Leaving widows in the lurch

Last week the government finally put forward legislation defining how Poles may receive pension benefits from the privatized portion of the nation's pension savings system. Poles may only receive annuitized lifetime payments (understandable), but they may not take payments for the lifetime of the surviving marital partner. Once a family bread-winner dies, the widow(er) is left totally empty-handed (downright immoral).
To remind: Poland made the switch from a classic pay-as-you-go pension system in 1999, forcing younger Poles to put half of their pension premiums into privately managed pension funds. Those funds have been a cornerstone of Poland's economic transformation, an absolute boon to the Polish capital market and capital base. Poland put off the question of eventual pay-outs until the last minute.
The campaign vow from the liberal party was based on the mantra of free choice. In the promise, future retirees were to be able to choose annuitized or non-annuitized payments, even one-time payouts. And retirees would be able to chose individual or marital pensions. In the event, nothin going.
The mandatory annuitized lifetime payments are understandable. Nothing could be worse down the road than a legion of irresponsible pensioners who spent all their money early and were left to starve in their old age. Here, the state clearly has an interest.
But the lack of marital pension options seems to show little more than government cynicism. The logic appears to be this: 1) if we allow for marital pensions, the average monthly payment will have to be lower once the annuity is timed for the longer lifespan of the surviving partner; no sense risking popular outcry over the size of future pensions and 2) with one of the lowest employment rates in Europe to support a growing pensioner crowd, why not use this opportunity to force everyone to get a job and secure their own pension savings?
The first argument is aggravating, largely because the mistakes that have caused private pension savings to be inadequately low are solvable. As I noted in blog entry "Polish OAPs Face Uncertain Future" a major mistake was to force a one-size-fits-all allocation profile on pension savers irrespective of their age. That a 25-year old pension saver should have the same investment profile as someone nearing retirement is ridiculous.
But the second argument, rarely said outright but omnipresent in the government rhetoric (which continually presses figures showing Poland o be the EU nation with the worst employment ratios), is particularly aggravating. It is a frontal attack on families where people have decided that one partner will stay home to work as a full-time parent. If, logically, a family chooses to put the lower wage earner to child-rearing (to minimize the overall negative financial effect of the decision to shift to a single income) and if that parent outlives his or her bread-winning partner, he or she will spend his or her widow(er)ed/ years in abject poverty, having no capital accumulated on their own pension account from which to live. The message: keep your job and outsource child-rearing (hire a nanny) or else.
In some quarters, that sounds outright anti-family and opens a fabulous door for the opposition to retake major ground against the government. The last government was ousted by voters, but not for its pro-family rhetoric or policies.
The policy is also potentially anti-woman. Right or wrong, Polish stats say this: women earn less and live longer. Right or wrong, Polish norms say this: kids need their moms (but usually get their grandmas). And women, working women who voted for the party of choice, are a constituency of the current government rather not to be alienated.
Think about the families who choose to shift to a single income and raise their own children: by nature they are ready to take at least a temporary financial loss for their kids and that bias may extend into retirement. By nature they accept the motto that what is mine, is yours: today, tomorrow, during retirement, even after one partner is gone.
Yes, if you are wondering, my own family fits this profile. But we are not freaks. At my son's pre-school, a neighborhood public preschool near the center of Warsaw, my wife says that she has found more stay-at-home moms than working moms amongst the parents she has met.
The debate in the lower house is going to be ugly. It will be all too easy for the opposition to frame this decision as an attack on a given constituency.
And it will be nearly painful to see that a would-be liberal government, a government also devoted to the proposition that it is better to do nothing than to risk alienating a constituency or sparking a protest, will risk just that by failing to offer people a simple choice.