Pension system overhaul - follow-up

The topic of pension system reform, my hobby horse, will be keeping us company in the coming weeks. The final decision on the future shape of the pension system in Poland is bound to be taken and announced around the end of summer holidays. Until then several consultations will be run in order to work out compromise on the variant which will be chosen and pursued. Meetings have kicked off and judging by what politicians and government-related economists declare, we are drifting towards the second option, i.e. freedom to choose whether to still transfer part of pension contribution which now goes to private-run pension funds there or to move it to state-run social security fund.

A week ago I mentioned the calculations presented in the government report, whose accuracy has been called into question by independent (?) economists. I took the trouble to download calculations presented by independent economists (in a spreadsheet) and set about analysing them. I can only agree with independent economists that money-weighted rate of return (actually in essence internal rate of return) is a proper and more accurate tool for assessing investment performance that geometric mean. I spent some half an hour poring over the complicated spreadsheet to work out why specific formulas are in specific cells and find causations between them. Then I began to verify assumptions on which calculation had been made. I found a factual error in decreasing fees charged by pension fund managers (not impacting substantially the upshots), but then gave up on further exploration as it was before eleven, it was dark and my mind simply began to drift away. Had I spent one more evening doing all the stuff, I would have probably been able to tell whether the independent economists’ calculations were correct. Third evening for verification of government’s calculations and I would have been home. But in the first week of July when weather is perfect, there are much more interesting things to do than taking apart the report, if it is not going to change anything…

The silver-mouthed politician of the week award goes to Leszek Miller, chief(tain) of SLD. On Tuesday in the public radio he put forward calling parliamentary investigating committee to track and bring to the light irregularities in setting up and running pension funds. Having read the transcript of the interview I can say that:

1) There is no need to call any committee to find out pension fund managing companies charged over 17 billion PLN in fees from contributions paid by future pensioners. They did it within the letter of law (because politicians allowed them to do so), extensive reports on profitability and solvency of pension fund industry are available on Polish Financial Services Authority’s website and everyone (computer-literate) can easily find the numbers,

2) Personal tie-ups of reform-authors with beneficiaries of the reform are disclosed to the public. You may speak here about arrogance, lack of integrity, but not of withheld tie-ups.

3) If indeed it is true that powerful financial corporations lobbied for the reform to secure for themselves risk-free business, they surely did not spare efforts to efface all the traces of what could be found illegal and the committee would not be able to track it.

4) If Leszek Miller suggests pension fund managers were “pumping up” prices of some shares and there were investors in the know of it and benefited from this and he has evidence of such incidents, may he go to relevant supervision authorities. What Mr Miller speaks of is an example of insider trading, which is a (n easy to detect, difficult to prove) crime. Bodies which deal with such form if criminality in Poland are Financial Services Authority (KNF) and Prosecutor’s Office.

On Friday Mr Miller announced his grouping would pass a resolution condemning bygone prime minister Jerzy Buzek and bygone finance minister Leszek Balcerowicz for the pension reform. I know there are thousands or even millions of people in this country deeply convinced pension system reform, in particular creating pension funds, was the biggest scam made in Poland after 1989. Mr Miller also knows it (just as he knows there are millions of Poles hankering after Gierek’s decade) and in his cynical game wants to score a point by speaking out what those people have in minds. I shall refrain from explicit comments, this is pure politics, not policy, something that adds no value to moving Poland forward.

On Tuesday the runner-up, Jarosław Gowin reasserted he thinks “in pension funds there are Poles’ private monies” and insisted in case pension funds are scrapped, it would be best to give that money back to Poles (incidentally Mr Gowin failed to pin down what he actually meant). Last week I outlined a scenario of freeing the assets accumulated in pension funds, this week I will just paste a fictitious news item, thought out by me and posted on my wall on facebook – dedicated to philosopher Gowin.

It does not take a lawyer, nor the Supreme Court ruling, to come to the conclusion public pension fund assets are not private savings, it is a matter of logic, you just need to use your brains.

The conclusions I reached after the last week are depressing. An average Pole knows little of economics. Loads of useless stuff are taught at schools and except for short course of “entrepreneurship” run in high schools, youngsters in Poland are not educated in the workings of economy. I estimate 80% of Poles do not understand what the whose fuss about OFE is about and hence are pliable - one day can believe the government, the other they will believe Mr Balcerowicz is right. Due to lack of education they have to take what they are told on trust. Imagine how much room for misrepresentations, manipulations, populism and propaganda it leaves.

Politicians and journalists also lack proper knowledge and understanding of the topic. Let’s take the example of a sentence “oszczędzać na emeryturę w ZUS-ie”, in English ‘to save for pension in [state-run] Social Security Fund’, literally in “Social Insurance Company”. Stare-run pillar of the pension system is an insurance scheme. When you work you pay contributions and in fact take out insurance from not having subsistence when you retire. It is an example of endowment insurance policy with no payout before maturity. Get it? If not imagine you take out non-compulsory car insurance. If your car is not damaged, nor stolen, has the insurance stolen your premium. In state-run pension system you buy protection, not benefit. Had it been the other way round, the system would have collapsed, or contributions would have been raised.

The other story is poor informational quality lack of clarity in public speaking. This drawback of Polish public discourse is partly the effect of poor understanding of complicated issues. The other, very rare ability most public figures lack, is the aptitude to explain complex issue in simple words, intelligible for an ordinary recipient. Even if somebody has knowledge, difficulties in putting it across make it useless for the society!

Now let’s move a level higher. Imagine the recipient is an educated graduate of economics, who not just holds a diploma, but is familiar with the stuff and avidly interested in it. If such person needs some six hours (maybe it is little) to determine whether rates of return in the report were correctly calculated, does the whole debate not move to another universe, completely out of reach for ordinary people? Should an average citizen know whether geometric mean, or money-weighted rate of return is apposite for comparing investment results? Does this give politicians and economists right to deprive benighted people of the right to decide how to secure their retirement? Thus I moved to the realm of questions doomed to be unanswered which reminds me today’s writing has come to an end.

Nie będę płakać po OFE - pension system overhaul

With some considerable delay, the Polish government unveiled this week the long-awaited report containing a comprehensive analysis of the Polish pension system and recommendations for coming changes into its workings. Regular readers of this blog probably know the topic and my opinion on it inside out, yet if somebody has to catch up, follow these posts. The report, in Polish, can be found here. I have not found any English-language summary of it, yet for the sake of brevity, I will not summarise it, nor repeat anything I have written before as there have been no fundamental changes that need to be underlined.

Defenders of private-run pension funds being a part of public social security system have, predictably, torn a strip off its authors, accusing government-linked experts of manipulations, lies and use of propaganda, funnily enough without pointing at any specific example. The critics also say calculations presented in the report are distorted. Due to shortage of time and data, I cannot check accuracy of calculations presented in the report, yet if the only accusation is that the government presented investment results of pension funds net-of-fees, rather than gross-of-fees, then jaw drops open helplessly. For my part, I have found the report surprisingly substantive and unbiased and see in it one of few commendable recent attainments of PO-led government.

Albeit, let’s face the truth, this overhaul is carried out not because minister Rostowski cares so much about future benefits of the Polish pensioners, but the key incentive for pursuing it is the tightness of public finances.

The report analyses inter alia the impact of private-run pension funds on capital markets. As an analyst I have seen a few examples of stock-listed companies in which pension funds were major investors and those companies, actively managed by key shareholders, have been well-run. For many companies capital provided by pension funds was indispensable for development and proved a successful investment. Pension funds also contributed to development of Warsaw Stock Exchange and helped it grow to be the biggest such institution in CEE. But there is also the other side of the coin. The processes which have had favourable impact on Polish capital market will one day, due to changes in demographic trends, reverse. Today pension funds are net buyer of securities, but in a few decades outflows from pension funds will surpass inflows, as fewer people will work and pay contributions and more will be paid benefits. Then pension funds will be putting a downward pressure on stock prices and will have to dispose of some of its assets… Due to active ownership of shares in stock-listed companies, the recklessly made decision to nationalise the pool of assets in pension funds invested in stocks as it would have detrimental impact on Polish stock market and economy.

Pension fund defenders convince pension funds have contributed to higher GDP growth rate, while the government claims the effect on economic growth has been negative. The former back their assertion by arguments I mentioned in the paragraph above, the latter point out transfers of part of pension contributions transferred to private-run pension funds, which had to be replenished by subsidies from state budget, increased government’s borrowing needs, debt-to-GDP ratio and thus debt service costs. However, the same debt was later purchased by pension funds, hence increased demand for borrowing from the government was balanced by increased demand from pension funds – those two have cancelled each other out, leaving yields on government bonds roughly unchanged, with some intermediaries (private companies managing pension funds) charging a considerable percentage of that “hollow circulation of funds” as fee for facilitating the process. Their revenues, from standpoint of future pensioners generated a loss.

The report highlights the problem of “double-tax generation”. One of the goals of the pension reform in Poland was a shift from pay-as-you-go to capital system. Under such move, one working generation had to pay contributions for benefits of current retirees and, at the same time, “save” for their own pensions. Is such burden not to heavy to carry? Authors of the reformed wanted to fill the gap by proceeds from privatisation, as the generation of current retirees, working in socialist Poland, had built many of the big state-controlled companies. Privatisation itself should be a goal, but not at any price and not to, let’s face it, meet current government expenses. The whole concept of privatisation as source of funding for the reform, resembles me a granny who sells her unnecessary jewellery to make ends meet. Whether it is wise – I am not the one to judge it…

The issue hardly anyone broaches is conditionality of state’s liabilities towards pensioners. In the Social Security Fund you have book records, while in pension funds you have government securities. Both are the government’s promise to pay, either directly a pension, either to repay bondholders. However, due to form of insurance, book records in Social Security Fund are conditional – these liabilities turn partly unconditional, when a Fund member retires; in pension funds, where assets can be inherited, the liability is conditional as long as a member does not retire. Minister Rostowski declared the part of assets transferred from pension funds to Social Security Fund will also be inheritable, hence in such way state budget would not be better off.

And the last problem, with which I have not come up – frankly speaking I hatched the idea on one of Internet forums – is the functioning of pension funds in the light of MIFID. Under investor protection regulations, if I was to pay my money into investment fund with exactly the same investment policy as a strictly regulated pension fund, I would be obliged to fill in a survey to check suitability of such investment for me, and in case of unsuitability, I would be warned against it and would have to sign a statement despite the warning I want to invest in a risky product. In the case of pension funds, nobody bothers to follow such procedure, which disproves the untrue claim that “in pension funds there are people’s money”.

The government presented for further discussion 3 variants:

1. The pool of assets in pension funds comprising of government securities is transferred to Social Security Fund and booked on accounts allocated to future pensioners. Other assets in pension funds remain intact, 2.92% out of 19.52% pension contribution goes to private-run pension funds which are not allowed to invest in government-issued securities, the rest goes to Social Security Fund. Furthermore, internal benchmark mechanism (pathological) is scrapped, but indebtedness ceiling level (currently 50%, 55%, 60% of debt-to-GDP) are accordingly decreased to prevent rise in public debt.

2. Citizens are free to choose, whether to participate in private-run pension funds, or to rely only on state-run Social Security System. The proposal, as I far as I could notice, does not pin down the split of contribution between state- and private-run parts of the system. This option is more controversial, as system participants would have to submit declarations they want to stay in a specific pension fund; not submitting a declaration would mean silent assent for transfer of assets to Social Security Fund, plus such decision would be irrevocable, while the decision to stay in a pension fund could be revoked any time in the future). Moreover, there is a problem what to do with shares of companies transferred to Social Security – this would be hard nut to crack, yet feasible, the report contains some recommendations with feasibility and drawback analyses. The idea to “write off” government bonds transferred to Social Security Fund would have to be thoroughly analysed by lawyers, as this smacks of sovereign default!

3. Extended freedom to choose – if someone chooses to stay with a pension funds, pension contribution to private-run funds would be 2 percentage points (in relation to pre-tax salary) higher. If you read between the lines, the message is “if you think private-run pension funds are so good, why not pay them more?)

The government also resolved that state-run Social Security System will be responsible for all benefit payments and assets from pension funds will be gradually transferred to Social Security Fund over last 10 years before retirement, to minimise risk of lower pension due to downturn on financial markets.

As commentators say, variant 3 is least likely to go through, while oppositional parties lean towards variant 2. I also hold the view that, despite some of its drawbacks, would be the lesser of all evils and, if amended properly (I put forward a citizen has to submit a declaration if they want to have assets allocated to them transferred to Social Security Fund and shifts between state-run and private-run funds could be done many times and in both way, of course in minimum intervals of let’s say 6 months), should be implemented.

What I did not like about the report is that private-run pension funds and their managers who have ripped over 17 billion PLN off future pensioners are presented as scapegoats. They are only a beneficiaries of legal framework created by politicians and if somebody is to blame, these are politicians, who passed such law, thanks to social support achieved thanks to several misrepresentations. Imagine you are a wife and your husband asks in his buddies to your house and lets them eat the whole content of your fridge, piss in your garden and demolish your furniture – your husband is to blame, not the buddies who were allowed to do damages.

One of my colleagues from work told me pension funds from the beginning were meant to be the scapegoat (not only the best, for reasons below, business on earth). In fact, to tackle demographic problems you only had to shift from benefit-defined to contribution-defined system, raise retirement age, scrap some privileges and create legal framework for voluntary private-run system of pension saving or insurance. At the end of the day, how high pension benefits will be depends only on standing of the economy, as investment results of pension fund in the long run depend on them. This means obligatory pension funds create little value added, and, provided calculations in the report are accurate, costs they generate are higher than value added they generate.

Now comes the time for consultancies. The debate will be fierce, as the prime minister said, big money is at stake – but for both sides of the argument. Minister Rostowski will play for more balanced budget, pension funds and its defenders will play for state-guaranteed source of profits on risk- and responsibility-free business. And I believe interests of the future pensioners are somewhere near the bottom of the list of priorities defenders are opponents of pension funds have.

I only fear the pension funds will draw another divide line in the Polish society. We have Poles who believe Martial Law in 1981 prevented a disaster and Poles who believes general Jaruzelski (turning 90 next Saturday) declared it despite there was no threat of Soviet intervention only to nip in the bud growing social movement. We have Poles who believe Smolensk crash was a tragic accident being aftermath of human errors and Poles who believe it was an assassination. From now we will have Poles praising government for dismantling the biggest scam in over 20 years of Third Republic of Poland and Poles believing the government wants to take over their money.

For the very end, I was deeply astonished by press conference on Friday by Mr. Balcerowicz, one of leading defenders of pension funds. When I looked at his wrathful face when he avidly spoke of “lies, misrepresentations and propaganda” I feared he would kick the bucket. He did not, but I am curious to find out why he failed to mention a single, specific lie and disprove it. Is it so difficult to say “the statement you can find on page X, paragraph X of the report, i.e. “quote” is untrue, because this and that”? Why has he not done it?

The release of the report coincides also with congress of the Civic Platform, held this weekend. It made me realise if I were to choose, I would opt for Donald Tusk’s platform, not Jarosław Gowin’s one. I opt for moderate economic and social liberalism, not conservatism. But above all, I opt for sound mind and common sense!

Too much filth will kill you...

Back from holidays again – experienced a total logout from work and tomorrow the first thing I’ll need will be a password reset to access my computer. Even the weather diffidently signals time to return to corpo-world has come – the recent heat wave gave way to a downpour and temperatures plunged by 10C, giving a blissful relief from the heat. And may it stay so…

Got some time to catch up with film watching and finally watched Drogówka, the fourth film by Wojtek Smarzowski which went on the silver screens in February this year.

Mr Smarzowski’s film-directing attainment is definitely incomparable to any other contemporary film-maker in Poland. To put it briefly, in Smarzowski’s world there’s no choice between good and evil, the best option is only the lesser of tow evils… In his (in)famous four films he deftly depicts the darkest side of life, pouring the filth into the audience, making you want to take a shower and wash away all the dirt that has stuck to you while watching.

For many people I know even his first film, Wesele, released in 2004 and favourably received by critics, was intolerable. The film is actually a very ‘light’ depiction of the dark side of Polish mentality, showed in the background of a provincial wedding. The story of pregnant bride coerced to marry a groom bought-off by his would-be father-in-law sheds light on the worst traits of provincial duplicity: caring more about “what people say” (keeping up appearances) and money than about relatives’ happiness. Striking shady business is more important than grandpa’s sudden death, stolen Audi TT is more important than just-married wife and a child she will give birth to. Well-done and well-balanced art…

Dom Zły (especially with English subtitles, Jamie, are you still with us?) takes you back to the days of Martial Law and, in retrospections, to late 1970s. The picture is dirty, at times vulgar and explicit, yet taking into account the purport of the film, suitable. Form should fit the content and in this case the balance is still struck.

I’m ashamed to admit I haven’t found time, even in the last days (when still I was kind of busy doing some overdue refurbishment works around the house), to watch Róża. My mother, who watched it (but refused to watch it with me), told me cruelty and filth was dosed out moderately. The film, set in post-war reality of “regained lands” shows the dark side of events that actually took place and the depiction simply lacks censorship that would erase the ugliest parts. Yet, as critics say, given the historical background, use of abhorrent content is justifiable.

Compared to the newest Smarzowski’s film, the three previous could be classified as late-afternoon cartoons for polite children. In Drogówka, subsidised by State Film Art Institute and favourably reviewed by critics, the batty director has gone over the top and I will stand up for this view despite by general insensitivity to filth. The film was meant to over-expose all the pathologies plaguing the Polish police, in particular its road traffic forces. In fact only some of the pathologies showed in the film are the daily bread – these are mainly use of foul language or offensive jokes. Other alleged afflictions depicted in the film are simply marginal problems – gone are the days of wide-spread corruption, hardly ever can you find policemen gaining fortunes on bribery, regularly visiting brothels and raping accidentally met women. When the film was released I found the police representative’s statement, claiming the film discredits police, exaggerated and unfounded. Upon watching this and sticking it out (which I consider a success, as the plot is anything but gripping) I have to take back my words. As three previous film showed actual dark side of life, were waspish and cruel, yet fair, this one is a one massive distortion. The amount of obscene content is also fairly overdosed. The film could have done without explicit scenes of anal sex in the escort agency and one of the last scenes – oral sex on the back seat of a car, tragically ended by rear-ending could have also been edited out and without those two shots the film would have soaked with filth anyway. I have nothing against showing moral downfall, as I believe when it exists in fact, as such eye-popping naturalism showed to the public may help eradicate evil. In Drogówka intensity of filth might be unbearable even for the toughest audience.

I only wonder whether Mr Smarzowski takes pleasure in shooting such films. With each next film his exploration of dirt gets deeper, naturalism grows into over-naturalism and I don’t feel like watching his next attempt, no matter how many stars it receives in review in “Co jest grane”…

Pamiątkowe rupiecie - book review

Two paragraphs below are an adapted and abridged translation of the book’s blurb.

Wisława Szymborska was anything but delighted to have learnt Anna Bikont and Joanna Szczęsna were writing her biography. As she found personal confessions inappropriate, she avoided like a plague telling stories of her private life. Despite this, the authors managed to persuade the poet to meet, which resulted in unveiling several astounding stories and facts from the past of the Noble prize winner. During a series of meetings Szymborska amazingly and humorously commented on various stages of her life and work. The story is supplemented with memories of the poet’s friends and pieces of poetry interspersed throughout. 

The book is a first full-scale biography of the Noble prize winner, substantially complemented in comparison to the first edition, issued after the Noble prize was awarded. The authors added chapters covering eventful last fifteen years of the poet’s life. They investigated hitherto unknown details from her life and enhanced the content with first-published photographs. The portrait of Szymbowska grew in dignity and depth, yet has not lost any of its lightness. The poet’s death marked the end of some era in the history of Polish literature. While reading this fascinating biography, full of anecdotes and poems, descriptions of journeys and testimonies of friendships, we can taste the climate of Szymborska’s era…

 
Encouraging, isn’t it? Even if the translation (mine) is imperfect…

Had a chance to read this book during early May weekend, yet have hung back on review, on account of, as usually, being short of time.

As indicated by the blurb, the insight into the poet’s private life was extremely hard-gained and it makes the book even more valuable and attention-gripping. Whatever you could say about Wisława Szymbowska, she was anyone, but a celebrity. The last thing she needed was publicity and as much as she could she avoided public appearances, which usually made her feel uncomfortable. Compared to most contemporary public figures who feel at ease being in the limelight, she was a misfit. I somehow feel sympathy with her in this respect…

The poet’s natural modesty, as emphasised repeatedly in the book, was her outstanding feature. And when encountering the poet, when observing her behaviour, you could feel this was not a feigned modesty, not a mask worn to gain accolades. Her manners exuded naturalness, you could almost sense her attitude to life was genuine, no room for acting…

Just to mention a few moments from the poet’s life that seem to deserve most attention in the context of how Szymborska will go down in history and controversies arousing around her. She survived WW2, witnessed inhuman cruelty and then the land she was born became a part of the Soviet bloc. The war brutality and duplicity of Church observed in the childhood put her faith in God to a test. Out of religious teenage girl, she evolved into doubting and seeking woman. She could not claim to be an atheist, yet rather an agnostic. Such openly declared beliefs turned against her in 1996. When she was awarded the Noble prize, right-wing lunatics instantaneously raised outcry over her steering clear of Catholicism and some other facts from her life she would never conceal.

These inconvenient facts Szymborska would never hide was her was post-war fascination with communism. Just like many people she wholeheartedly believed the new system would bring equality and common happiness. She actually discerned inhumanity of communism, but in the period of being totally besotted, she, and many of her peers, took in all the justifications for the system’s cruelty. She was infamous for writing an elegy after Stalin’s death (you can find it in the book), or writing commendation of North-Korean soldiers fighting capitalist invaders. She lost her faith in communism after the system thawed out in the second half of 1950s and in the 1960s she threw away her party membership card. She would never withhold her immature fascination with communism and claimed this was genuine, not opportunistic. She brought herself several times to account for this, yet the time could not be turned back. This stage in her life and poetry should not be forgotten, yet definitely should be forgiven.

Pieces of Szymboska’s poems have been deftly interspersed throughout stories from her life. I must admit the match is in most cases perfect – facts from life are marvellously illustrated with poems, often created on the spur of the moment. Or maybe the stories have been selected and put into apposite order to fit messages hidden in the outstanding poetry?

For the ones who have not been very familiar with Szymborska’s work, the book offers an opportunity to delve into remarkable poetry. As soon as you read several short poem, you realise the Noble prize was undeniably well-deserved. Some of the poems are translated into foreign languages, including English. The translation I read (I can’t quote it now, the book was borrowed and I forgot to scan the relevant page) was noteworthy and deftly rendered the poem’s message, while retaining natural flow and rhythm.

Szymborska’s artwork exudes with unique combination of simplicity and complexity. Striking a balance between the two in any genre is a challenging task and attaining it with a huge dose of sensitivity seldom happens. This only proves the poet’s uncommon aptitude that should outlast next generation of Poles.

Expect the next posting in the second half of June – holidaying until 16 June again ;-)

A trip to Dolnośląskie

All the good things have to come to an end… Taking a long-awaited and well-deserved holiday break helped me recharge batteries and forget about most of everyday worries. All the plans, social and sight-seeing-related have been followed out, so with no regrets tomorrow I’m bound to submerge into corpo-world. However, before I brace myself for a head-on collision with the recently upsetting murky corporate reality, let’s share some uncanny pictures and thoughts from the days off…

The Sky Tower in Wroclove, to the right shot from the street level, on its south-west edge. The tallest building in Wrocław was under construction in late summer 2011 when I last visited the city. Construction works were finished in 2012. The edifice built by Mr Leszek Czarnecki, one of the richest Poles, comprises of shopping mall, offices and apartments and there have been ample controversies surrounding the building, its design and whether its fits the rest of Wrocław in terms of architecture.

You may like its design or not, but you can’t fail to discern it. It’s visible from all main roads running to Wrocław from the distance of some 50 kilometres and right away it should strike you that the structure stands out in terms of height – the second tallest building in Wrocław is two times smaller… Its shape – looks like a tube sliced aslant – is a distinguishing mark. Whatever the owner and architects wanted to achieve has been achieved – no matter whether the building’s design falls in with your taste, pretty nobody passes it by indifferently.

To the right – north-eastern entrance to the shopping mall. Lipstick on a big, as I called this peculiar composition – the sculpture “Profile of time” by Salvador Dali was put up outside the building in April 2012 and has sat there since then. To make it clear – I have nothing against placing the piece of craftwork there and find it one of more attention-deserving examples of contemporary art (bringing to mind the timeless picture by Salvador Dali), but who the hell has come up with the ridiculous idea to mar the sculpture with the advertising screen put up just next to it? Does this stand for due respect for art? Or is the craftwork meant to serve the consumerism?

Sky Tower overlooks Wrocław and the further from it you move, the more likely you are to discern the characteristic tube in the distance. To the right, a photo taken from the southern fringes of Wrocław, where Al. Wyścigowa (former national road no. 8) and Al. Karkonoska  (National road no. 5) converge and then run towards A4 motorway. Before motorway bypass of Wrocław was opened this was a place where all the southbound transit traffic would meet…

Between the afore- mentioned streets one can find a cemetery of Soviet Soldiers. Cannons and tanks have been giving a warm welcome to all visitors coming to Wrocław since late 1940s when the necropolis was laid. This is one of many similar places in Poland (including the cemetery in Warsaw by ul. Żwirki i Wigury) commemorating the Soviet soldiers who “sacrificed their lives to liberate Poland”. The inscription to the right literally says: “HERE REST THE SOVIET ARMY SOLDIERS, PARTICIPANTS OF WROCLAW BATTLES WHO HAVE LAID DOWN THEIR LIVES FOR LIBERTY AND INDEPENDENCE OF NATIONS OF POLAND AND THE SOVIET UNION”. Unless you are a hard-line commie, you should at least bridle at this pack of lies. What liberty? What independence? Many lunatics would probably be in cloud nine, if only they could obliterate such places of commemoration and go unpunished. I in turn hold the view such places should be taken care of and stay unharmed to bear testimony for next generations, also to bear testimony of omnipresent lies on which the totalitarian system was founded. Besides, those soldiers who rest there, were also victims of communism, cogs in a machine who were meant to die in order to let the Soviet empire expand westwards… They, as all humans, deserve a place of peaceful rest…

Coming to down-to-earth issues:

The weather was clement until Wednesday afternoon when temperature unexpectedly plunged and fell to mere +5C on Thursday morning. Given that spring came later than usual this year, some northern slopes in Karkonosze were still covered with snow (to the right, view from Kowary).

And two shots from Jelenia Góra – to the right, a pebble from Jelenia Góra, encased in cobblestone in the market square. Long story why it’s been here, every why has a wherefore. If any of the readers bothers to tell the anecdote, I’d be more than grateful…

To the right, again Jelenia Góra – every city must have its focal point, but few have it marked so distinctly. Interestingly, this is an element of a Church property. I won’t dare to speculate whether this is just a coincidence, or if it proves dominance of one specific institution in the Polish secular state ;-)

The trip was eventually in some 70% sponsored by a carefree driver who rear-ended me in Jelenia Góra. The speed at which the rear of my car was hit was low (again, inattention and centimetres lacking to make it a near-miss) and I was lucky not to sustain any neck injury (cervical spine is very sensitive to such accidents) and the damage done to my car was negligible. Upon checking the exhaust system and boot door lock remained intact, the culprit and I agreed on a few hundred PLN compensation for visibly scratched paintwork on the rear bumper. The damage doesn’t diminished the car’s utility value and it earned me some dough…

A propos motoring. After the period of run-up to Euro 2012 when several kilometres of roads were being modernised and built and ordeal drivers had to go through, now we can enjoy much higher standard of expressways and motorways – the wait was worthwhile! This was the first time I drove the newly built almost 100-kilometre long section of S8 (I last was there in September 2012, a month before opening) between Mszczonów and Piotrków Trybunaski and for the first time drove without even having to downshift to 4th gear 102 kilometres from Kostomłoty (junction on A4 motorway west of Wrocław) to Syców, where S8 expressway ends and turns into National Road no. 8, full of big trucks, small towns and numerous speed cameras… The missing section between Piotrków and Syców is under construction, due to be opened in 2015. Fills with hope. Actually driving the decent roads is faster and safer, but not necessarily cheaper. Unless you hold your horses and move excruciatingly slowly (100 kmph in my car is the speed above which fuel consumption begins to soar, from 6 litres of petrol per 100 km when the car does 100 kmph, to 8 litres when speed rises to 130 kmph and some 10 litres if I reach 150 kmph), the journey will set you back more (even more if you go via toll motorways, not the case this time) – but at the end of the day, comfort has its price…

Poles aged 30 – portrayed, but accurately?

From time to time journalists of Gazeta.pl (online flank of Agora S.A., one of the most influential, leftist-liberal, media holdings in Poland) come up with series of articles dwelling on social problems. Quite recently two of them encouraged readers of the portal, aged near 30, to share with wider audience how their dwellings looked and what their material status in terms of housing conditions was. I usually keep track of such series with some does of curiosity, but that time I impatiently waited for each consecutive article, then read each of them with bated breath and avidly followed record-long comment threads…

The larger project run in attempt to paint a collective portrait of generation of 30-year-old Poles began by posing a question why people born in early 1980s are reluctant to have children. In the next step journalists resolved to find out where and how those people live and how the finance their housing needs.

The first article is a string of brief stories which paint a bitter-sweet picture…

Kaśka, aged 32, and her husband co-rent a room in a bigger flat. It’s cheaper and more practical, yet at times inconvenient. Their salaries would suffice to rent a tiny flat in a shanty town, but they prefer a 20-metre room in a flat shared with other people. Tensions sometimes appear, but when they are in need, they may count on their flatmates. In the meantime they put aside money to have equity and get mortgage on more favourable conditions. As for now, no bank finds them creditworthy. Purchase of property with cash – out of reach.

Błażej, aged 30, lives with his girlfriend in her 42 sqm flat (probably inherited or bought by her parents, photo suggests it’s located in Służew, part of Mokotów district, Warsaw). Given his girlfriend’s and his earnings, they wouldn’t be capable to service any mortgage debt, nor to rent any flat. Their aspirations have been fulfilled. Probably hadn’t it been for the windfall (his girlfriend’s own flat), they would live with parents…

Agata, aged 31, and her husband live in a mortgaged flat. Shortly after getting married they lived in a rented flat, then when a child’s birth was imminent, they took out a loan. Month by month, they move closer towards “full ownership” of their flat.

Piotrek, aged 30, and his wife, with some support of their parents and bank financing, bought a 70 sqm on city fringes. In his view this was a fair trade-off between location and size. Debt burden is not excessive and the flat would be spacious enough when children are born.

Anka, aged 29, is also one of those better-off. Since she was 20 she lived in flats inherited after family, currently she and her husband live in a house built on a plot donated to them by husband’s parents. She’d be damned if she dared to complain about her housing conditions.

The stories above bring a moderate dose of optimism. All character manage, some better, some worse, but are satisfied with what the have and keep cheerful. When you begin to read next sent in pieces, smile is immediately wiped off you face…

Sferyczna, single woman, aged 30. Lives in Warsaw, but hails from provincial Poland. Worked for a while abroad, but has not managed to save any money. Currently rents a tiny room in a tiny flat and estimates is 5 years will be eligible for a mortgage. Interestingly, she claims to earn more than peanuts and still she declares she can afford very little…

Karolina, aged 31, and Marcin, aged 36, have one child and live in an old flat that could do with a comprehensive refurbishment. Mortgage is a huge burden for them, each unplanned expenditure or a second child would blow over their budget. Loan instalments make up more than half of their income – this speaks for itself…

Next piece contains two contrary opinions. Rafał, aged 31, and his wife wonder whether only grumblers are around. He wants his voice to be audible. Instead of grumbling his wife and he toil away up to 60 hours per week, have built a house and bring up two daughters. Not a word about any mortgage, but he mentions his father who runs a prosperous company. Despite having little spare time, he claims he is happy and encourages to sheer hard work, which, as he believes is a key to the door of financial and personal success.

Marek, aged 27, has co-rented a flat since coming to Warsaw 5 years ago. With his earnings, little more than 2,000 PLN after tax, he can only afford to rent a small flat and pay maintenance charges, this all sets him back some 1,500 PLN – after this he has 600 PLN to spend on food, travels, clothes, entertainment??? He sees future in anything, but bright colours – with his earnings he stands no chance to get a mortgage and own any property…

Need something upbeat, don’t continue reading… A 30-year-old single woman has just bought her own flat. The mortgage and refurbishment loans have both 23-year repayment schedules, but her own flat is a step forward after years of renting and sinking money to landlord’s pocket. Living conditions are pretty dire, but glimmers of hope bring about smile on her face. In a few months the flat will be finished. As for now, she saves on everything, including food and scrapes along, to service debt timely…

Another confession, written by a 29-year-old man. He works in a public sector, is employed for a finite period and earns minimum wage. No chance to move out of parents’ house, even to rent anything. No prospects of becoming self-supporting, of raising family, no feeling of stability. He’s angry with those who stigmatise his peers who keep living with parents. In fact many of them do this not out of fear of taking responsibility for their lives, of facing adulthood, etc., but they stick to their parents for purely financial reasons. When earning 1,500 PLN after tax, attempt to taste independence is like being thrown at the deep end… Hopes for future… None… just prospects of barely getting by…

Not yet miserable? Carry on! A 31-year-old single woman has a single-bedroom mortgaged flat, but she and her daughter live with her parents. The graduate of Polish studies and Journalism, since finishing school changed jobs many times. Each was supposed to have been temporary, before she found something more desirable. In 2010, with support of her parents and a bank she bought a flat. Soon after she was offered a new job, left the previous, well-paid one, and eventually was left out in the cold, because the new employer changed its mind. Never jobless, she had next temporary, poorly-paid jobs which allowed her to pay bills and mortgage instalments. A year after it turned out she was pregnant with a man who turned out to be too irresponsible to fulfil role of a father. To make ends meet, she moved to her parents and lets her flat to repay the mortgage… She wipes every night and slowly is losing hope for a better tomorrow…

Let’s face it – those letters have been picked out of several sent in to Gazeta.pl’s editorial room. The picture of the generation which emerges is a matter of who and on the basis of what criteria chooses which letters to publish.

More interesting are plentiful comment threads under the articles, counting several hundred entries. Comments can be divided into a few categories…

Predictably, quite a few commentators trot out the “young, educated, from big cities” myth – they argue the depicted misery bears a truthful testimony how in fact the “Green Island” looks like and what the youngsters got from the party they had voted for. How long before people realise politicians’ influence on people’s everyday is much smaller than they claim? Misery of many young people can’t be put down to “feckless rule of losers and traitors”, while if the biggest oppositional party came to power, it wouldn’t turn Poland into a land of milk and honey. Society and economy are driven by actions of millions of individuals, not by decisions and deeds of few politicians. They don’t have power to heal the country and, on the other side, have little power to screw things up. If I were to be malicious, I could say between 2005 and 2007 property prices in Poland soared by almost 100%, hence becoming less affordable.

Some commentators point out those stories do not hold water – why somebody takes out a loan and than changes a job, for a worse-paid one, how some of mortgage instalments calculations match with what somebody has left at their discretion, etc.? Some even claim the stories sound so incredulously that they appear concocted.

The more ruthless advise authors of the letter who take pity on themselves to blame themselves, not the rest of the world. Who made them choose dead-end studies? Who precluded them from working harder? Who told them to change jobs several times?

Other group indicate young Poles have over-inflated expectations regarding consumption and earnings, while it takes time to grow into wealth. The only way to consume more than you can afford to is living beyond means, which means living with a ball and chain in form of debts and praying luck streak doesn’t cease, as then the frail wealth collapses.

For my part – I have no right to complain… I’m better of in comparison to some 99% of my peers. I don’t live in my own flat, but this is only my choice – I can afford to rent or take out a mortgage, but since there’s no pressure to move out I keep living in my parents’ house (and give them little money each month) and put aside some 70% of my salary. I earn very decently and have prospects of even higher earnings, but on the other hand at the back of my hand there’s a seed of uncertainty – my employer knows how to send adrenaline rising and having seen people being fired (with 1-day notice and generous severance packages) I realise no matter how committed I am, one I day I can have an inadvertent slip-up or my employer may change strategy and back out of business segment I work at, resulting in my job contract being terminated. I have job contract for indefinite period and well-above national average salary, but in return am offered no stability. I don’t go mad with the awareness each day might be the last day of my work only because I don’t have to provide for a family and have no debts to settle.

I’m also far from sharing opinions of those telling those unhappy people to blame only themselves. Success, not only financial, is a combination of many factors, including parentage (if your parents are wealthy, you’re better off at the start), skills (many are inborn I believe, you may develop them or not, but if you really lack a specific skill, developing it won’t get you far), hard work (inborn skills without hard work are useless) and luck… Every day I happen to realise where I am now and what I do is just a stroke of fate… Of course I can’t pronounce it’s prudent to take dead-end studies in political sciences, change jobs frequently, or get pregnant with an immature man, but in some cases people are inarguably out of luck and telling them to blame themselves proves only lack of empathy. Not everyone has a chance to be born in the capital city, in well-off family, to have educated parents. Most people have it up-hill and in Poland I can’t honestly say others have it downhill.

I recently calculated, with my above-average earnings and possibility to put aside most of my salary, if I was to start saving from scratch now, I’d have to save for 6 years to buy an average 50 sqm flat in Warsaw, assuming property prices stayed unchanged. Some time ago I read an average Pole would have to save for 11 years their whole salary to buy such flat. Imagine this – live with your parents for 11 years, let them feed you, don’t buy clothes, cosmetics, don’t go out, don’t travel and after 11 years you can buy a flat for cash. If your parents can’t support you financially you can only take out a huge burden on your back and pray nothing goes wrong along the way. How young Poles live is an aftermath of still steep, in comparison to earnings, property prices in Poland. As many market specialist claim, only increased supply of dwellings could help solve this problem – this can be achieved in form of public-private partnerships – local governments building in partnership with property developers council flats for rent. But for this you need a proper legal framework and wise and honest people to run such schemes. Out of reach, just like own flat for an average Pole turning 30…

Apologies in advance for taking a break from blogging next week. I’m holidaying… At last :-)

Early May long weekend – from sociological standpoint

1 May (Labour Day) and 3 May (Constitution Day) are bank holidays in Poland. This favourable alignment of non-working days almost each year gives an opportunity to extend a weekend preceding or following those days and take longer holidays. The majówka has already become a well-established annual tradition since the Constitution Day was reinstated over 20 years ago, while Labour Day, the paramount festival of the working class in PRL, remained intact as a public holiday.

Customarily, most schools and universities do not hold classes, many offices close, public transport vehicles run according to weekend timetables. In a word, in the first days of May Poland runs into a standstill, or at least is ticking over.

Many people decide to go on holiday at this time, as by taking a few days off they may extend their time off-work for up to 9 days. Many do this because they have no choice, either because they need to look after their children, or because their employer forces them not to come to work. Lucky are those who may voluntarily come to work on working days in the middle of the long weekend. The customary daily routine is that you come slightly later, go for a longer lunch and knock off earlier. Little is going on in the office, nobody pesters you with e-mails, phone calls and at the end of the day it turns out your efficiency rises and within 5 hours your output is equivalent to what you manage to do on a normal 9-hours working day – you can sit back and catch up with overdue tasks. For this reason I hardly ever take days off during long weekends. It simply doesn’t pay off, I even draw a lot of pleasure from going to work on such days. The atmosphere is quite specific and I must say everyone likes this feeling of being laid-back.

If you aren’t at work, there are several popular ways of spending the early May long weekend: going to holiday resorts (seaside, lake district, mountains), spending it in own or friends’ allotments, or on outdoor activities near your dwelling. This year I feel sorry for those who decided to holiday away from home, as the weather, unlike last year, is awful. Temperature below 20C, sparse moments of sunshine, yet rainfalls in abundance. Only today sunshine fought away clouds and Poland was basking in spring pre-heat.

The key outdoor form of entertainment in the last 20 years in Poland is making a barbecue. People from all walks of life keenly indulge in this form of leisure. No matter if you have a big garden, an allotment, a balcony or go to a park, no matter where you live, how much money you have, how old you are, preparing grilled staff and consuming it gives pleasure to almost everyone, except for some neighbours, sick of inhaling accompanying smoke. This year weather has not been conducive, as it settled clement at the end of the weekend, but today I finally bothered to inaugurate the barbecue season…

From what I observed over those days:

1 May 2013 – lots of people working around their houses – painting fences, cleaning cars, tidying up garages, mowing lawns. This is not a Church holiday so nothing holds them back from physical work which is considered inappropriate on Church holidays. Trains run half-empty (I boarded one in Warsaw, after getting sweat during a bike ride – air was very humid and I decided to take a rest and let the train carry myself closer to home). On my way I noticed few people on bikes, those I ran across were usually fathers with children.

On 1 May few people take part in marches staged by leftist organisations. Instead of claiming the rights of the working class, Poles prefer to relax. But if, for ideological reasons, someone would attempt to scrap the Labour Day, they would all in unison stand up for this bank holiday, for their right to have a long spring weekend.

2 May 2013 – traffic is sparse – on my way to work I get fed up with unhurried drivers and… am in a luck not to be caught by a police patrol, or by a speed camera. Having got off the underground I stroll past desolated streets to my office. At half past three I knock off and cadge a lift from my workmate who lives in Ursynów. Thanks to her favour I get to my car within 20 minutes – the traffic is blissfully sparse, although not as sparse as on bank holiday – this indicates shopping generates much of the traffic volume... Then I head for Konstancin and while I’m driving, heavens open. I feel sorry for numerous bedraggled cyclists I spot there.

3 May 2013 – rainfalls cease around midday. In the afternoon I set off to Piaseczno. I pass by few people as I walk to my hometown; traffic on the roads is anything but dense. The humans I come across come basically from two groups – either parents taking their children for a walk, or alcohol addicts on the lookout for a liquid which would quench their thirst. On the market square I observe a patriotic celebration taking place. Runners are getting ready to a Piaseczno – mile race. Most people sticking around are again parents with children. Credit to them – at least they want to familiarise their offspring with the history (40% of Poles don’t know what event we commemorate on 3 May, is unaware of circumstances in which the constitution was passed, or mistakes it for independence day…). The upbeat observation is that almost all cafes and bars are open – if you want to eat out on a national holiday, you won’t have troubles finding an eatery. The downbeat (or, why?) observation is that all off-licence shops are opened and in front of each you can see a gathering of drunkards (I was accosted by one of them, insisting I lent him 2 PLN). Besides – humans almost disappeared, Piaseczno again appears abandoned.

Swimming pool, which I visited three times during the weekend was anything, but full. The better for me, on Saturday morning half of the time of swimming I could enjoy the whole track at my disposal.

Today, while cycling from 10 a.m. until midday, I spotted no more than 20 other bike-riders, including an admirably fit “grandpa”. The man, I estimate no younger than 70, while overtaking me (I cycled some 20 kmph) asked how to get to the [brand] shop with sports stuff and having received instructions accelerated and rushed forward. The chap’s fitness was enviable.

Crowds were somewhere else… The picture which emerges from the jumble of observations above is gloomy. Given that

- an average Pole can’t afford to spend the long weekend away from home, unless at their family’s,

- number of cars parked outside houses and living blocks was no lower than on ordinary weekend,

- few people were out to the streets and traffic was sparse,

- on 1 May and 3 May shops were closed (unless their owners, their families or employees with contracts not governed by the labour code stood behind the counter),

- no crowds could be spotted in the places of leisure,

- half of Poles do not read a single book in a year,

the facts above lead me to a dejecting conclusion that an average Pole spends the long weekend sitting or lying in front of TV (or computer) screen and this gets me down. I’d prefer my nation to be more open-minded and this can be achieved by spending more time outdoors and in places other than supermarkets and shopping malls. I’d prefer my nation to be fitter and without walking, swimming, cycling or working out this can’t be achieved.

Or maybe I’m just picking on. Everyone should rest and relax the way the feel is best for them. Doctors advise people whose lifestyle is sedentary should choose pastime activities involving physical exercises. After spending most of the week behind my desk at work I can’t imagine myself sitting more than I need before my laptop or lying in bed and watching TV (I hardly ever do this). Spring beckons and young body cannot resist it!

Pension system in Poland – pending overhaul…

The topic of private-run pension funds in Poland (the biggest scam in the history of Poland after 1989 IMHO) has been shelved on this blog over two years ago. Back then I outlined a relatively decent (how modest of me) summary of its workings and the government’s plans at that time. As I see no point in flogging the dead horse, if you need to catch up, please revert to ample previous posts where you can find both my private opinion on the workings (and pathologies) of second pillar of Polish social security system, as well as an unbiased description of it.

By the end of first half of 2013 the government plans to carry out a long-awaited comprehensive review of the whole pension system in Poland, the review is bound to cover not only the private-run pension funds, but also other contemptible features of it, such as privileges for many groups of professionals that need to be funded from taxpayers’ purse.

As the results of the review have not come to the light, there have been speculations regarding what the government might do to enhance workings of the private-run pension funds. As some of the government-liked economists claimed, any outcome was conceivable, including fully scrapping the pension funds and moving assets from there to state-run social security fund (running deficit for years), if their existence was deemed detrimental to future pensioners and public finances. This most abject plan has been given up, as one of three main rating agencies threatened to downgrade the rating of Poland if the government seized assets accumulated there. The Polish government is aware that you shouldn’t mess with ruthless financial markets and it quickly backed out of such option, declaring it had never come into play. I’m in two minds about such stance, but it’s hard to deny the government the foresight in this respect. Lucky streak of low debt service costs will not last forever…

Now to the point. Pension system is an element of public discourse; several economists, politicians and, let’s speak it out, lobbyists make several statements to shape Poles’ opinions on it. The problem is some of them are not home truths. I will confine to pointing at just three most blatant… Distortions? Misleading statements? Departures from truths? Misrepresentations?

Misrepresentation 1: Money amassed in pension funds are Poles’ private savings.

The sentence above could be a nice illustration of the English idiom “pack of lies” – let’s count how many lies can you pack into one sentence.

“Money” – what money? Pension funds are a pool of assets, including two key types: government bonds – ca. 55% and shares of publicly traded in Poland companies – ca. 40% (the rest are miscellaneous assets, also cash and bank deposits). These assets are hence securities which represent either a government obligation to redeem its bonds, or ownership stakes in companies.

“Private” – further on, pension funds keep records of their participants in relevant registries, thus each participant is allocated a share in the pool of assets (recorded as number of “settlement units” allocated to them), each share has the same composition of assets. Now how come it is “private”? How come many claim those “money” belong to future pensioners, or is even owned by them? Let’s look at some facts? On 4 June 2008 the Supreme Court of Poland handed down a ruling (quoted and linked in one of previous posts) which clearly stated assets in pension funds are a part of public social security system, hence contributions to pension funds are obligatory. This should dispel all doubts – whatever assets are allocated to the account assigned to you in a pension fund, they are owned by the state. If however, just like many other people, including dr hab. Leszek Balcerowicz (interesting why everyone titles him “professor”, if Mr. Balcerowicz does not hold this academic title, it is only his position at the university I graduated from), claim this is your money, ask yourself a few fundamental questions:

If it is your money – why can’t you withdraw it and spend it the way you want?

If it is your money – why can’t you have influence on how it is invested?

If it is your money – why can’t you use this assets as a collateral for a loan you wish to take out?

If it is your private money – why are you forced to pay huge load fees to private companies managing it?

The only advantage of it “savings” in pension funds is that they are inheritable. There are of course some restrictions aimed to keep “money” in the system, but indeed there are case when contributions, depleted by fees charged by management companies, can come out of system in real cash. Unfortunately the only such circumstance is death…

“Savings” – peculiar are savings funded by debts run up by the Polish state of the taxpayers… With some “little” help of 14 useless, yet expensive intermediaries. No comments…

Misrepresentation 2: Pension funds fetch high profits.

Remember the adage there are “lies, damned lies and statistics”? You could add financial reporting tricks to that list. Here the trick is simple and only recently somebody bothered to analyse its impact on returns brought by pension funds.

The mechanism is very simple – what in all statistics is presented as rate of return is a growth in value of “settlement unit” – a book record representing market value of some portion of assets in a fund. Example: let’s assume now your contribution to a pension fund is 100 PLN. The moment you make a payment one settlement unit is value at 10 PLN. 100 divided by 10 is 10, so you should have allocated 10 settlement units to your account. And here’s the catch! Because load fee for each contribution is 3.5%, only 96.50 PLN out of 100 PLN is invested in assets in the pension fund, the rest goes to oil the wheels of the pension system, majority of which to private management companies. Now let’s assume the value of funds’ assets rose by 4% over the reporting period, so the end-of-period value of one settlement unit is 10.40 PLN. Now recall you bought 9.65 settlement units. Value of assets allocated to you is 9.65 times 10.40 = 100.36 PLN. Your rate of return is 0.36%! Surprised? Now let’s face some other facts: I omit management fees, as they are included in valuation of settlement units, at the reform inception load fee was 10%, then 7% and some 3 years ago it went down to 3.5%. Imagine then break-even rates of return, i.e. by how much market value of funds’ assets had to increase to let their participants earn at least a nominal return (answer: they are respectively: 11.11% and 7.53%), let alone above-inflation one. To recap, given that yields on government bonds run near inflation rate and returns on stocks are very volatile, this system cannot (has a built-in inability to) generate profits to future pensioners. The only beneficiaries are private companies administering it.

Misrepresentation 3: Obligation of the state in form of issued bonds, purchased by pension funds, better secures future pensioners’ interests than promise in form of book record in state social security fund.

Giving lie to this statement takes very little. Let’s look at the example of Greece on the verge of bankruptcy. Bondholders had to accept 53.5% face value haircut, which means out of each single Euro they recover 46.5 Euro cents. Most pensioners have not seen their benefits declining by such percentage, usually in nominal terms their benefits fell by 30%. Media reported single cuts by 60% or 70%, however these hit most privileged Greek pensioners. Moreover in November 2012 Greek Supreme Court declared pension cuts unconstitutional. The same, under the current legal framework, would probably happen in Poland, if it, heaven forbid, was nearing default. Get real! Promise on form of bonds has no higher value than constitutionally protected right to participate in the social security system!

One more misrepresentation is in the calculation of state’s liabilities towards future pensioners. Pension funds advocates claim thanks to existence of pension funds, they become explicit, while in the state-run social security fund they are hidden. They also calculate book record of sum of liabilities on technical accounts with social security fund. They only forget about one detail – these are all contingent liabilities – the state does owe that much to people, as this worst-case scenario comes to a pass only if all people reach pension age. Once somebody dies before retirement, liability towards them is erased. There is no indecency in it, as social security system in Poland functions as insurance – if you pay contributions, you may, bit not have to get the benefit.

Hope it has given you some food for thought, and not for the last time.

"It depends"

Is probably the best answer to (most of) the questions below…

How can you define love? *

How many kinds of love can you distinguish?

Should love be unconditional? **

What can love be mistaken for? Desire? Passion? Fascination? Infatuation? Craving? Obsession? Affection? Care? Friendship? Dedication? Sacrifice? Something else?

Why do people pair off? Just driven by the feelings (?) named above? Not to be alone when they grow old? To have a shoulder to cry on? For practical / economic reasons? To bring offspring to the world? Out of primeval instinct of preserving the mankind? Because it’s socially acceptable? Because others do it?

Why do people decide to formalise their relationships by getting married? Does the institution of marriage reinforce the bond between them? Do they think due to formalised procedure of breaking up (divorce) they can make the other one stay by their side? Does the ring on the finger change the way of thinking of the opposite sex? For same reasons as in the paragraph above?

What keeps people together for decades? *** What does it take to put up with each other for such long period of time? Patience? Tolerance? Friendship? Something else?

What put relationship to a test? Parting for a longer period of time? Extraordinary hardships (incurable disease, accident, disability) or the down-to-earth problems (she spends too much money on clothes, he scatters his dirty socks around the flat)? ****

Does a relationship between two people, casually called “love”, has to go through specific stages? If psychology attempts to define such stages, is its approach universal? Does every relationship have to go through the same path? How about the concept of “love at first sight”? *****

Why do mating rituals differ with age? A silly question, but… Why a teenager who wants to go out with a girl acts differently than his ten years old counterpart?

How much freedom should there be in a relationship? To what extent can we influence, and to what extent tolerate our partners choices?

Is there such thing as destination? If somebody says two people were meant for each other, is it just a metaphor? ******

How quickly can a relationship between two people turn sour? How short can be the distance between love and hatred? If it can turn into hatred, or any other negative feeling, has it ever been a true love?

How is it easy to break a promise*******? If a promise is given before the countenance of God (church marriage), is it harder to break it, compared to the pledge made in a registry office? Is the time factor important – i.e. the more time goes by from making the promise, the more brittle the value of it is? If the other party breaks the promise, are we still bound by the promise we’ve given?

How come people hurt people they love? Do they do it deliberately or inadvertently? If the former, is it, again, genuine love? Should a “normal” human being feel guilty after hurting a fellow human? Is it inhuman to take pleasure in causing pain to other people?

Why sometimes it takes so little to fall out of love? Does it prove fragility of human feelings?

Why sometimes it’s the opposite – why is it so hard to let go? Does being unable to break away from a dead-end affection bear any testimony?

Is there a return from the point of no return? If so, it is true some wrongdoing can be forgiven, but never forgotten? Why some people after breaking up can still be friends and some hate each other guts?

The list could have been longer, yet extending it will get me nowhere nearer to the revelation, so I choose to take a bike from the garage and have a shake-down ride :-)

* Don’t just think of love as a feeling between two people of (usually) different sex.

** Consider manifold facets of love, including the concept of divine love, a deity giving its love to mankind.

*** Good timing for such question – five days after my parents celebrated 30th anniversary of their wedding and half a year before my paternal grandparents celebrate their 65th anniversary.

**** From what I’ve observed, living together is the best test. From the phase when you spend together only the best moments, you go to another one, when you have to get accustomed to your partner’s habits, share mundane household chores, begin to have a common budget, you get up the bed of roses and walk into the thorns…

***** I’ll dare to answer this question right away – it’s simplification / misnomer – there might be a fascination, affection, desire at first sight, but it can become love later.

****** My own take on this problem is that there is more than one “second half” to every one of us, hence odds of meeting at least one of them are much higher.

******* Having lived long enough to see people tying the knot before God and then watching their relationship falling into pieces I find this question immensely justified.

In fact, these are all questions to which there is no one clear answer. The realm of humans’ emotions is governed by an indefinite set of vague rules. It’s where its beauty consists in…