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

IMF Staff Country Reports, March 9, 2007

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Canonical URL: Republic of Poland: Financial Sector Assessment Program-Technical Note-Competition and Performance in the Polish Second Pillar

This technical note explains the Polish pension system and domestic capital market.
Competition policies may need to be reviewed, in particular the combination of measures to maintain small pension funds operating while imposing strict caps on fees.
If the government decides to continue pursuing policy of promoting competition in returns while reducing fees further, it may need to consider more structural changes in the second pillar, along the lines of the Swedish model.

The note explains the structure and functioning of the Polish second pillar (pension funds) and its interaction with the domestic capital market.
Identified tension between maintaining small pension funds and imposing strict caps on fees.
Highlighted policy trade-off: promoting competition in returns versus further reducing fees.

Review competition policies governing the second pillar, with attention to how measures to sustain small funds interact with fee caps.
If pursuing both stronger competition in returns and further fee reductions, consider structural changes to the second pillar comparable to the Swedish model.

Subjects: Expenditure, Financial institutions, Insurance, Labor, Mutual funds, Pension spending, Pensions, Stocks
Keywords: coverage ratio, CR, equity portfolio, Europe, government bond, Insurance, ISCR, management fee, Mutual funds, pension fund portfolio, Pension spending, Pensions, private equity, Stocks, variable annuity

Appendix I. An Analysis of Price Competition in the Pension Sector
- Appendix I. An Analysis of Price Competition in the Pension Sector (Markdown version)
- Appendix I. An Analysis of Price Competition in the Pension Sector (PDF)