The Polish government has finally published the draft bill radically changing the second-pillar pension system.The bill, issued late on 10 October, puts in place essentially all the proposals announced in September, alongside punitive restrictions on advertising by the second-pillar funds (OFEs) and some proposed changes to the third pillar.The bill is now out for a 30-day public consultation.Its publication marks a U-turn from 1999, when the establishment of the mandatory second pillar was seen as a means of providing higher retirement income while eventually reducing the pension and public deficit, to a position where the system has ostensibly done the opposite. The draft bill states that the costs associated with the OFEs had, according to the Finance Ministry, ballooned to PLN279.4bn (€66.7bn) by the end of 2012.This was equivalent to 17.5% of GDP and more than 30% of the country’s public debt.The Finance Ministry has estimated that the changes will in 2014 reduce the public debt by 8.4% of GDP according to national accounting standards and by 9.2% according to EU methodology.As expected, the first pillar Polish Social Insurance Institution (ZUS) will handle the OFE retirement payouts, with the accumulated funds transferred incrementally 10 years before retirement.The controversial investment changes are also in place.All Polish sovereign and state guaranteed bond holdings, including central bank issues, will be transferred from the OFEs on 3 February 2014.The law actually stipulates 51.5% of portfolio value on 3 September 2013 – the day before the government officially announced the changes – so the funds that cannot satisfy this quota with state bonds will have to make up the difference with other non-equity assets such as cash and bank deposits, road and municipal bonds.Earlier, the Polish Chamber of Pension Funds (IGTE), which has disputed the legality of both the transfer of assets to ZUS before retirement and the removal of government securities, sought opinion from the European Commission.Małgorzata Rusewicz, IGTE acting president, told IPE: “We still emphasise that proposed changes raise serious legal doubts.“In accordance with legal regulations valid in Poland, the OFEs have the right to invest the assets of their members until the insured retire.“Therefore, the transfer of assets from the OFE to ZUS, even if it concerns only a part of them, as in the case of bonds, constitutes appropriation of the assets that are the property of the OFE and its members by a public institution without compensation.“The assets accumulated on behalf of the insured will cease to be private property – they will become public property and will be consumed by the state.”In future, the OFEs will be banned from investing in any state securities, not just Polish ones, as well as state-guaranteed loans, deposits and related instruments. As part of what the government has consistently called “real economy” investment, they will be allowed to invest in Polish road and other infrastructure bonds, corporate and municipal issues.As of 4 February 2014, the OFEs will have to invest a minimum 75% in equity, irrespective of their members’ age and risk appetite.“Forcing a pension fund to invest a minimum 75% exclusively in shares will significantly increase the risk of such transactions and make it impossible to manage in a manner beneficial for the insured,” said Rusewicz.“It will make it impossible to protect the real value of those assets in periods of a slump in the economy. Until now, such solution has never been used in pension funds anywhere.”Other investment restrictions will be lifted as of 1 July, including the abolition of the minimum investment return benchmark.The foreign investment cap of 5% will be raised to 10%, then 20% in 2015 and 30% in 2016.The OFEs will be able to lend stock, a practice previously prohibited, while a separate law will specify in what circumstance they will be able to use derivatives, also banned up till now.Contribution fees will be halved, to 1.75% for the OFEs and 0.4% for ZUS, and the contributions to the OFEs capped at 2.92% of gross wages.The hitherto mandatory system becomes voluntary.New entrants to the labour market and existing OFE members will have a three-month window from 1 April to declare their intention to remain in the second pillar or have future contributions transferred to ZUS.They can make this choice in person, by post or online.Those who do not will by default have their future contributions moved to ZUS.Workers will be able to change their decision, with the April-June window open in the first instance after two years, then every four years.This is effectively the only concession the government has made since its proposals were announced in September.Previously, the freedom to change one’s mind was to be restricted to those workers who had opted to remain in the second pillar.OFE members will be able to change their fund every three months, although it is not clear how they will make their decision, as the government also dropped a bombshell by making the publication and distribution of OFE advertising a criminal offence subject to a penalty of PLN1m or up to two years in prison.“We are surprised with additional change, according to which there will be no possibility to advertise OFEs in any way,” said Rusewicz. “We honestly don’t know at the moment how to interpret these rules. We don’t know, for example, if the IGTE would be able to organise any informational campaign regarding OFEs.“It would be a phenomenon for the whole EU if such a rule would be adopted by the Polish Parliament.”The draft also covers changes in the third-pillar IKZE retirement accounts introduced in 2011 to improve the take-up, including increasing the limit on tax-free contributions and reducing the tax on payouts to 10%.
A TOP Donegal hotel has been warned it will be prosecuted if it breaches data protection laws again after admitting staff kept mobile phone numbers of guests for direct marketing purposes.Gallaghers Hotel in Letterkenny admitted breaches of ethics when investigated by the Office of the Data Protection Commission.It followed complaints from guests who stayed there that they began receiving text messages offering deals there after they had checked out. The hotel had not obtained valid consent to send marketing communications to any of the numbers.“We informed Gallaghers that it had not obtained valid consent and it must now delete all numbers obtained in this way for marketing purposes,” says a report from the OFPC.“It readily agreed to delete its entire database and start obtaining valid consent for marketing purposes from now on. It has now attached a tick box to its registration cards in order to obtain such valid consent.”A warning has now been issued to Gallaghers Hotel that if any further complaints concerning their electronic marketing operations it is likely that the Commissioner will prosecute it if he is satisfied that it has committed offences. The complaint follows a massive increase in text marketing in Donegal in recent months from various establishments. TOP DONEGAL HOTEL ORDERED TO WIPE DATABASE AFTER ILLEGAL TEXTS TO CUSTOMERS was last modified: June 6th, 2014 by John2Share this:Click to share on Facebook (Opens in new window)Click to share on Twitter (Opens in new window)Click to share on LinkedIn (Opens in new window)Click to share on Reddit (Opens in new window)Click to share on Pocket (Opens in new window)Click to share on Telegram (Opens in new window)Click to share on WhatsApp (Opens in new window)Click to share on Skype (Opens in new window)Click to print (Opens in new window) Tags:donegalGALLAGHER’S HOTELletterkennyOffice of the Data Protection Commissioner