The Polish government will work to correct “a giant mistake” that is the country’s private pension system, introduced in 1999 and responsible for the bulk of Poland’s public debt, its finance minister said.

The government in recent years has wrestled with privately managed pension fund companies, which receive a percentage of gross salaries and invest it in the capital market. The system has so far failed to deliver on its promise of high pensions, while a diversion of a portion of payroll taxes to the private system in 1999 led to a massive shortfall at the state-funded social security administration.

This gap has been made up for with money the government has borrowed in the market. The setup is partly responsible for the build-up of public debt, now around 56% of economic output.

  Wall Street Journal