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Like most other European governments hit by the region's financial crisis, Poland has been wrestling with its debt for the past few years. The debt was around 56 per cent of gross domestic product last year, below the European average, but relatively high for an emerging market. Without the private funds, Poland's debt would have been at 38 per cent of GDP last year, the government said.
In some cases, the government would increase stakes in companies it controls already. In others, it would become the single-largest shareholder in homegrown private companies. The government said it won't take over the companies in which private funds hold shares. It plans to hire private managers. The government's treasury ministry recently took a more active role in directing the largest companies it controls, especially in heavy-industry sectors.
With the private funds, contributions from workers are split between the state and private funds, while in the past contributions only went to the state. The government needs to borrow in the market to finance the shortfall, sometimes selling bonds to private pension funds for the same money previously pumped into them.
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