Transcript Pension system and employment incentives Polish experience

Agnieszka Chlon-Dominczak
Ministry of Regional Development
Poland
Bled, 7 June 2007
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Widespread early retirement privileges in early
1990s
Combined with restructuring of the economy
Led to significant increase in the number of
retired people in working age
End of 1990s: attempts to reduce the inflow of
new beneficiaries:
◦ Reducing options for early retirement due to the
restructuring of company (but: introduction of preretirement benefits)
◦ More strict disability assessment leading to the
significant reduction of inflow
◦ Downscaling pre-retirement benefit programme in 200
80
70
60
50
40
30
20
10
0
1992
1993
1994
1995
1996
Employment rate(15-24)
1997
1998
1999
2000
Inactivity rate(55-64)
2001
2002
40
1 600
35
1 400
30
1 200
25
1 000
20
800
15
600
400
10
200
5
0
0
1997
1998
1999
2000
2001
2002
2003
Old-age pension s for people below retirement age
Pre-retirement allowances
Pre-retirement benefits
Employment rate of people aged 55-64
2004
2005
Per 100 persons aged 55-64
‘000 persons
1 800
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Turn from defined benefit to defined
contribution-based system
Benefit formula takes into account:
◦ Accumulated savings
◦ Life expectancy at retirement age
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Increased incentives to postpone retirement
decision
◦ The longer you work, the higher the savings
◦ The longer you work, life expectancy reduces
140%
value of retirement savings
(at 65 years = 100%)
120%
100%
80%
60%
40%
20%
0%
20
25
30
35
40
45
50
55
60
65
age
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largest increases of retirement savings:
at the end of working career
180
Pension index
Pension in age 65 = 100)
160
140
120
100
80
60
40
20
0
55
56
57
58
59
60
61
62
63
64
65
66
67
68
age
Old system (65=100)
New system (65=100)
69
70
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Tightening access to pre-retirement benefits
Mandatory activation of unemployed claiming
pre-retirement benefits
Pilot programme „50 plus”
Pilot initiatives under EQUAL programme
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There is a need to co-ordinate labour market
policy and social policy to prolong working lives
Need for coherent policy:
◦ Tightening one scheme can lead to increased pressure
on other schemes
◦ Old-age, disability and pre-retirement schemes should
be seen together
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It is more efficient to keep on the labour market
than re-activate
◦ Quick reduction of human capital in the case of older
workers
◦ Life-long learning should be adjusted to the specificity
of older workers (traditional tools usually do not work)
Thank you for your attention