Saving – voluntary or mandatory?
One of the fundamental principles of Employee Capital Plans (PPKs) is that they are voluntary, which means that everyone can decide whether they want to accumulate and grow their savings within the programme or not. At the same time, the legislator included the principles of general applicability and automatic enrolment in the PPK Act.
Some criticise this. But to analyse these principles and the reasons for the final shape of the scheme, we should delve a little deeper into the theory of economics. In this way we can examine the motivations behind financial decisions – also ones related to the division of money between current expenses and savings for the future.
Richard Thaler, author of the behavioural theory of saving, notes that people make decisions, also financial ones, under limited rationality [1]. Furthermore, they lack complete knowledge about finance and they are impatient, consequently focusing too much on current affairs rather than on the future. On top of that, the information overload and the ongoing changes so characteristic of our present reality increase the risk of bad decisions.
In view of that, the principles of general availability and automatic enrolment are a nod to individual PPK participants. After all, the purpose here is to change their habits and build a conscious approach to economic issues. Besides, general availability in the case of schemes such as the PPKs is nothing new. The experience of such countries as the United Kingdom, the Netherlands or New Zealand shows that the application of that principle helped build trust in the scheme, which resulted in regular participation increase. For example, the participation at the start of the Workplace Pensions scheme in the UK was less than 40%, and now, after seven years, it has reached 87% of all the eligible employees [2]. The Netherlands also have good results, with participation of around 90%.
Can we copy that success in Poland? We most certainly can, but for this to be possible we need quality financial education and simple tools to support saving. This way it will be easy to build the financial security of Polish people and the whole country in the longer, strategic perspective.
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