Shaping pension reform in Poland : security through diversity

All over the world, pension systems have financing difficulties that need to be addressed. There are three ways of dealing with pension systems problems - finance it to a greater extent from general revenues, rationalize the system, or a full-fledged reform. After several years of political and professional discussions, Poland decided to follow the latter path and introduced a new defined contribution multipillar system, consisting of a public National Defined Contribution, pay-as-you-go first pillar, a funded private second pillar, and voluntary funded third pillar. The new framework covers only retirement savings, while other benefits still remain under the old defined-benefit pay-as-you-go regime. The reform was launched on January 1, 1999. This paper presents the current situation of the pension system, the struggle for pension reform in the 1990s, structure, the long-term outlook of the new pension system and the main aspects of the system design as well as first experiences from the implementation process. Long-term projection show that the new system allows for greater financial stability of the public pension scheme and increases the savings rate with a positive impact on economic growth.