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Money from OFE. Morawiecki about PO: “They took PLN 150 million from OFE”. What happened to that money

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The message of the ruling camp is coming back that the PO-PSL government took PLN 150 billion from the OFE from the Poles. The thesis was recalled on Saturday by Prime Minister Mateusz Morawiecki in Jasło. Therefore, we explain what the 2014 operation on open pension funds was all about.

Law and Justice politicians set off for Poland. On March 10, PiS president Jarosław Kaczyński he announced “thousands of meetings” with Polesattended by the most important politicians of his party. “Our programs, serious and later implemented, were created after a long conversation with Poles conducted in various circumstances. It is Poles who provide us with true knowledge about the needs of our nation and society. It is their views and needs that we must be guided by,” Kaczyński said.

A day later, the first of these meetings took place – in Jasło with the participation of Mateusz Morawiecki. The Prime Minister spoke extensively about the governments of the Civic Platform and the Polish People’s Party. He accused his predecessors of incompetence. He compared the reaction of his own government to the crisis caused by the COVID-19 pandemic with the reaction of the PO-PSL government to the economic crisis of 2008. “We saved five million jobs, we spent PLN 200 billion to save jobs. And what did they do? They took PLN 150 billion from OFE. Do you remember that?” – He was asking. “Scandal, yes,” he added after a moment in response to the spontaneous reaction of the listeners.

“They took OFE from Poles”; “We were then taken money from OFE”

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In recent years, the topic of transferring treasury bonds from Open Pension Funds (OFE) to the Social Insurance Institution (ZUS) has regularly appeared in the public debate – often in a vague form.

On June 26, 2020, just before the first round of the presidential election, Morawiecki appeared in a television interview listed a number of allegations against the candidate Rafał Trzaskowski. “Together with Tusk, they took OFE from Poles,” he said. “We were then taken money from OFE” – this is the statement of President Andrzej Duda of June 28, 2020 from a meeting with voters in Strzelce in the Łódź Voivodeship.

In 2014, all Treasury bonds worth over PLN 153 billion were transferred from OFE to ZUS. The amounts were recorded on individual sub-accounts insured with ZUS.

What is the OFE system

Open Pension Funds (OFE) have been operating since 1999. Investments of funds on the stock exchange and in bonds (later the bond part was redeemed) were supposed to be a way to get higher pensions than those paid by the Social Insurance Institution. 15.8 million Poles became OFE members. At their peak, the funds managed capital exceeding PLN 300 billion.

According to the intention of the creators of the system, the pension contribution to ZUS, reduced by the money transferred to OFE, was to be compensated with privatization revenues. However, there was not enough money in the system. – In the years 1999-2012, privatization proceeds covered only 47 percent of contributions transferred to OFE – said Konkret24 in July 2020, Dr. Małgorzata Starczewska-Krzysztoszek from the Faculty of Economic Sciences of the University of Warsaw.

In 2014, bonds from OFE transferred to ZUS

In 2011, the government of Donald Tusk decided to reduce the contribution to OFE from 7.3 to 2.92 percent. Further, even more far-reaching changes took place in 2014 – when all Treasury bonds worth over PLN 153 billion were transferred from OFE to ZUS. It was about half of all funds collected there. The amounts were recorded on individual sub-accounts insured with ZUS.

Employees could choose whether they still want to deposit their money in OFE or only in ZUS. Ultimately, nearly 2 million people opted for OFE at that time. However, OFE still has money accumulated so far, e.g. invested in shares of companies listed on the Warsaw Stock Exchange.

The money transferred from OFE is still on the sub-accounts of its owners in ZUS. Before the reform, however, they were in the form of bonds. “The nature of these commitments has also changed from a written contract (bonds) to an insignificant and not very specific promise that current or future politicians can change in one day” – commented in 2016 Krzysztof Kolany, chief analyst at Bankier.pl. At that time, Kolany wrote about “Skoku na OFE” and “the illusion of free choice”. As he explained, “the authorities did not allow the resignation from compulsory pension ‘insurance'”. In November 2015, the Constitutional Court ruled that the reform was constitutional. According to the Tribunal, assets accumulated in OFE were public property, not private property.

PiS’s ideas for open pension funds

In mid-April 2019, Prime Minister Mateusz Morawiecki announced further steps to reform the system. Money accumulated in OFE was to be transferred to Individual Retirement Accounts (IKE). However, the transfer of capital was to be associated with the so-called conversion fee of 15%. funds accumulated in OFE. However, the government gave OFE insured an additional option – transfer of funds to the Social Insurance Fund in ZUS.

Experts quoted by Tvn24.pl at the time spoke of “taking money”. “Assuming that we will stay in IKE, i.e. we will not mess with these funds, we will lose 15 percent today. This is bad news, this is taking this money away from us – economist Marek Zuber commented at the time. In a similar way in April 2021 Oskar Sobolewski from the Pension Institute spoke for TVN24 Biznes.

In 2020, work began on the act, the assumption of which is the liquidation of open pension funds. Reform was due to enter into force in January 2022. Work on it, however, was suspended and ended with the work of the committee after the second reading. “Under the guise of making these funds private, the government actually wants to get the 15 percent from the transformation fee” – assessed Oskar Sobolewski from the Pension Institute in April 2021 in an interview with TVN24 Biznes. Sobolewski even talked about a “jump to OFE”. Just like in 2016, Krzysztof Kolany, quoted above, assessed the 2014 reform.

An expert from the Pension Institute suspected that the government would quickly try to return to the project of liquidation of open pension funds. However, that did not happen. In September 2022, Parkiet.com noticed that the number of members of open pension funds fell below 15 million, and older generations prevail among OFE members. This may mean that open pension funds will disappear spontaneously. “The acceleration will take place already in 2024, and its accumulation in the years 2029-2030” – assessed Parkiet.com.

Author:Krzysztof Jablonowski

Main photo source: Darek Delmanowicz/PAP

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