Confirm cookie choices
Cookies are pieces of code used to track website usage and give audiences the best possible experience.
Use the buttons to confirm whether you agree with default cookie settings when using

Poland: Benchmarking study on the governance and regulation of Polish private pension funds



Business sector:

Financial institutions

Funding source:

EBRD Shareholder Special Fund

Contract type:

Consultancy Services

Notice type:

Invitation for expressions of interest (CSU)

Issue date:

06 Aug 2015

Closing date:

04 Sep 2015   at  18:00   London

Access eSelection

12/08/2015 Clarification: the deadline date for the receipt of EOIs has been extended to Friday 4 September 2015 at 5pm GMT.

Project Description:
The European Bank for Reconstruction and Development (the 'EBRD' or the 'Bank') aims to undertake a benchmarking study on the governance and regulation of the Polish private pension funds as part of a project to provide integrated capital market development advice in Poland (the 'Project').

The Polish capital market is generally thought of as among the most developed in the EBRD region. The country still holds a leading role in central Europe in terms of indicators such as market capitalisation, number of market participants, trading volumes and the number of listed companies. Warsaw is widely recognized as regional centre for the nascent CEE private equity industry and it is also home to a relatively deep asset management industry.

At the same time, compared to similar emerging markets, Poland remains well behind in terms of long-term funding instruments for banks and enterprises. Bank refinancing is constrained given the underdevelopment of mortgage bonds and securitisation. In its operations in Poland EBRD finds that additionality is highest at long maturities and PLN issues and that primary bond issuance is often uncertain to succeed.

There have been intermittent discussions between the Bank and the regulator (KNF) around these transactions. The EBRD's Local Currency and Capital Markets team ('LC2') in 2012 delivered a comprehensive country assessment to the regulator and government, and our assistance on a new covered bond framework, and collateral reform were instrumental in moving legislative proposals forward.

The Polish capital market is now at a critical juncture. In 2014 growth of both bond and equity markets came to an abrupt halt. Unlike elsewhere in Europe, the number of IPOs fell, and share turnover slowed. The Polish market and its stakeholders, i.e. brokers, banks, regulators, exchange, clearing houses, institutional and retail investors etc. are faced with a number of challenges, both internal and external. Many of the earlier gains could now be reversed.

Assignment Description:
With about 9 per cent of GDP in assets under management, the Polish private pension funds ('OFEs') remain the principal local institutional investor. Experience in other countries with funded pension systems has demonstrated that these funds can achieve superior and better diversified returns, while prudently managing funds in line with the overall liability flow and risk preferences of an ageing population. A dynamic and well regulated local institutional investor base is essential for market development, including in novel asset classes such as infrastructure assets or private equity. Following the changes to the Polish pension system implemented since 2013, the industry has effectively stopped supporting local capital market liquidity. Nevertheless the government has examined proposals to raise the extraordinarily low private savings rate through additional voluntary pensions instruments.

The Bank now intends to engage an expert (either an individual or nominated by a consulting firms (the 'Consultant') to assess the current regulation of the Polish OFEs against benchmarks elsewhere in Europe and other emerging markets, and on that basis develop recommendations (the 'Assignment').

The principal objective of the assignment will be to assess the current regulation of the Polish OFEs against benchmarks elsewhere in Europe and other emerging markets, and on that basis develop recommendations to be addressed to the regulator. The recommendations will be based on well-defined objectives of the government (in terms of risk levels, degree of choice and competition). At the same time, innovations and reforms that have at times been examined by the government, such as voluntary pension instruments, can be developed further in this study.

This work will be presented in a report that will first be shared with the regulator and government, and then presented at a workshop that is open to market participants, government and the central bank.

Scope of Work
Specifically, the Consultant will be expected to provide Services that can be summarised as follows:

Activity 1: Review of current pension fund regulation
The Consultant will undertake an initial desk research, followed up by subsequent interviews over 2-3 days with the key market participants and the regulator in Warsaw.

Activity 2: Impact assessment of recent regulatory changes
The recent re-regulation of the private pension pillar has led to a number of adverse and unintended consequences, such as: overly risky asset concentration in a small set of large domestic publicly listed companies; limited gains from diversification across asset classes and foreign markets, i.e. foregoing the gains that are the basic rationale of private pension funds; costly operational business models given the largely passive shadowing of certain equity indices. Financial literacy and public recognition of the need for personal savings through pension funds remains extremely limited in Poland. There is a risk that remaining pension fund members may at some point withdraw funds in bulk or that the regulator may determine that the existing fund structure is no longer suitable to overall pension policy objectives and move more assets back into the state system. Most market participants therefore view the present industry structure as essentially unsustainable. The Consultant will provide a comprehensive analysis of the current situation that will serve as a basis for Consultant's recommendations and subsequent discussions the relevant stakeholders.

Activity 3: Comparison to best practices and recommendations
Poland's experience in redesigning the overall role of the funded pillar within the pension system is not atypical in emerging Europe. Other countries have similarly found that risks and costs within a private fund management industry are difficult to reconcile with overall expectations in social policy. Given the present context of limited enrollment within the OFEs, and a substantial stock of assets remaining in the funds, there is likely a better regulatory model that incentives industry outcomes more in line with policy objectives. The Consultant is to assess the present regulatory regime in Poland against best practice in the principal areas of fund management regulation. This will be illustrated based on at least one western European market and one emerging market.

Activity 4: Workshop
Following the conclusion of the research the Consultant will be expected to present the main conclusions and recommendations to EBRD and subsequently the clients (KNF and Ministry of Finance). The recommendations will then be presented in a workshop in Warsaw that will be open to market participants, the regulator, government and central bank representatives and to participants from neighbouring countries, and the broader European investor community. This forum may facilitate a joint discussion of efforts to develop both capital market infrastructure and the institutional investor base.

Status of Selection Process:
Interested experts (either individuals or individuals nominated by a consulting firm) are hereby invited to submit expressions of interest.

Assignment Start Date and Duration:
The Assignment is expected to start by September 2015 and has an estimated overall duration of 4 months.

Cost Estimate for the Assignment:
EUR 70,000 (exclusive of VAT).

The Consultant must determine whether any VAT would be chargeable on the services and the basis for that determination, without taking into consideration the special status of the Bank as an IFI and state this to the Bank in their response to the Invitation for Expressions of Interest. To the extent that a Consultant incurs input VAT on goods and services purchased in connection with the provision of services (e.g. VAT on airline ticket) which is not otherwise recoverable by the consultant from the local tax authority, the gross cost to the consultant of such expenses shall be treated as a reimbursable expense.

Funding Source:
The Assignment will be funded by the EBRD Shareholders Special Fund.

There are no eligibility restrictions. Individuals or consulting firms interested in nominating an expert from any country may apply.

Consultant Profile:
Individual services are required. The Consultant shall be a pension fund expert (individual expert or an expert nominated by a firm, see note 2) preferably with previous professional experience related to:

1. Private pension fund regulations in comparable European and/or emerging markets; and
2. Pension fund management, and designing of low cost business models, and investment allocation models, based on best practice in fund managers developed European markets (e.g. UK Nest structure);
3. Successfully working with market participants and authorities in comparable advisory assignments;
4. Successfully developing financial industry and market infrastructure contacts in developed markets and ideally in emerging Europe; and
5. Proficiency in written and spoken English for the purposes of presentation to public and private sector counterparts.

Submission Requirements:
In order to determine the capability and experience of Consultants seeking to be selected for this Assignment, the information submitted should include the following:

1. Cover letter (max. 2 pages) summarising why the expert believes to satisfy the requirements as defined in the above section Consultant Profile;

2. CV (not exceeding 4 pages) which should include full descriptions of responsibilities carried out, not just a job title, including information on contracting entity/client, project location/country, duration (mm/yy to mm/yy), expert months provided (if different from duration) , main activities, objectives; and

3. Completed Consultant Declaration Form and Contact Sheet, the template for which is available from the following web-link:

The complete expression of interest (including CVs, Consultant Declaration and Contact Sheet) should be submitted, in English electronically through e-Selection, to reach the Bank not later than the closing date/time. The expression of interest shall be one file (pdf). The EBRD reserves the right to reject applications of Consultants submitting more than one electronic file.

Bank Contact Person:
Paula Alegria
Senior Advisor, Technical Co-operation
European Bank for Reconstruction and Development
One Exchange Square
London EC2A 2JN
Tel: +44 (0) 20 7338 7589
e-mail: (submissions should be sent through eSelection and NOT to this email address)

1. The selection will normally be made from responses to this notification only. Consultants will not be asked to submit a proposal. The highest-ranked Consultant will be selected from a shortlist and be invited to negotiate the contract.

2. Consulting firms (proposing individuals) and individuals may apply. Each submission through eSelection shall contain one (1) CV only. Should a consulting firm wish to propose more than one individual, each CV shall be submitted as a separate expression of interest via eSelection. Single applications for a number of experts (i.e. containing more than one CV) may result in rejection of such application and all concerned experts.

3. The shortlist criteria and weightings are as follows:

(a) Previous professional experience in private pension fund regulations in comparable European and/or emerging markets (50%);
(b) Previous professional experience in pension fund management, and designing of low cost business models, and investment allocation models, based on best practice in fund managers in developed European markets (30%); and
(c) Previous professional experience in successfully working with market participants and authorities in comparable advisory assignments (20%).

4. The award of this contract will be subject to the relevant internal approvals.

GDPR Cookie Status