Pensions to prop up deficit

11th September 2009

Money set aside to pay future pensions will be used to finance next year's budget deficit according to the government's recently released budget proposal for 2010.

The plan has aroused controversy, since the cost of funding pensions is expected to rise substantially over the next 10 years.

The government has proposed eliminating the Demographic Reserve Fund, which was established in 2002 to secure the pensions of future retirees. The fund receives 0.35 percent of premiums paid into the state Social Insurance Company (ZUS) and since 2009, 40% of receipts from privatization. In the budget proposal, the PLN 6.5 bln now in the fund would be used to finance current pension obligations.

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