Regulations will allow the soon-to-be-launched PPK pension funds to be “nine times more active” on the stock exchange, a major benefit to future retired people, Warsaw Stock Exchange (WSE) Chairman Marek Dietl tells PolandIN.
“This new system is less regulated,” Mr Dietl said, referring to the new contributory pension scheme, which in July is replacing the Open Pension Fund (OFE) second tier of the retirement saving system set up in 1999 but partially dismantled in 2014 by the former government.
According to the exchange chief, “in the old system, the portfolio turnover was two percent, so two percent of their holdings were sold in the stock exchange every month.” By contrast, he explained that “the same percentage for the new funds is 18 percent – nine times more. So they will trade more actively as they seek alpha – the returns – more actively. And this is the major benefit for future pensioners, but also for the stock exchange.”
The key change to the pension system will be to the second tier, which will consist of an opt-out contribution by employees of 2.0-4.0 percent, matched by an employer contribution, and topped up by the state. The amassed funds will be privately managed. The first tier of the system will remain as it is – a contribution to the social security office (ZUS), while the third tier will be a tax-incentivised investment savings scheme (IKE).
Click here to watch the full interview with Warsaw Stock Exchange (WSE) Chairman Marek Dietl.