Competition and Performance in the Polish Second Pillar

Competition and Performance in the Polish Second Pillar is part of the World Bank Working Paper series. These papers are published to communicate the results of the Bank's ongoing research and to stimulate public discussion. This paper provides an assessment of the Polish funded pension system and the quality of the regulatory framework for the accumulation phase. There are two elements that distinguish the Polish pension fund portfolios from other reforming countries: the relatively high component of domestic equity, and the negligible component of international securities. Although this asset allocation provided relatively high real rates of return in the past, it may not be the case in the future, as further portfolio diversification to other instruments will become necessary to ensure sustainable rates of return. The paper provides a number of recommendations to expand the opportunities for investments in pension funds. Pension fund management companies have been able to exploit scale economies in certain areas of the business, such as collection of revenues. This study proposes mechanisms to enhance them even more by centralizing also the account management system, which may also help to increase portfolio efficiency and competition. With the payout phase starting in 2009, broad definitions in areas such as the role of the public and private sector need to be established. The paper examines products and options that authorities may consider for the design of the payout phase. Book jacket.Rudolph, Heinz is the author of 'Competition and Performance in the Polish Second Pillar', published 2007 under ISBN 9780821371190 and ISBN 0821371193.