Publication: Case Study 4 - Poland : Participation in Macroeconomic Policy Making and Reform
Date
2003-03
ISSN
Published
2003-03
Author(s)
World Bank
Abstract
In January 1999, Poland launched a new
pension system that was the result of 5-6 years of broad
outreach campaigns and complex negotiations within the
government and between the government and key stakeholder
groups. A number of compromises were made to broaden support
for the reform; these changes will significantly increase
costs during the transition period but without undermining
the long-term viability of the reformed pension system.
Post-communist Poland operated on a traditional
pay-as-you-go (PAYG) system; payroll taxes of current
workers financed the pension benefits of current retirees.
Due to a number of policy changes expanding early retirement
options and other privileges, pension costs skyrocketed in
the mid-1990s and Poland had one of the highest spending
rates of any post-communist transition country. In addition,
long-term demographic shifts led to a decline in people
paying into the system relative to those receiving benefits.
Contribution rates (i.e., payroll taxes) had already risen
from 25% in 1981 to 45% in 1990. They could not easily be
pushed up further.
Citation
“World Bank. 2003. Case Study 4 - Poland : Participation in Macroeconomic Policy Making and Reform. Social Development Notes; No. 80. © World Bank, Washington, DC. http://openknowledge.worldbank.org/entities/publication/53198ab1-d997-5578-bfb7-55f034a3068b License: CC BY 3.0 IGO.”