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Presidential aide questions part of Polish pension overhaul

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(Globalpost/GlobalPost)

WARSAW (Reuters) - Government plans to ban Poland's privately-managed pension funds from investing in treasury bonds are questionable because they would increase the risks for future pensioners, local media quoted a presidential aide as saying on Monday.

The aide, Irena Woycicka, declined to say whether President Bronislaw Komorowski, who needs to approve any new legislation before it comes into law, will actually back the government's pension overhaul as there was no draft legislation yet.

The government's move to draw back into the state savings built up under a 1990s reform of the sector has unnerved foreign investors in Poland who may be less concerned with whether the funds will be able to hold U.S. and other government bonds afterwards.

But Woycicka's comments are the first sign that the president's office has concrete reservations about the much-criticised scheme which could lead Komorowski to throw it back to parliament.

The president has the option of sending bills back to parliament or sending them to the constitutional tribunal, a move which at least would slow the legislative process.

"The assumption that OFE (pension funds) would not be allowed to invest in treasury papers is (...) questionable," Woycicka, secretary of state in the president's chancellery, was quoted as saying in the Gazeta Wyborcza daily.

"This would increase the risks for the members of OFE, because at times of high risks on the stock market, the OFE would not be able to invest in the more stable bonds."

Woycicka is one of nine senior aides to the president and is responsible in the chancellery for issues related, among others, to the labour market and pension system.

The plan has drawn protests from some central bankers and fund managers, who said it was harmful for the economy and had too many negative side effects.

Komorowski, a political ally of Prime Minister Donald Tusk, has said he would ask experts and lawyers to thoroughly analyse the draft legislation to check if it does not violate the constitution.

The government is likely to have little difficulty pushing the changes through parliament after its leftist opposition said it would vote for it. The cabinet expects the plan, which would curb Poland's debt and deficit, to come into force by the middle of next year.

(Reporting by Marcin Goettig; editing by Patrick Graham)

http://www.globalpost.com/dispatch/news/thomson-reuters/130930/presidential-aide-questions-part-polish-pension-overhaul