WARSAW: Poland ended 2014 with a general government deficit at 3.2% of GDP, above the EU’s standard 3.0% threshold for fiscal health that would warrant removal of EU-mandated fiscal constraints, known as the excessive deficit procedure. Poland beats the measure for debt levels.
The 2014 deficit “is insignificantly above 3%, but the systemic costs of the pension reform reduce it to 2.8% and allow for removal [of the procedure] already this year, in our view,” Szczurek said during a morning interview on public radio. The Polish government made its once mandatory private pension scheme optional in 2014, sending the full scale of social security premiums back to the state system for those who did not opt to remain in the program.
The government had been transferring a portion of the social security premium of younger workers to their private pension fund accounts since 1999, when the social security system was partially privatized. The government simultaneously shifted 51.5% of AuM of the pension funds back into the state system, chiefly the fixed-income portion of the accounts.
