Poles do not save money for retirement

Eurostat data confirm what experts have been noticing for a long time: Poles are not good at saving money. In comparison with other European nations, an average Polish citizen does not have much assets saved for retirement or other purposes. The situation is worrying.

EU’s statistical office presented gross saving rate of European households, i.e. the value of gross savings divided by the value of gross disposable income. The numbers place Poland almost at the bottom of the list of money savers.

What is the reason for that? Many people believe Poles just do not earn enough money to put money aside, they just spend everything they earn on their basic needs. However, in the neighbouring countries, which do not have much wealthier economies than Poland, things look differently. In Czech Republic, the household saving rate for 2014 was 11.77, while in Poland only 1.94.

Another reason may be cultural: Polish people are not used to saving and do not like to put money aside and limit their consumption. Many people lack basic knowledge on finances and the economy.

This is upsetting, taking into consideration the fact that Polish pension system is ineffective and citizens cannot count on high state pensions. It is almost certain future pension payments will be much lower than that of today’s retirees.

To maintain a good standard of living in the old age, people need to take matters in their own hands and start saving for their retirement. This is especially true for women, who generally work fewer years and pay lower pension contributions than men, and as a result may expect lower pensions.

The government hopes to encourage saving through a new type of state bonds. They are offered to the beneficiaries of the 500+ child benefit scheme. Those who decide to invest, may count on higher interest rates than those of regular bonds.

The President of Warsaw Stock Exchange, Małgorzata Zaleska, called for changes to of the tax on capital income, the so-called Belka tax (named after the Finance Minister who introduced it). The tax is charged on the interest on bank deposits, dividends, and other financial income. The levy is deducted automatically by banks.

Zaleska put forward an idea to change the rate of the tax depending on the investment period. Long-term investment would be rewarded with lower tax. She suggested taking the tax rate down from 19 to 10 percent for investments lasting more than 12 months.