of the retirement age now set at 64 for men and 63 for women (with two kids).
Lowering the retirement age is contrary to the plan of Mateusz Morawiecki, Minister of Economy, which rightly linked in one of the documents the decline in working-age population with a slowdown in economic growth. It will put a drag on catching up with the Western Europe’s living standards.
Forced solidarity creates a contradiction – the working class taking care of themselves seems to oppose the interests of the pensioners, while helping the pensioners more would result in a greater burden on the workers. The pursuit of solidarity leads to a conflict of interests.
Unfortunately, in 2016, the populist Law and Justice government decided to reverse the reform – the pseudo-economic rationale was the infamous lump of labor fallacy. They wrongly claimed that lowering the retirement age would be a perfect tool to fight youth unemployment – retiring seniors would (in their opinion) leave their jobs for young Poles.
The principle of free movement of capital, goods, people and services comprises the main pillar of the European Economic Area. Excessive regulation, however, prevents EU Member States from reaching its full potential. Such untapped potential is particularly evident in the free movement of financial services.
Ageing of the Polish society means that every year more and more people will reach the retirement age. At the same time, the number of people of working age will be decreasing. In this context, it appears that the pension system reform implemented in 1999 introduced a not very fortunate principle to the Polish pension system.
The debate on the potential reform of the Polish pension system has brought to light many fallacies about capital pillar of the system. Let’s clear some of them up.
Demographic change is not a tsunami. It proceeds gradually but steadily, just as the ocean’s tide. It can be foreseen if we simply choose to open our eyes and look at facts.
The proponents of the limited access to savings caught savers into a trap. Take it or leave it. Fortunately, also thanks to INESS, which also commented on the law in Parliament, there is a sort of exit option for savers, who don’t like the offered annuities but need some money from their savings. They can keep their savings account and withdraw at least annual yield.
Just before Christmas, it became clear that the prime minister and the two major labor unions had signed a memorandum which not only prevents raising the retirement age, but also fundamentally changes the pension model of Bulgaria. Noteworthy, the main agents behind this decision were the same people who in 2010 decided to steal 100 million leva from professional pension funds, thus breaking the Constitution.