Financial Sector Assessment Program Update : Republic of Poland - Competition and Performance in the Polish Second Pillar

Abstract

In March 1999, Poland implemented a
 systemic pension reform that involved the introduction of a
 multi-pillar pension system to replace the defined benefit
 (DB), pay-as-you-go (PAYG) system that had been operating
 since 1949. This technical note on the pension sector was
 elaborated as part of the Poland Financial Sector Assessment
 Program, or FSAP update that took place in April-May 2006.
 The note assesses the structure and performance of the
 second pillar, as well as its regulatory and supervisory
 framework. The note is structured as follows. Section two
 provides an overview of the whole pension system after the
 1999 reform, including coverage and fiscal policy in the
 transition to the new system. Section three analyses the
 structure and performance of the second pillar, including
 asset growth, portfolio composition, investment returns, and
 fees. Section four examines the regulatory and supervisory
 framework for the second pillar. Section five analyzes
 briefly the status of capital market development and the
 main obstacles to the further development of financial
 instruments suitable to pension funds. Finally, section six
 provides a number of policy recommendations.