Polish parliament passes pension reform

(WARSAW) - Polish lawmakers Friday adopted a controversial pension reform piloted by the centre-right government which is seeking to cut the national debt.

The reform, adopted by Poland's lower house or Sejm in a 237-154 vote with 40 abstentions, slashes from 7.3 percent to 2.3 percent the proportion of an individual's salary that can be paid into private pension funds.

The five percent difference will instead be paid into Poland's national social security scheme, or ZUS.

The government has said the move is crucial to enable the state to keep paying out pensions from the indebted ZUS scheme's coffers.

The reform will save the state 195 billion zloty (48 billion euros, $68 billion) by 2020, according to the government.

The law must still be approved by the Senate and signed off by President Bronislaw Komorowski, a key ally of Prime Minister Donald Tusk. The government hopes to have it in force by May 1.

The existing pension rules date back to 1999, 10 years after the fall of the country's communist regime.

They are based on two pillars -- the public ZUS scheme and private funds known as the OFE. In total, an individual must pay 19.5 percent of his or her salary into the two schemes combined.

Poland's debt in 2010 was 753 billion zloty, or 53.3 percent of gross domestic product, according to a finance ministry estimate.

Under the country's constitution -- as well as European Union rules -- it cannot exceed 60 percent.

But with the population of this nation of 38 million aging rapidly, the government raised the spectre of the ZUS scheme taking the debt level well over the limit.

Opponents of the reform included Leszek Balcerowicz, architect of Poland's sweeping market reforms after the collapse of communism.

Critics have claimed that it is unfair to cut the amount of money Poles can pay into private schemes, even if the goal is to help state coffers, because it breaches pledges set down in 1996 legislation.