Filip Chybalski

The last ten years of the 20 century was the decade of pension reforms in Central and Eastern European countries. A three-pillar pension system has been adopted in most of that countries, including Poland, where the second pillar is created by open pension funds (OFEs), managed by pension fund companies (PTEs). The aim of this article is to identify and analyze barriers to the increased effectiveness of investment by pension funds in Poland. The most significant of these barriers include the system of remuneration for pension fund companies, the minimum required rate of return mechanism, the excessively restrictive investment limits, and the lack of rational choice of pension funds by Poles. The conclusion is reached that the system of remuneration for pension fund companies should be linked to a greater extent to the funds’ results, which has been achieved in some countries of Central and Eastern Europe, but not in Poland. The current financial crisis has also brought to light the need to make other changes in the second pillar of the pensions system, including liberalization of investment limits for pension funds, particularly in relation to foreign investments, and the introduction of subfunds. It is also necessary to educate society in matters relating to capital-based pensions, since otherwise there is a lack of understanding of the rules according to which pension funds function and of the types of risks associated with this. Moreover, people are insufficiently aware of their shared responsibility for their future pension benefits. The actions listed above would on one hand stimulate competition between the open pension funds in their investment activity, and on the other hand provide protection for the accumulated capital, particularly in a period of financial crisis.