Government Wants New Mechanism Instead of Pension Recalculation. Experts Sound the Alarm

The Polish government is advancing a new proposal to alter how pension increases are calculated, specifically targeting individuals who applied for pensions under rules applicable to those born before January 1, 1949, prior to June 6, 2012. This move follows a Constitutional Tribunal ruling from over two years ago (case file SK 140/20) which declared a specific provision unconstitutional, though the ruling has yet to be officially published.

The contested provision, Article 25, Paragraph 1b of the Act on Pensions and Annuities from the Social Insurance Fund, allowed for the reduction of benefits when an insured person took early retirement. The Tribunal found this regulation to be in conflict with the constitution, not only for those born in 1953 but also for other age groups, as previously addressed in a separate ruling (case file P 20/16).

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The main drawback of that project was the freezing of the revaluation of the initial capital and contributions during the period of receiving early retirement. As a result, the insured would receive a new, higher benefit, but not as high as those who were harmed pensioners from the 1953 cohort received.

Initially, in 2020, lawmakers attempted to address this issue by enacting Articles 194i and 194j of the pension law, which aimed to completely remove the problematic Article 25, Paragraph 1b for both men and women born in 1953. However, a year after the Constitutional Tribunal's SK 140/20 ruling, the government presented a new draft proposal. This latest version significantly diverges from the original concept of fully recalculating pensions as if the unconstitutional provision had never existed.

Instead of a full recalculation, the new proposal introduces an "increase mechanism" for pensions. The Social Insurance Institution (ZUS) would calculate a hypothetical pension amount excluding Article 25, Paragraph 1b. This hypothetical amount would then be compared to the individual's current early retirement pension, and the difference would be calculated. However, this difference would not be paid in full. It would be reduced by a corrective coefficient, the value of which depends on the period during which early retirement benefits were received. Experts, such as legal advisor Dr. Andrzej Hańderek, argue that this new approach, under the guise of a systemic solution, aims to drastically limit pensioners' rights and protect the state budget from the consequences of the favorable court ruling.

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Under the guise of a systemic solution to the problem and the introduction of a new institution 'increase to pension,' the legislator is trying to drastically limit the rights of pensioners and protect the state budget from the consequences of the extremely favorable ruling.