We are more willing to live in the “here and now” moment than the awareness of securing our well-being in the long term. Education is a chance for change.

The value of the liquid financial assets of Poles (e.g. cash, deposits, shares, bonds, fund units, etc.) & nbsp; at the end of Q2 2023 exceeded PLN 2.1 trillion. Over 10 times the increase in this value over the past 25 years can make an impression.

Does this mean that we are a financially properly secured society that knows how to manage its resources?

Unfortunately not. by Eurostat & nbsp; The savings rate of Polish households, i.e. the share of savings in relation to their disposable income, in 2021 was the lowest among the European Union countries and amounted to 2.77%, while the EU average was 16.93% and the highest in Ireland was 24.34%[1]. On the other hand, as many as 38% of Poles assess their knowledge of finance as a small one[2].

Although more than half of the surveyed Poles (57%) declare that they have savings, most of them would be able to make a living from them for no more than six months. 38% of people with savings invest, so they are oriented towards multiplying their savings. This is only 22% of the total population.

So how do the average Kowalski or Nowak build their financial security? Nearly half of Poles do not have any savings, and among those Poles who save, values representing 2-6 months of salary dominate.

reason? It would seem that there is no resources. But nothing could be more wrong.

The financial knowledge of Poles needs improvement.

What financial instruments do they use?

As confirmed by the data presenting the structure of Poles’ savings, in short, they can be described as short-term, conservative, with a high aversion to investment risk and innovation. Although there has been a clear increase in the interest of Poles in the capital market over 20 years, which was greatly influenced by OFE and an increase in Poles’ interest in investment funds, a relatively small group of individual investors continues to participate in it. Pension programs run by employers, ie Employee Capital Plans (PPE) and Employee Pension Programs (PPE), are a great hope for the development of the financial knowledge of Poles. They can contribute to the stabilization of long-term additional pension investments.

The key opportunity to increase the financial awareness of Poles is the increase in education in this area, and all financial market entities declaring social responsibility and sustainable development should engage in it.

Thus, the current image of Polish society shows that we are more willing to live the moment “here and now” than the awareness of securing our well-being in the long term. We prefer to overeat earned money than to put aside and multiply financial surpluses. It is worth noting that the reason is not only the low wages, because the example of the inhabitants of Romania shows that you can save and invest by earning less than Poles[3].

We lack not only the habit of saving and being aware of the importance of saving, but also knowledge and openness to the available investment opportunities. This is probably the main reason why Poles keep more than half of their savings in banks, in deposits, where in the era of still high inflation, they lose their real value, not to mention their multiplication.
Research clearly shows that this is the result of ignorance and the same fear. 48% of us believe that improving the level of economic knowledge will contribute to better management of the household budget & nbsp; And for 45%, it will allow to increase the sense of financial security – “Poles’ financial knowledge level 2023”.

Without investing, we do not actively increase our savings, and if we do, we decide on what is durable, and therefore above all real estate or gold. This is the main element of the diversification of our investments.

We have limited confidence in investment and innovation specialists. As research shows, we are less likely than Germans and Romanians to decide to invest in startups, which are, after all, one of the key elements of the development of the economy.

So how to stimulate and consolidate among Poles the need to build long-term pension capital, investment culture, and therefore experience and social awareness?

• The foundation is trust – in the system, public institutions, and stability and transparency. Unfortunately, the reality that surrounds us is not favorable. It does not need to be said too much about how a huge destruction of social trust was brought about by changes in the principles of the functioning of OFEs and the announcement of their liquidation. All these events are a clear lesson for rulers and the market. How important for the success of long-term building the strength of the capital market are the basic principles: stability, durability, transparency. The low level of Poles’ participation at the time of launching employee capital plans was to a very large extent the result of Poles’ low trust in the durability of the system, which was additionally fueled by the government’s announcements about the liquidation of OFEs.
• Cooperation, dialogue and mutual support of representatives of all involved parties are necessary – representatives of the government and public institutions, financial institutions, representatives of employers, representatives of science, employees, students, students, etc.
• It is necessary to introduce effective systems supporting regular retirement savings of Poles. Today I see a very great potential for the development of Employee Capital Plans (PPK) and further development of employee pension programs (PPE) in Poland. This is a huge role for employers. I see openness to these solutions among young employees, “not soaked up” with the narrative on OFEs, and already seeing that it is “saving that does itself” (quote from my conversation with my son on this subject, fresh at the time entering the labor market).
• Financial education. The lack of financial education among Poles is a source of low long-term savings. Saving is a financial habit that each of us should buy from the child at home, at school, in public environment, and at least from the moment we start our professional work. postpone your monthly salary regularly and consistently. Is this happening? No, this is confirmed by the cited research. The average Pole knows little about the capital market and available financial instruments and solutions. Poles have low economic knowledge. Only 60% of the surveyed Poles know that the falling inflation rate means that prices are still rising, only slower. 40% of Poles do not understand this relationship[4]. The capital market is still unavailable to the ordinary Kowalski or Nowak, although over the last 20 years technological development enables the acquisition of most financial products through better and better applications and platforms. It includes specialists and connoisseurs. Therefore, it is necessary to introduce financial education of Poles at all levels of social life, ranging from the education of children in schools and in the family circle. The current, enormous commitment of financial institutions, support for public institutions, private initiatives (a great example of the initiative teaching children finance in a non-standard way “sneakers on the stock exchange) are, it turns out, insufficient.

In order to build and permanently develop the Polish capital market, the financial education of Poles is necessary, communication and cooperation of all parties on the systematic adjustment of regulations to the changing reality, while ensuring the stability, communication and transparency of the system. It is essential here that extensive commitment and support of public institutions and the state are necessary. A market functioning in this way can reopen Poles’ trust in long-term investments and the development of the capital market in Poland.

Agnieszka Jaworska-Martycz
Expert of retirement products
cooperating with eofwca.pl

[1] Source: Eurostat https://ec.europa.eu/Eurostat/DataBrowser/View/NASA_10_KI__Custom_3940823/default/table?lang=en (*No data for Malta, Romania and Bulgaria)

[2] The study “Polish financial knowledge level” 2023 conducted by CBM Indicator on request and in substantive cooperation with the Warsaw Institute of Banking and the WSE Foundation

[3] Assay Index report “Poles’ investment readiness index” https://assay.pl/wp-content/uploads/2022/11/assay-index-2022-pl.pdf

[4] Poles’ attitudes towards finance 2022