We are usually familiar with the proposals of the party we vote on in the elections. We are not always aware, however, of all the consequences of these promises. It would be useful to compare the election programmes, if we want to know what the parties are really promising us. ‘Rzeczpospolita’ will compare and evaluate parties’ economic proposals under ‘Kalkulator wyborczy’ programme. We will start from the social security scheme.
Shorter work – lower pensions.
The main proposal of PiS (the Law and Justice party) in this regard is lowering the retirement age to 65 for men and 60 for women. Very similar solutions, although expressed in other words, are in the programme of the United left. They propose to allow retirement after 40 years of work for men and after 35 years for women and raising the lowest retirement by 200 PLN.
’35 years of work for women, if you also count in their periods of leave related to childcare or unemployment, would imply retirement at approx. 60′, analyses Maciej Bukowski of Warsaw Institute for Economic Studies. According to ZUS (the Social Insurance Institution), the average retirement age for women in 2014 was 59.8 years, with an average professional experience of 37.5 years.
Both parties emphasize that the Poles, and especially women, are neither willing nor able to work until 67. That said, they carefully avoid mentioning that shorter work will mean lower pension. Why is that? Currently, the longer you work, the more capital you collect. Moreover, the later you retire, the smaller the number of monthly payments will be, so the pension may be higher. And vice versa – the less we work, the less we collect, and as it has to suffice for longer – the pension is reduced.
While preparing in 2012 the reform of the gradual extension of the retirement age, the government of Civic Platform (PO) and Polish People’s Party (PSL) presented fairly detailed simulations. In 2041, the average pension of women retiring at the age of 67 will be approx. 3500 PLN, while those retiring at the age of 60 – approx. 2000 PLN. Thus the longer work leads to 70 pct increase in pension, whereas the shorter work – to roughly 40 pct decrease. For men, these sums amount to respective 2900 PLN and 3490 PLN.
Who will be paid from the budget?
Lower pensions theoretically entail lower expenses from the Social Insurance Fund. We need to remember, however, that earlier pension means the lack of contributions from the person working so far, who will have to be paid a pension instead. Therefore Law and Justice estimates that the accumulated cost of the lower retirement age in the years 2016-2019 will add up to 40 billion PLN. United Left does not evaluate their ideas, as they consider it impossible to determine how many people will decide to retire early, and how many will continue working.
The implementation of the PSL proposal would also cost over 40 billion PLN over the four years of term. The party proposes, among others, pensions after 40 years of work, which will cost roughly 1.3 billion PLN per year. They put the greatest emphasis, however, on the raising of lowest pensions to 1200 PLN per month. Today it is close to 880 PLN. If this proposal was implemented, higher pensions would be received by approx. 12 pct of current retirees and half of invalids. Hence, the costs are up to roughly 9 billion PLN per year.
We also need to take into consideration the results of future major, almost 50 pct raise in minimum pension. ‘Currently 1200 PLN constitutes 30-40 pct of an average salary. If politicians planned to maintain that ratio in future, the minimum pension would equal with this average. The costs would be very high’, says Maciej Bukowski.
