BlackRock Says Poland Shouldn’t Fear Market Backlash on Pensions

Poland’s plan to overhaul its pension system shouldn’t irk investors as it shows the government’s commitment to reducing public debt, BlackRock Inc said.

The review, which includes downsizing the mandatory privately-owned pension funds in place since 1999, seeks to remove a “gigantic burden” on public finances, Finance Minister Jacek Rostowski said last week. A decision on the revamp will be made at the end of August, Prime Minister Donald Tusk said yesterday. According to BlackRock’s Beata Harasim, a London-based portfolio manager, the plans demonstrate “fiscal prudence.”

“The government doesn’t need to be afraid it will be punished,” Harasim, who helps manage debt at the world’s largest money manager with $3.94 trillion in assets, said in a phone interview with Bloomberg News late yesterday. “The most likely variant assumes that debt levels will be reduced, making policy more prudent.”

Poland is considering revising its 2013 budget as the European Union’s largest eastern economy battles its worst slowdown in over a decade and tax revenues fall short of plan. With inflation at a seven-year low, Poland cut interest rates by 225 basis points since November to record low 2.50 percent today.

Polish pension funds hold 280 billion zloty ($83.6 billion) in assets, including 110.8 billion zloty in equities as of May 31, data from the financial markets regulator show.

Before it's here, it's on the Bloomberg Terminal.