President takes aim at rare Polish reform success

By bne IntelliNews September 21, 2015

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President Andrzej Duda has tabled a draft law proposing to lower the Polish retirement age, his office announced on September 21, threatening to unravel what is seen as the main reform success from the eight-year reign of the centre-right Civic Platform. 

The move sees the new president living up to his campaign pledge to push to reverse the rise in retirement age introduced by the ruling Civic Platform in 2013. The text of the draft suggests it would cost around PLN40bn in 2016-2019, however, others claim that figure could swell several times. 

Duda was fielded in May's presidential election by the opposition Law and Justice (PiS) party. Taking advantage of PO's unpopular reform that established the retirement age for 67 for both men and women, one of Duda's leitmotifs in the campaign was a promise to revert to the old system, under which men would retire when turning 65, and women at 60. 

"Many times during my meetings I heard of the need to lower the retirement age in Poland. I vowed to lower it and to table a draft law [on the matter] as the president," Duda said in a statement. 

The timing of the bill is a clear trap for PO, which is struggling to overturn PiS' healthy lead in polls ahead of elections next month. Should the ruling party reject the bill overturning what was one of its few major reforms, it will only hand the opposition more ammunition ahead of the October vote. 

The draft comes four weeks before general election in Poland, with PiS looking increasingly certain to win and possibly form a government on its own, without having to form a coalition. PiS has 39% of the vote in a poll by IBRiS carried out on September 18-19. PO had 22% support in the poll. 

Should PiS hold on to that advantage, Duda's proposal would then likely be adopted by the next parliament. Of the estimated cost, the state budget would need to find PLN30bn over the next three years, PAP reports, with the remainder presumably to come from private funds. 

PO's finance minister Mateusz Szczurek warned in June that the economic and fiscal proposals put forward by PiS would have serious consequences for fiscal and financial stability. According to the Polish finance ministry, the cost of Duda's proposed reform would be much higher: about PLN400mn, according to gazeta.pl

"In the short run, the bill's effects would not be significant. However in the longer perspective of 20-30 years it would lead to a crisis in public finance, and therefore a considerable increase in social insurance premiums or a reduction in future pensions," Piotr Kuczynski, at Xelion brokerage house, told bne IntelliNews

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