According to the rules of the present pension system in Poland, a woman who has reached the age of 60 and a man who has reached the age of 65 can retire. There are exceptions to this rule, which apply to selected professional groups, or to those receiving bridging pensions, which are already being discontinued. However, as a rule, in the general pension system, the criterion for obtaining the right to a pension is the above-mentioned age and length of employment (contribution and non-contribution periods) of at least 20 years for women and 25 years for men, in order to collect at least the minimum pension. Length of employment, therefore, is already taken into account to some extent and required in the formula for granting a pension benefit.
So, what would be the basis of the change introduced regarding seniority pensions?
The main difference between the seniority pension and the pension obtained under the current rules is that there is no requirement to reach the aforementioned retirement age. At the same time, there is a requirement to achieve a certain length of employment, much higher than with the current statutory pension, and which is also very important, to accumulate a certain pension capital. The latter requirement may prove to be a key determinant of whether or not a person will be eligible for a seniority pension. As for the specifics, as is usually the case in life - the devil is in the details. The proposals for seniority pensions proposed by politicians differ in the required length of employment (between 35 and 39 years for women, and between 40 and 44 years for men), the required pension capital (capital to earn at least 100% of the minimum pension or capital for at least 120% of the minimum pension), and the way in which seniority is calculated.
In some proposals, only contributory periods count, while some also count non-contributory periods (i.e., for example, periods of higher education, parental leave, periods of sick pay). For example, imagine that a woman started working at the age of 24, right after college. During her career, she gave birth to a child and took a 2-year parental leave. If the non-contributory periods are not included in her seniority required for a seniority pension, then at age 60 her seniority will be 34 years - still less than the minimum required for a seniority pension, but her age already entitles her to a pension under normal rules. Similarly with the requirement to accumulate adequate pension capital. It seems that the seniority pension will not apply to the lowest earners.
According to various estimates, at most tens of thousands of people could benefit from the seniority pension in the first year. Compared with figures published by the Social Security Administration, according to which about 300,000 people retired each year over the past few years, this is not a huge group.
However, the key question is whether a seniority pension is actually a beneficial solution both from the perspective of an individual (i.e., retirees), as well as the economy and society as a whole.
Taking the individual's point of view, it must be remembered that a person opting for a seniority pension will collect a lower benefit than in the case of a pension under the general rules. On the one hand, he or she will work for a shorter period of time, and therefore accumulate a lower pension capital. On the other hand, this accumulated capital will be divided over a greater number of months of benefit collection. Thus, this is not a particularly financially viable solution. From the perspective of the entire economy and labor market, it is also difficult to find benefits in the introduction of seniority pensions.
The pension system in Poland is predominantly pay-as-you-go, i.e. the generation of working people finances the retirement benefits of people no longer working. Such a system works well when the number of working people significantly exceeds the number of retirees. In an era of aging populations, the demographic structure threatens the financial sustainability of the pension system and places an undue burden on the younger generation - fewer and fewer people are working, more and more are collecting pension benefits. Therefore, the trends and recommendations for social policy in developed countries are to extend working lives and delay retirement, whether using "hard" measures such as raising the legal retirement age, or more "soft" ones in the form of incentives to stay in the labor market as long as possible. The introduction of seniority pensions seems to stand in contrast to these trends.
