At last! Poles will be able to receive pensions in euro. The government is preparing the law
Recently, the draft law on the pan-European individual pension product (PEPP), i.e. the so-called European retirement.
Introducing such a solution is it is a duty of all member states, although they are reluctant to do so. Just like Poland.
– We have a lot of slippage in this matter – says Business Insider Polska Oskar Sobolewski, expert on the pension market and founder of the Pension Debate. Such solutions were created almost two years ago, and were to be adopted first in 2021 and then in spring 2022. Now the estimated date is Q4 2022. At least then the government is going to deal with the matter.
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There is no rush in Europe either. Recently, the first entity to offer PEPP is the Slovak fintech Finax. For now, however, only Slovaks can use it, because the relevant regulations have been passed there. Although Finax itself is present on the Vistula River, Poles cannot save for their European retirement there yet.
“The retirement solution of the Slovak fintech assumes investing in line with the life cycle strategy. Depending on the chosen option, at the beginning of saving 80 percent. or 100 percent funds are invested in ETFs that mirror the stock market. 10 years before retirement, part of the portfolio is transferred to bond ETFs to reduce the impact of market fluctuations on the value of the portfolio. In both variants, at the time of retirement, 60 percent. portfolio is to be ETFs based on shares, and 40 percent. Bond ETFs “- recently wrote about the product, the Association of Individual Investors.
The European pensions are designed to build citizens’ awareness
Why introduce a European pension if we have a national one? The Union points to this necessity in the face of the coming demographic crisis and aging society.
And EU citizens are not aware that saving for retirement is a necessity right now. For example: in Poland, the estimated amount of benefits of today’s 30- and 40-year-olds may be only 25 percent. their last salary.
Anyway, Brussels explicitly admits that the purpose of introducing PEPP is primarily to “increase the awareness of EU citizens that the pensions they will receive from state pension security systems, it will be insufficient to maintain the current standard of living “.
The new instrument is therefore to provide European Union citizens with new opportunities to save for retirement. “His greatest value will be the possibility of cross-border investment, as well as transfer when changing the place of residence from one EU Member State to another“- we read in the justification on government websites.
At the same time, the government adds that PEPP is intended to increase competition between entities offering pension programs and to ensure economies of scale. “It should benefit savers by giving them access to better and cheaper products,” reads the explanatory memorandum to the bill.
The expert comments on the new idea
– PEPP will de facto become another instrument under the third pension pillar in our system – tells us Oskar Sobolewski.
As he explains, working Poles will be able to save money for the European retirement pension more or less in the same way as today they pay into an Individual Retirement Account or an Individual Retirement Security Account. Of course, it will be completely voluntary.
The money paid for the European pension will be invested not only in Polish companies, but the managing entity will be able to use the same funds abroad.
See also: Poland has a very serious problem with pensions. One year left for a painful decision
– Thanks to this, it will be much easier to transfer pension savings between individual countries – explains Sobolewski. As he adds, PEPP should also include the possibility of withdrawing funds in foreign currencies. Thus, Poles will be able to receive pensions in euro.
According to our interlocutor, however, we should not expect the European pensions to introduce an earthquake on the market. – I think that only a few will take advantage of it. Perhaps tens of thousands of people, including mainly foreigners working in our country – assesses Oskar Sobolewski.
However, as he adds, any idea that will increase retirement awareness among Poles is good. – It was the same with the PPK. Although too many of us decided not to save, it did spark some discussion. And that is the biggest advantage of this reform. I think it will be the same with PEPP – concludes the founder of the Pension Debate.
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