IDEAS home Printed from
   My bibliography  Save this article

The minimum pension as an instrument of poverty protection in the defined contribution pension system – an example of Poland




Pension systems’ reforms are often related to a shift towards (fully or partially) defined contribution systems, in which the pension distribution reflects to a larger extent the wage distribution. Additionally, relatively shorter working lives of those that have lower earnings, increase the risk of receiving lower benefits. The aim of the paper is to present the changing role of minimum pension as a tool of redistribution in Poland after the pension reform. The new mandatory pension system covers workers born after 1948 and is based on two components – notional and funded defined contribution (NDC and FDC). It replaced the old defined-benefit PAYG system, which had a significant redistribution through the pension formula. The formula itself served as a tool of low income protection, that was additionally strengthened by the minimum pension guarantee. The new system aims at actuarial fairness, which means that the only mechanism of redistribution is the minimum pension, financed from general taxes. As a result of this change, grater income inequalities of pensioners following those of people in working age are expected. This means a change of the role of the minimum pension from one of the tools supporting redistributive policy to the main tool of social policy preventing poverty among elderly persons. The minimum pension is expected to fall compared to average wage. The decision on its level and evolution becomes one of the most important policy questions. It will have crucial importance in preventing poverty in the old-age. Simulations are used to present the impact of changes in the pension distribution on the number of pensioners covered by minimum pension.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Chłoń-Domińczak, Agnieszka & Strzelecki, Paweł, 2013. "The minimum pension as an instrument of poverty protection in the defined contribution pension system – an example of Poland," Journal of Pension Economics and Finance, Cambridge University Press, vol. 12(03), pages 326-350, July.
  • Handle: RePEc:cup:jpenef:v:12:y:2013:i:03:p:326-350_00

    Download full text from publisher

    File URL:
    File Function: link to article abstract page
    Download Restriction: no

    Other versions of this item:


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Marta Lachowska & Michal Myck, 2015. "The Effect of Public Pension Wealth on Saving and Expenditure," Upjohn Working Papers and Journal Articles 15-223, W.E. Upjohn Institute for Employment Research.
    2. Elena Jarocinska & Anna Ruzik-Sierdzinska & Theo Nijman & Andres Vork & Niku Määttänen & Robert Gál, 2014. "The impact of living and working longer on pension income in five European countries: Estonia, Finland, Hungary, the Netherlands and Poland," CASE Network Studies and Analyses 0476, CASE-Center for Social and Economic Research.
    3. Agnieszka Chlon-Dominczak, 2013. "Female Transition to Retirement," IBS Working Papers 2/2013, Instytut Badan Strukturalnych.
    4. Angelo Marano & Carlo Mazzaferro & Marcello Morciano, 2012. "The strengths and failures of incentive mechanisms in notional defined contribution pension systems," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 71(1), pages 33-70, October.
    5. Alonso-García, J. & Devolder, P., 2016. "Optimal mix between pay-as-you-go and funding for DC pension schemes in an overlapping generations model," Insurance: Mathematics and Economics, Elsevier, vol. 70(C), pages 224-236.
    6. Goedemé, T., 2012. "GINI DP 27: Recent Trends in Minimum Income Protection for Europe's Elderly," GINI Discussion Papers 27, AIAS, Amsterdam Institute for Advanced Labour Studies.
    7. Piotr Lewandowski & Jakub Sawulski & Kamil Stronski, 2016. "Labour market segmentation and the financial situation of the pension system in Poland," IBS Working Papers 10/2016, Instytut Badan Strukturalnych.
    8. repec:eee:chieco:v:44:y:2017:i:c:p:16-29 is not listed on IDEAS

    More about this item

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cup:jpenef:v:12:y:2013:i:03:p:326-350_00. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Keith Waters). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.