The Polish government is reportedly mulling a plan to force consolidation of all private pension fund assets into an entity managed by a state-controlled company, local media reported on May 27.

The tempatation of over €30bn is obvious for an administration that is casting about for cash to drive the populist spending promises it made during the campaign for the October election. Like several other policies rolled out by the ruling Law & Justice (PiS), a grab for the assets of private pensions would appear to come straight out of the playbook of Hungarian Prime Minister Viktor Orban.

However, for the moment, the plan only appears to go as far as putting the assets under state management. Citing unnamed sources, Rzeczpospolita reports the government is considering consolidation of all 12 private pension funds, known as OFE, which hold over PLN140bn (€31.8bn) in assets. A final decision will come after a governmental review of the pension system, which is due by the end of the year.

The aim of the consolidation would be to drive down costs that private companies running OFE charge on pension premiums paid by Poles, the source claims. State-controlled insurer PZU and state-owned bank BGK are mentioned as potential managers for the consolidated pensions funds.

Poland’s ministry of labour and social policy, which is responsible for the pension system, did not deny the consolidation plan. However, it told Rzeczpospolita any decisions would be made after the government completed review of the system by December 31.

However, speculation is rife that the consolidation would only be the first step towards a state grab of the assets. Should that happen, it would be the second such raid on private pensions in Poland.

In 2013, the centre-right Civic Platform (PO) cabinet shifted 51% of the assets held by the funds – about PLN146bn (€35bn) – largely in the form of government bonds, to the state-run system. The move offered Warsaw a huge cut in state debt that allowed it to duck under Polish and EU limits, although it hit the equities market hard, given that OFE's were by far the biggest investors on the Warsaw Stock Exchange up to that point.

The PiS government, meanwhile, is under pressure to finance election promises to boost spending. While a child benefit scheme that is estimated to be likely to cost 23bn in 2017 has been rolled out since PiS took power in November, other flagship policies, such as the lowering of the retirement age and raising tax-free income, appear to have been put on the backburner as the funds to drive them is sought.

Even without those schemes in place, the government's spending plans threaten to push the deficit above 3% of GDP, and Poland back into the European Union’s Excessive Deficit Procedure (EDP), which it finally managed to escpae last year. The loosening of fiscal policy also has investors and rating agencies on edge.

Known for its fascination with many of the controversial policies followed by Orban in building his version of 'illiberal' democracy in Hungary, PiS will clearly have seen his first big gambit on taking power six years ago. In 2010, the ruling Fidesz effectively nationalised over €10bn in private pension assets. While the move spread alarm in the markets, it allowed Hungary to slash its deficit.