Retirement age 67 and cuts in 800+. Economists present “Budget SOS”

The public deficit is reaching record levels, the state must carry out fiscal consolidation – say economists from the Civic Development Forum and the Warsaw Enterprise Institute. They propose, among others: uniform retirement age – 67, limitation of 800+, liquidation of 13th and 14th pensions, as well as privatization.

FOR and WEI, founded by Leszek Balcerowicz, prepared a joint report entitled: “Budget SOS”. The goal is – as representatives of both foundations explained – to develop cross-party recommendations aimed at stabilizing the situation of public finances.

Reduction of 800+ by half and liquidation of 13

FOR analyst Mateusz Michnik informed that the report prepared two variants – “mild” and “severe”. One of the suggestions is limiting the group of beneficiaries of the 800+ program. As he explained, the goal is for only the poorest households to receive the benefit. In the “severe” variant, they propose a reduction of program beneficiaries by half. In a lighter scenario, it was estimated that the benefits for the budget amounted to PLN 13.4 billion, and in a more severe scenario – PLN 30 billion.

Moreover, the report proposed liquidation of the 13th pensionwhich – as Michnik said – is “a solution created primarily for electoral purposes.” This would bring PLN 32 billion. – Only in the “severe” variant will the 14th pension be abolished, because we understand that it has some redistributive aspect – said a FOR representative. The liquidation of the 14th pension would bring PLN 12 billion.

Return to retirement age of 67

Another postulate of economists is a uniform retirement age – 67. – In the current conditions, we see no way to maintain a low and unequal retirement age (…) It harms both men who have to work longer hoursj, as well as women who receive lower pensions due to the lower retirement age – argued Michnik. He added that this would bring approximately PLN 50 billion in savings.

We propose a review of new expenses – such as grandmother's pension and widow's pension – to see how well they meet their goals. In a more severe variant, we encourage reductions, Michnik said.

In the same variant, economists also propose freezing the wage bill in the public sector. These three changes would mean PLN 6, 7 and almost PLN 62.5 billion, respectively.

Widespread privatization and gambling

Further changes proposed by FOR and WEI also included the liquidation of the state monopoly on gambling, which would generate PLN 519 million of additional state revenues and “general privatization”.

– We haven't had privatization in Poland for years (…) We propose the privatization of all State Treasury companies, except the strategic ones, i.e. energy ones, of the Polska Grupa Zbrojeniowa. This privatization would bring us savings from approximately PLN 75 billion to even PLN 100 billion, said Michnik.

Changing the debt limit in the Constitution

Both foundations also proposed a number of other changes, including: temporarily raising the debt limitincluded in the Constitution, in relation to GDP to 80 percent. for 10 years. This would be aimed at encouraging those in power to provide more transparent information about public finances. As Michnik explained, the idea is to include all state expenditure in the budget act.

FOR and WEI estimate that the adoption of their proposals in the light variant would mean approximately PLN 241.7 billion in savings, and in the severe variant – over PLN 345 ​​billion.

The Civic Development Forum Foundation was established in March 2007 by prof. Leszek Balcerowicz. The purpose of the foundation – as it informs itself – is to “change the awareness of Poles and the current and planned law in a freedom-oriented direction.” The Warsaw Enterprise Institute is a think tank promoting the ideas of economic freedom. (PAP)

jls/malk/