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Monday, March 4, 2024

Pensions. The Social Insurance Fund deficit will grow, but according to ZUS, “the situation is very good”

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According to forecasts, the annual deficit of the Social Insurance Fund (FUS) will increase until 2028. The intermediate scenario assumes an increase by approximately PLN 30 billion, and in the optimistic scenario – by approximately PLN 19 billion. Despite this, the Social Insurance Institution emphasizes that the situation of the Social Insurance Fund “is stable” and its efficiency “remains at a record level.”

“According to the latest forecast of receipts and expenses of the Social Insurance Fund (FUS) for the years 2024–2028, its situation is stable. There is no question of bankruptcy of the system,” he wrote in the release. ZUS.

The Social Insurance Fund deficit will grow

ZUS reported that “regardless of the forecast variant, the annual balance of the Fund is constantly decreasing.” He added that in all three variants, the annual deficit of the Social Insurance Fund in 2028 is to be higher than in 2024, and:

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– in the intermediate variant – by PLN 30.1 billion (in 2024, the forecast annual deficit is PLN 71.1 billion, and in 2028 – PLN 101.2 billion); – in the pessimistic variant – by PLN 44.3 billion (in 2024, the forecast annual deficit is PLN 80.5 billion, and in 2028 – PLN 124.8 billion); – in the optimistic variant – by PLN 19.0 billion (in 2024, the forecast annual deficit is PLN 63.6 billion, and in 2028 – PLN 82.6 billion).

“Currently, the situation of the Social Insurance Fund is very good. Its efficiency, i.e. the degree to which expenses for benefits are covered by contributions, remains at a record level: 85% in 2022 and approximately 84% in 2023. The forecast indicates that in the coming years it will also stable. The slight decline in coverage results primarily from the fact that we are entering a period in which people from the post-war baby boom will begin to reach retirement age,” ZUS explained.

FUS, ZUS, Polish pension system

The announcement also states that “Poland has a reformed pension system in which the amount of the pension is closely linked to the amount of pension contributions paid by the insured person and to the expected period of receiving the benefit.”

“The reform made it possible to stop the state from incurring unpayable liabilities for the future despite the forecasted deterioration of the demographic structure of our country. Therefore, the aging population does not pose a serious threat to the financial stability of the pension system in Poland compared to many other countries,” it was emphasized.

It was added that “the Polish pension system is not at risk of bankruptcy” and “the erroneous belief that it is in any way at risk results from ignorance of its operation”, and “the stable financial situation and solvency of the system in the long term are confirmed by, among others, reports of independent organizations such as the Organization for Economic Co-operation and Development (OECD) and the European Commission.

In its announcement, ZUS refers to OECD data (“Pensions at a Glance 2021”), which states that the share of public pension expenditure in Poland’s GDP in 2019 it was 10.6%, and in 2060 it is expected to be 10.8%, which is approximately the same. In other countries, the burden of pension costs is expected to increase significantly in the future, e.g Belgium by 25 percent, and in Czech RepublicIreland, New Zealand, on Slovakia, in Slovenia and Hungary by 50–70 percent, which means several percentage points. GDP.

Main photo source: DarSzach / Shutterstock.com

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