Estimating the Impact of the 1999 Pension Reform in Poland, 2000 - 2050

Abstract

This paper gives an account of the main aims and principles of the reform measures which came into force in 1999. Its primary objective is to present estimations of the effects of these measures on the composition of the pension system, over the next 50 years, in terms of institutions, expenditures and revenues. Within the segment of retirement pensions outside agriculture, the 1999 reform is found capable of achieving its key objectives concerning work incentives, total spending and aggregate savings. However, invalidity and family pensions for all and retirement pensions for farmers represent three segments which are yet to be properly reformed.

The paper concludes that the 1999 reform should arrest a further deterioration of public sector finances with respect to pensions, but any reduction of Poland's exceptionally large both public spending on pensions and social security contributions is contingent on adopting radical reforms also in these three segments.