Poles about ECP – comments to survey results - Grzegorz Maliszewski, Chief Economist of Bank Millennium

According to data of Polish Development Fund, so far 39% employees of biggest companies joined Employee Capital Plans. This is low, despite seemingly obvious benefits for the employees.

Underestimated are the undeniable financial benefits for future pensioners in the form of additional payment from the employer or the welcome bonus. Only 4,9% of persons polled said the most important benefit of participating in ECP is the welcome bonus as well as annual additional payment from the State and 3,9% said it was the additional payment from the employer. Towards the end of January 2020 the first ECP members received welcome bonuses worth more than 250,000 PLN and PDF estimates their value this year will reach close to 400 million PLN in total. Let us also not forget about additional payments from the employers who will transfer at least 1,5% of our salary to the ECP account every month. The value of these additional payments may be estimated at tens of thousands of zloty over a period of several decades (the estimates are based on the average salary).

Such survey results may be evidence on the one hand that people have little awareness of the benefits, but on the other hand they may be of the view that such financial incentives are insufficient to convince them to make long-term investments on financial markets within the framework of a pension scheme designed by the State.

It seems however that the main reason is low public awareness as regards the importance of saving long-term for a pension. Only 6% of the respondents said the key advantage of the programme is increasing the future pension, and little above 10% - that it is automatically saving for retirement. In this context the ECP programme is a desirable solution because voluntarily saving for retirement is not widespread among the Poles, yet there is the need to build long-term savings. This will benefit the future pensioners as well as the Polish economy, which is in need of greater domestic savings and investments.

There are many myths and fears, that have arisen in the context of ECP; low awareness can also be seen of the significant benefits, which can be available to future participants. Thus much depends on the performance of ECP funds in the first period of their operation and whether the Government will decide to engage in a regular and long-term education campaign in the mass media, which may significantly affect the attitude towards the programme of new participants.

Let us also remember that results of the ECP programme will be seen in the longer horizon and I would assume that in 5 – 10 years, maybe earlier, we may witness a wave of voluntary enrollments, which was to be seen in some Western countries.

*Survey metric: the survey was carried out by Instytut Badań Rynkowych i Społecznych IBRiS on 25 January 2020 on a representative nationwide sample of 497 adult Poles, declaring employment under an employment contract or contract of mandate. Survey technique: CATI, random-quota sample, constituting a numerical representation of demographic features for the total Polish population (data according to GUS).