Polish lawmakers approves pension system overhaul to cancel government bonds
Lawmakers in Poland voted to approve the changes of the country's pension system that would takeover and cancel the government bonds that are held by privately-run pension funds. The move would enable the cabinet to reduce the debt of the state and give it the flexibility for public spending, a report by Bloomberg said.
The lawmakers of the Sejm or the Polish Lower House of Parliament approved the changes in a 232-216 vote with one abstention. The law still needs to get the approval of the Senate and would have to be signed by President Bronislaw Komorowski before it can be implemented, said the report. Komorowski may refer the draft law to the country's Constitutional Tribunal for legal review, Bloomberg reported.
The law would give Poland the power to take over 51.5% of assets that are being held by 14 pension funds starting February 3 next year. Bloomberg reported that some of the owners of the firms that manage the funds are Aegon, Aviva, Allianz, Assicurazioni Generali, AXA SA, MetLife Inc, ING Groep and Nordea Bank.
Citing estimates from the Finance Ministry, Bloomberg reported that the legislation would lower the government's public debt by 9.2 percentage points of economic output. It would also ban funds from investing in government debt beginning in 2016.
Before the vote was held, Labor Minister Wladyslaw Kosiniak-Kamysz told the members of the 460-seat Parliament, "We're proposing this measure out of a sense of responsibility for current and future retirees, public finances and financial markets."
The changes, which are sponsored by the government on the three-tier pension system of Poland, has been controversial. One of the concerns about the cancellation was that it would amount to uncompensated expropriation, the report suggested. Lawmakers opposed to the changes said the Parliament were only given three days to talk about the draft law. They also gave 1,017 amendments to the legislation. The report also cited the survey done by research firm CBOS conducted on the issue which revealed that 53% of Polish voters were against the proposal.